Lehman Aide Was Strengthened : Procurement Reform May Have Led Way to Scandal

When John F. Lehman Jr. took the helm in 1981, it was clear where he was steering the Department of the Navy: He had a mandate from the nation’s newly elected President to create a historic 600-ship force, and he would let nothing--and no one--stand in the way.

Congress certainly didn’t get in the way. “He was masterful” at the art of budget politics, one congressional aide says.

Nor did his critics. “Lehman is a nasty, dirty fighter” and used his power to retaliate against opponents, a Pentagon aide says. “He struck the fear of God in people.”

However, the youthful Navy secretary came to be frustrated on one front: the slow and deliberate procurement bureaucracy of the Defense Department. He cursed it as “an incredible and unwieldy monster”--and then tried to slay it.

With no warning and one mighty swipe of his budget cutlass, Lehman eliminated the entire Naval Materiel Command in 1985. In the name of reform, he wiped out the most troublesome obstacle in his ambitious campaign to expand the Navy.

But today, as federal investigators pick through the desk drawers and file cabinets of former Lehman aides and many of the defense contractors who paraded through their Pentagon offices, there is increasing evidence that Lehman’s bureaucratic reform also may have opened the door for scandal.

“Lehman claimed he was eliminating a layer of bureaucracy, which he did, but he gave more power to his own office and to his deputies,” said a former high-ranking Pentagon official who clashed frequently with Lehman.

One important result was the loss of a natural safeguard against abuse, the plodding Defense Department review process. Still, no one dared challenge the powerful Lehman.

The secretary’s retribution could be devastating, sources said. For example, a three-star admiral who had battled Lehman over airman pay issues discovered that he was retiring only when he read about it in a Navy publication, a former Pentagon official familiar with the dispute said.

Congressional aides have reported that defense contractors seeking help from their congressman on dealings with the Navy have cautioned: “Be careful--don’t get Lehman mad at us.”

Sweeping Investigation

When the Naval Materiel Command ceased to exist in the fall of 1985, key procurement activities fell to Lehman’s assistant, Melvyn R. Paisley. It was his two-year supervision of this procurement operation that is a primary focus of what is being called the most sweeping federal investigation of fraud, bribery and leaks of classified information in Pentagon history.

In addition, during Paisley’s tenure, former Defense Secretary Caspar W. Weinberger was warned that defense contractors had a “direct pipeline” to classified Pentagon budget documents through “leakers” in Lehman’s office, according to a Defense Department report disclosed in federal court. And sources say investigators are pursuing information that Lehman may have warned Paisley that his phones were being tapped.

One former high-ranking Navy officer, now a defense consultant, defended Lehman’s efforts to streamline the naval procurement process.

‘He Wanted Expediters’

“John came in with his agenda, the 600-ship Navy, and he confronted a system that in his view was all screwed up,” the former officer said. “He wanted expediters . . . to get things done. He wanted people to help him and that’s why he turned to Paisley.”

Lehman’s association with Paisley goes back many years. The Boeing Co., where Paisley was an executive, once hired Lehman as a consultant. After Lehman became secretary of the Navy, he hired Paisley to be his assistant secretary for research, engineering and systems, a position in which Paisley was to influence the Navy’s choice of weapons systems and who built them.

Paisley’s technical expertise, however, was challenged in the Pentagon and the defense industry.

Now FBI search warrants and investigative sources are questioning the propriety of the Navy procurement process under Lehman’s stewardship, which ended last year.

Lehman has repeatedly refused to comment on the case but one defense consultant said the former Navy secretary would not “rely on dishonesty.”

‘A Lot of Integrity’

“He’s tough, ruthless; he can be vindictive, but he’s got a lot of integrity,” the consultant said.

Even in defense of Lehman, however, the consultant conceded that he was “a hard-driving secretary of the Navy” who wanted things done and told his underlings to get results and, as a result, may have “created an environment where it’s easy to stray from the straight and narrow.”

In a more blunt assessment, former Assistant Defense Secretary Lawrence J. Korb called Lehman’s procurement systems “bureaucracy run amok.” Korb, one of Lehman’s harshest critics, said in an ABC interview Sunday that the Navy was “making its own procurement rules” and that Lehman would circumvent Defense Department efforts to rein him in by going to allies in Congress.

Lehman, 45, may have learned some of his skills as a bureaucratic infighter while serving as a deputy to Henry A. Kissinger on the National Security Council. He later earned support of conservative Republicans with articulate attacks on the Jimmy Carter Administration, calling it soft on defense. In 1980, he helped draft a GOP platform that endorsed a 600-ship Navy.

Directed Major Expansion

He won the Navy secretary’s job at the age of 38, despite strong opposition based on his youth and abrasive personality. But before his 1987 retirement, Lehman not only succeeded in modernizing the Navy, but also in directing the only major expansion among the military branches. And he came very close to achieving his 600-ship goal.

Naval analyst Norman Polmar has called Lehman “the most influential secretary of the Navy since James V. Forrestal” in the Franklin D. Roosevelt Administration.

Lehman, who has degrees in international relations and is now a Wall Street financial consultant, continues to have political ambitions. He is a defense adviser to the George Bush campaign and has been mentioned as a possible secretary of defense in a Bush Administration.

His supporters, however, fear that the Pentagon fraud scandal will hurt him.

“Lehman has a lot of political enemies,” one source says, “and there are a lot of people who want to pin this on him.”

Staff writer John M. Broder contributed to this story.