Can’t Make Arms-Purchasing ‘Greed-Proof,’ Carlucci States

Defense Secretary Frank C. Carlucci said Monday that he is “most disturbed” by allegations of widespread fraud in the Pentagon’s weapons-buying system, but he warned against “hasty, piecemeal” changes to the system that might ultimately make matters worse.

“There is simply no way to devise a system that is greed-proof,” Carlucci said in his first public comments on the unfolding scandal.

May Reopen Contracts

The secretary said also that he will consider reopening any contracts tainted by fraud or payoffs when he has “sufficient evidence” of illegality.

Federal law enforcement agents have carried out 42 searches in the last two weeks at the Pentagon and offices of defense contractors and consultants across the country to gather evidence of fraud and bribery in the purchase of military equipment. The case has been described by authorities as the most sweeping investigation of defense contract corruption ever.

U.S. Atty. Henry E. Hudson, who is overseeing the investigation, has said he has evidence that 75 to 100 weapons contracts involving tens of billions of dollars were won as a result of bribes paid to Pentagon officials or collusion among defense contractors.

50 Consultants Targeted

Hudson has also said that as many as 50 industry consultants who act as middlemen between the Pentagon and arms makers are under scrutiny in the inquiry. Carlucci acknowledged that the Defense Department can do nothing to regulate the behavior of these consultants, many of whom are former Pentagon officials who market their access to top defense policy-makers.

“We do have a handle on consultants who work for us,” Carlucci said. “ . . . But we do not have any direct controls over the consultants who work for the defense contractors.”

Carlucci noted frequently in his remarks, delivered to the National Press Club in Washington, that the investigation is still in its early stages and that he is reluctant to discuss the charges in detail. He said he had been briefed twice on the investigation in the last two weeks, by Atty. Gen. Edwin Meese III and by Hudson.

Still Investigating

“One conclusion one can draw is that the process has not yet run its course, that they are still working on the investigatory phase,” Carlucci said. “There have, of course, been no indictments.”

Carlucci last week removed all sensitive contracting duties from six current Pentagon officials identified by the Justice Department as subjects of the investigation. He has taken no action against contractors or consultants named in the federal search warrants.

Carlucci defended the overall Pentagon procurement system, saying it had improved dramatically since President Reagan took office in 1981, although it still would benefit from further reforms such as rationalizing the budget process.

“But, if you have bank embezzlement, you don’t suddenly condemn the banking system,” he said. “You look at ways to deal with those who are culpable.”

He said business as usual would continue on Pentagon contracts that have fallen under scrutiny in the fraud investigation. According to search warrants served two weeks ago, investigators are looking for evidence that McDonnell Douglas Corp. may have improperly won the contract for the Navy’s advanced tactical aircraft and certain foreign sales of the company’s F-18 fighter.

Law enforcement officials believe also that United Technologies Corp. possessed sensitive bid data from rival General Electric Co. on jet engines the two firms were trying to sell to the military.

Can’t Slow Down Contracts

Carlucci said that “it would be premature for me to make a judgment on any contract. And, until we do, it’s important that all our business go forward. We have to worry about national security. If you begin to slow down contracts or stop them, in the absence of any evidence, then the costs escalate enormously.”

He has set up a panel to monitor the investigation and suggest changes in the procurement system, if needed. Former Defense Secretary Donald H. Rumsfeld and former Deputy Defense Secretary David Packard have agreed to serve on the commission, Carlucci said.