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Westinghouse Challenges Pentagon’s Bid for Reports

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Associated Press

Attorneys for the Pentagon and Westinghouse Electric delivered final arguments Wednesday in the company’s effort to quash a subpoena for internal audit reports in a critical test of the government’s power to probe the finances of its defense contractors.

The dispute stems from a subpoena issued last August by Pentagon Inspector General Joseph H. Sherick seeking audit reports and a host of paper work related to the company’s defense sales.

Sherick issued the subpoena and sued in federal court in September after Westinghouse, the 13th-largest Pentagon supplier with 1984 sales of $1.8 billion, refused an earlier request for the records by the Defense Contract Audit Agency, an independent Pentagon audit team that lacks subpoena power.

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Herbert Fenster, a Westinghouse attorney, argued that the inspector general has no authority to subpoena the company’s records in this case because his office did not initiate the probe and cannot transfer its subpoena power to any other agency, including the Defense Contract Audit Agency.

“Congress did not give the Defense Department inspector general authority to conduct contract audits,” Fenster told U.S. District Judge Louis Rosenberg. “When the DCAA audits defense contracts, the inspector general could only look at the product, the audit report itself, and then decide whether he wanted to launch an investigation.”

Robert L. Ashbaugh, a Justice Department attorney representing the Pentagon, contended that the inspector general can use his subpoena power in any way that furthers his mandate to police defense contracts.

“Congress gave the inspector general broad discretion to conduct an investigation,” Ashbaugh said. “He’s saying ‘It’s my case once I issue a subpoena.’ ”

“The question,” Rosenberg said from the bench, “is whether the inspector general is being used as a stooge for the DCAA.”

Rosenberg gave the parties 25 days to submit additional written material and is expected to issue a written opinion after that.

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Meanwhile, in Washington, the same issues are pending before the Armed Services Board of Contract Appeals. Westinghouse officials say privately that the board could give the Pentagon auditors what they want even if Rosenberg rules for the company.

The case before the contract appeals board is in preliminary stages, board spokesman George Hawkes said Wednesday.

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