NASA Chief Turns Agency Over to Aides : Beggs Calls Fraud Charges ‘Baseless,’ Will Supervise Transition

NASA Administrator James M. Beggs Thursday turned the reins of his agency over to what he said he presumed would be temporary leadership, denouncing federal fraud charges against him as “baseless,” “outrageous” and “ridiculous.”

He predicted that he will be “completely exonerated” of charges that he and three present General Dynamics executives conspired to defraud the government by hiding cost overruns on a Pentagon contract for a prototype of a gun to provide air defense for combat troops.

“There is nothing that I did in the case involved that I would not do again, if I had to do it over again. We acted in an entirely ethical, legal and moral sense,” Beggs told employees of the National Aeronautics and Space Administration and its contractors via a nationwide television hookup.

After turning over the agency’s leadership to Deputy Administrator William R. Graham, who joined NASA only last week, and Associate Administrator Philip E. Culbertson, Beggs said that he will remain in Washington for a few weeks to guide the transition.

Beggs, who has headed the space program for 4 1/2 years as it underwent a period of rejuvenation, was indicted by a federal grand jury in Los Angeles Monday. On Tuesday, the White House had indicated that Beggs should step aside at least temporarily, a move the NASA chief made Wednesday, when he asked President Reagan for a temporary leave.

According to the indictment, when Beggs was executive vice president of General Dynamics, he and three other executives used illegal accounting techniques to hide the true cost of two prototype Sgt. York Division Air Defense guns. U.S. Atty. Robert Bonner estimated that the alleged scheme enabled the contractor to illegally recover $3.2 million in cost overruns from the Defense Department between 1978 and 1981.

The work on the $40-million prototype was part of a competition, which General Dynamics lost to a division of Ford Motor Co., for a $5-billion contract to produce a tank-mounted air defense gun. Last August, the program was scuttled by Defense Secretary Caspar W. Weinberger.

As he appeared in a small auditorium for his parting remarks Thursday, Beggs, 59, received a standing ovation from about 200 officials and employees. He was also applauded several times during his remarks, including when he declared that he would not resign.

The charges, he said, “are baseless. They are outrageous, ridiculous, and I feel confident” of acquittal.

In addition, Beggs expressed concern that Justice Department lawsuits are creating an atmosphere that could poison the relationship between government agencies such as NASA and the Defense Department and their defense and aerospace contractors.

The indictments Monday continued a long-running string of troubles for General Dynamics; and, on Tuesday, the Defense Department suspended the company from receiving new federal contracts. But, in a move that immediately lessened the impact of that prohibition, the Navy delayed acceptance of proposals for four new SSN-688 submarines.

Everett Pyatt, assistant secretary of the Navy for shipbuilding and logistics, acknowledged in an interview Thursday that the service had little choice if it wanted to maintain competition in awarding major contracts.

He said that the Navy’s efforts to encourage competition in the production of the $700-million Trident submarines--General Dynamics is the sole producer--might meet with greater success in the future.

In referring to Newport News Shipbuilding & Dry Dock Co., which has balked at seeking Trident contracts in the past, although it competes for the SSN-688s, he said: “I think they’re going to take a more aggressive attitude.”

Pyatt said that, if the Navy had not delayed its decision on the new SSN-688s, it would have been forced to award the contracts on a noncompetitive basis--and most likely at a higher price--to Newport News Shipbuilding.

“Who are we punishing?” he asked. “Do we want to deprive ourselves of the competition?”

But Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee and a frequent critic of military procurement practices, has charged that “the Navy is merely waiting for General Dynamics to be back in their good graces and go back to business as usual.”