Pentagon Halts Awards Pending Toshiba Probe : Japanese Firm Reportedly Sold High-Tech Equipment That Aided Soviet Submarines

The Pentagon has delayed awarding millions of dollars in contracts to Toshiba Corp. while Japan investigates charges that the company sold secret high-tech equipment to the Soviets for building quieter submarines, officials said Tuesday.

Among the Toshiba contracts jeopardized by the action is the proposed purchase of 90,000 laptop computers for the Air Force valued at $100 million. The company, responding to U.S. trade sanctions against Japanese firms, said last week that it will begin producing its laptop computers in Irvine in July. Toshiba officials could not be reached for comment.

Efforts to reduce the noise levels of Soviet submarines with precisely machined propellers made by the Japanese were linked to the John Walker family spy ring, said Reagan Administration officials, who requested anonymity. They suggested that the ring may have told Moscow that noisy propellers were the chief reason the U.S. Navy has been able to detect its submarines.

After the Walker ring was exposed two years ago, senior officials said the secrets divulged led to improvements in the operation of Soviet submarines, making them more difficult to detect, but they never mentioned anything about propellers.

Undersea warfare depends for its success on how silently submarines can run beneath the waves.

“Star Wars” Contracts

“There is evidence they’re (the Soviets) using the propellers,” said one official. “The Navy is very upset.”

The Pentagon, according to the officials, has banned further business dealings with Toshiba while Japan investigates the diversion. In addition to the laptop computers, pending contracts are for “Star Wars” related work in missile defenses, officials said.

The action against Toshiba has affected other companies that are competing for the same contracts because the contracting process has been held up, Pentagon officials said. Toshiba has not been suspended officially or barred from doing business with the Pentagon, although that could happen, they said.

At the same time, the Pentagon banned further contracts with the government-owned Norwegian firm Kongsberg Vaapenfabrikk, which produced a vital computer software component for the Japanese precision milling equipment and allegedly was involved in the illegal transfer to Moscow, officials said.

The Defense Department declined to comment beyond saying that it “is looking at the Toshiba issue very closely.”

Milling Machines Sold

U.S. officials expressed more concern about any Kongsberg connection than about Toshiba because the Norwegian company is heavily involved in sensitive and sophisticated aerospace technology, “and the question now is how secure the technology is” following the diversion to the Soviets, one source said.

The issue, which has created a sensation in Japan, involves the 1983 sale to the Soviets by the Toshiba Machine Co., a division of the parent electronics firm, of four barn-size milling machines. The equipment can produce propellers, weighing up to 250,000 pounds, so precisely that the tolerances are to within one-tenth of a millimeter, the sources said.