Defense Contracts Worth ‘Tens of Billions’ Probed

U.S. Atty. Henry E. Hudson, who heads the current investigation of Pentagon corruption in weapons contracting, told congressional leaders Wednesday that he is looking into illegal dealings among Pentagon officials, defense contractors and consultants on as many as 100 contracts involving “tens of billions” of dollars over two years.

Although other federal law enforcement officials have identified two House members implicated in the massive inquiry known by the code name “Ill Winds,” those briefed by Hudson said they were assured that the inquiry is not directed at anyone in Congress.

“This investigation at this point has not produced any subpoenas, search warrants or wiretaps directed at any member of Congress,” House Speaker Jim Wright (D-Tex.) declared.

Hudson’s closed meetings with House and Senate leaders yielded the fullest description to date of the breadth of the unfolding Pentagon inquiry, which is viewed by Democrats and Republicans alike as a potential issue in the November presidential election.

Congressional leaders appeared genuinely surprised by what they learned from Hudson. “I think we have a substantial scandal on our hands,” said Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee.

Dingell said Hudson disclosed that he is looking at between 75 and 100 contracts let by the Defense Department over a two-year period. Although the exact dollar value of the contracts is not known, he said, Hudson estimated it at “tens of billions of dollars.”

According to Wright, the investigation centers on three distinct types of illegal activity: the sale of proprietary government information by consultants to contractors, the manipulation of bid specifications to favor certain contractors and collusive bidding by contractors.

None of the contractors, consultants or Pentagon officials who have been served search warrants in the investigation were named by Hudson during the briefings, according to those who attended. Rep. Les Aspin (D-Wis.), chairman of the House Armed Services Committee, which oversees the Pentagon, said the inquiry is directed at between 25 and 50 consultants.

Focus on Consultant

One of the consultants believed to be under investigation is William Galvin, who has worked for several major companies including Unisys Corp. and United Technologies Corp. On Wednesday, it was announced that Galvin’s daughter, Joan, had been relieved of her duties as a defense aide to Rep. Andy Ireland (R-Fla.), a member of the House Armed Services Committee. A spokesman for Ireland said she would continue to handle other issues, however.

Hudson told reporters after the briefing for House members that he expects the investigation to yield indictments before the end of the year, but Dingell recalled that the prosecutor had also commented that indictments could possibly be returned in two months.

For members of Congress who attended the briefing, however, Hudson’s most important disclosure was that none of their colleagues had been singled out for subpoenas, search warrants or wiretaps--a fact that was unanimously hailed as good news.

“The investigation is not directed at any member of Congress,” Dingell declared.

‘Reprehensible’ Leaks

According to Wright, Hudson described as “reprehensible” the news leaks that have implicated a number of House members in the investigation. “He said it was deeply disturbing to him that they (the leaks) did not come from his office and that if he could identify the individual or individuals guilty of perpetrating this malicious leaking, he would go after them with hammer and tongs,” Wright added.

The Times has reported that Reps. Bill Chappell Jr. (D-Fla.) and Roy Dyson (D-Md.) are possible subjects of the inquiry. Other newspapers, wire services and television networks have mentioned a number of other members of Congress in the scandal.

House Democratic leaders such as Rep. Tony Coelho (D-Merced), the assistant majority leader, have suggested that Reagan Administration officials were leaking the names of House Democrats in an effort to draw public attention away from the alleged involvement of top Administration officials.

Two Inquiries Planned

Both the House and Senate Armed Services committees are planning to conduct their own inquiries into the contracting scandal and Dingell said his committee would revive an earlier investigation of unauthorized use of classified documents by defense contractors. He said Defense Secretary Caspar W. Weinberger had never responded to the committee’s request for a Pentagon investigation of the matter.

Sen. Strom Thurmond (R-S.C.), a member of the Armed Services Committee, announced that he had written letters to Defense Secretary Frank C. Carlucci and Atty. Gen. Edwin Meese III on Wednesday recommending that the Administration suspend all government contracts proved to have been obtained by illegal means. In addition, he said, the government should impose fines or penalties and reopen the contracts to competitive bidding.

‘Affront to Democracy’

“We should not hesitate to throw the book at any individuals engaged in these heinous actions that are nothing short of an affront to our system of democracy,” Thurmond added.

In a related development, it was learned that Hudson has shelved plans to make public affidavits filed by FBI agents to obtain court permission for searches they conducted of 38 offices and homes in 12 states last week.

Hudson had said at a press conference on Monday that he hoped to unseal by the end of this week the affidavits, which describe in detail the government’s theory of the weapons procurement corruption.

But a source familiar with Hudson’s change of mind said that more than one person involved in the alleged scheme has signaled willingness to cooperate with FBI agents and that disseminating the government’s knowledge--and lack of knowledge--could hamper this key phase of the investigation.