First Known Commercial Fallout From Pentagon Probe : Norden Withdraws Bid for Military Contract
Norden Systems Inc., a leading candidate for a $120-million contract to build an air command and control system for the Marine Corps, has withdrawn from the competition amid allegations that a consultant for the company improperly obtained information about a competitor’s bids, The Times has learned.
Norden’s withdrawal from the competition for the Advanced Tactical Air Command Control is the first known commercial fallout from the widespread Pentagon weapons buying scandal.
The Navy, meanwhile, announced Thursday night that it was suspending action on eight contracts potentially worth $545 million while officials review the contents of court documents released in Dallas earlier Thursday. The documents, submitted by the FBI in support of search warrants allege that the contracts, including the one involving Norden, might be tainted by bribery or other wrongdoing.
No other Pentagon contracts have so far been affected by the investigation, a Defense Department spokesman said earlier Thursday.
“We are proceeding in a responsible manner,” said Fred Hoffman, deputy assistant secretary of defense. “If and when we receive evidence suggesting any contracts have been tainted, we will act as warranted. So far . . . we have received no such evidence.”
Norden, a Connecticut division of United Technologies, pulled out of the competition June 24--10 days after investigators disclosed that the company was among those implicated in the illegal sharing of classified or proprietary data among Pentagon employees, private consultants and defense industry contractors.
“We believe, at this point in time, that it is of paramount importance for the public as well as the government to have full confidence in the integrity of the . . . procurement process,” a Norden official wrote in a June 24 letter to a Navy contracting official.
“Given the background of the current investigation and that the relevant facts have not yet been developed, we have concluded that Norden Systems’ withdrawal from the . . . competition is the best course for us to follow.”
The letter states that Norden “would be pleased to reconsider its decision” to withdraw if the government were to delay a final decision on awarding the contract.
It was not known Thursday how many companies remained in the running for the contract, which involves construction of a high-tech portable shelter used near the battlefield to control Marine Corps aircraft in all kinds of weather. The FBI affidavit released in Dallas on Thursday said the value of the contract could reach $120 million.
The affidavit, based on wiretaps of defense industry consultants and others, said a Norden consultant obtained information in September, 1987, from defense consultant Mark C. Saunders about bids submitted by General Electric, Ford Aerospace, Scientific Applications International Corp., E-Systems, Comptek, LTV, Grumman, Unisys, and Litton.
Connected to Paisley
Other major defense contractors alleged to have been the recipients of inside information on competitive bids were making no moves to withdraw from procurement competitions.
John F. McDonnell, chairman and chief executive of St. Louis-based McDonnell Douglas, the nation’s biggest defense contractor, sent a letter to all the firm’s employees insisting that McDonnell-Douglas and its partner, General Dynamics, won the competition to build the Navy’s advanced tactical aircraft “fair and square.”
A search warrant served two weeks ago on McDonnell Douglas indicated that federal authorities were investigating alleged efforts by Melvyn R. Paisley, the former assistant Navy secretary, to “steer” the $4.38-billion project to the McDonnell Douglas-General Dynamics team.
