Navy Might Have to Forgo Competitive Bids on Sub Contract, Weinberger Says

Defense Secretary Caspar W. Weinberger, in a special policy statement, said Tuesday the Navy might have to forgo competitive bidding on a submarine contract if General Dynamics Corp. cannot prove quickly that it is a responsible contractor.

General Dynamics was suspended from receiving any new government contracts on Dec. 3, one day after the company and four former or current executives were indicted on fraud charges. On Dec. 4, however, the Navy announced it was suspending a bidding deadline for new attack submarines to maintain the company’s chances.

The Navy said General Dynamics is one of only two companies capable of producing the attack submarine. The other company is the Newport News Shipbuilding & Drydock Co. Navy Secretary John F. Lehman Jr. said he wanted to avoid awarding a sole-source bid to Newport News and thus was willing to delay the competition.

Limit on Delay

Weinberger did not criticize Lehman for that decision in his statement. But he made it clear he would not allow the delay in bidding to last indefinitely.

Such a bidding extension, “while clearly in the public interest when made for a short time, must be weighed against the intent of the suspension and the circumstances giving rise to it,” Weinberger said.

“Unless it is demonstrated that a contractor is responsible, the government may have to give up the benefits of competition in this and other cases that may involve fraud or other illegal activities,” the secretary added.

The Pentagon, in releasing Weinberger’s statement, refused to say how long Weinberger was willing to allow the Navy’s bidding extension to last. Pentagon spokesman Bob Sims noted that General Dynamics has 30 days from the date of its suspension to contest the action, propose corrective actions, or demonstrate that the management problems that led to the indictment no longer exist.

Bidding Question

“The question is whether or not we now have a responsible company which may be allowed to bid on the program or not,” Sims said. “That will be determined during the next month or two when the company has a chance to make its case for the lifting of the suspension. These are also four submarines which are not even funded by Congress yet, although we expect them to be in this year’s program.

“What the secretary is saying is that there is a point beyond which we cannot go,” Sims said.

Sims said Weinberger believes the Navy would end up paying “substantially more” for the submarines if General Dynamics was not allowed to bid.

General Dynamics was indicted in connection with alleged overcharging on an Army contract to develop prototypes for the Sgt. York air-defense gun. The company lost the competition to the Ford Aerospace & Communications Co., which in turn saw the program stopped in mid-stream this summer because of doubts about the weapon’s effectiveness.