Navy Lifts Defense Firm Suspension
The Navy said today that it has lifted its suspension of $1 billion worth of contracts to General Dynamics Corp. because the embattled firm has set up and enforced a “rigorous code of ethics” to prevent false expense claims in the future.
Everett Pyatt, assistant Navy secretary for shipbuilding and logistics, said the decision will make the nation’s third-largest defense contractor eligible to receive new contracts totaling as much as $1 billion.
At the same time, Pyatt announced that the Electric Boat Division of General Dynamics has been awarded $642.8 million in new contracts--$616 million for a 12th Trident missile submarine, $23 million for design work on a new generation of nuclear-powered attack sub and $3.8 million for Trident overhaul design work.
An additional $41 million was released for contracts awarded to the company’s Pomona, Calif., division, which builds missiles.
Disputed Cost Claims
Contracts for such equipment as the Trident sub have been withheld from General Dynamics since last May while the Navy sought to resolve disputed cost claims on previous contracts and to ensure that new accounting procedures established by the firm would prevent improper claims in the future.
Pyatt said today that the Navy had finally managed to negotiate satisfactory settlements of the disputed claims, some of which dated back 12 years, and is satisfied that the firm has made a good-faith effort to improve its contracting methods.
The official said the Navy’s relationship with General Dynamics is “back to normal” but added: “I hope the lessons here are far broader than what General Dynamics may have learned. I hope the whole defense industry has learned we take these bills seriously.”
Pleased With Resolution
Al Spivak, a company spokesman, said today the firm is pleased that it has finally resolved the dispute.
“With these problems behind us, we will now be able to devote our full attention to meeting the demanding requirements of our important Navy contracts,” Spivak added.
In order to win an end to the contract ban, Pyatt said, General Dynamics had first agreed that $55 million worth of overhead claims submitted in connection with contracts dating to 1973 should be withdrawn.
In addition, the company accepted the Navy’s position on $111 million worth of overhead claims that the firm thought had been properly submitted but that the Navy contested.
