Packard Likens Arms Buying to 'Iran Bazaar'

Times Staff Writer

The nation's weapons procurement system is so corrupt and complex that it operates like "an Iranian bazaar," former Undersecretary of Defense David Packard said at a congressional hearing Wednesday.

"One could do just as good a job in awarding the major contracts by putting the names of qualified bidders on the wall and throwing darts. This would also save a lot of time and money," he said in testimony before the Senate Armed Services Committee.

Packard, who is widely respected in government and industry, headed a presidential commission appointed two years ago to recommend reforms in the Defense Department's business practices. Although some of his proposals have been implemented, he cited the need to "get some common sense back into the whole process."

Surprisingly Harsh Remarks

In surprisingly harsh remarks before the Senate panel, Packard said the weapons contracting process involves "literally tons of paper work, describing how the bidder would meet a bunch of 'Mickey Mouse' requirements that have absolutely nothing to do with doing the job right."

Packard berated a defense industry that he said "deliberately" underestimates costs and schedules and added that the 150,000-person Pentagon procurement bureaucracy is so bloated that it should be slashed immediately by 20%.

In addition, he chided meddlesome lawmakers who use taxpayers' dollars to further their own interests.

Packard upbraided Adm. William J. Crowe Jr., who, as chairman of the Joint Chiefs of Staff, is the nation's highest-ranking military officer, for not imposing discipline on the military services, which "promote their individual strategies and their pet weapons" at the expense of a unified national strategy.

Packard, a founder and billionaire chairman of Hewlett-Packard, the Palo Alto, Calif., computer firm, has been asked by Defense Secretary Frank C. Carlucci to help monitor the unfolding Pentagon fraud and bribery scandal involving weapons buying.

The feisty 76-year-old California businessman reserved some of his harshest criticism for Congress itself, which he said indulges in the "selfish" and "disgraceful" practice of adding funds to the Pentagon's budget for weapons that are not wanted by the military services.

Wants 2-Year Budgets

Echoing remarks made by Carlucci to a House committee on Tuesday, Packard urged Congress to streamline the process by which it approves the military budget and to approve Pentagon budgets every two years instead of annually.

Congress' complex budget-approval procedure, added to the multistage process by which the Pentagon generates military budget requests, tempts defense contractors with 24 "intervention points" at which they can plead their cases, Carlucci had told the House Armed Services Committee.

The widespread congressional practice of adding money to the Pentagon budget "is using taxpayers' money specifically for the personal benefit of the members of Congress, and it is thus fundamentally unethical behavior," Packard said Wednesday.

"How can the Congress expect ethical behavior from the (Defense Department) and the defense industry when it sets such a bad example of ethical behavior at the top?" he asked.

Packard warned also that the Pentagon's growing emphasis on promoting competition in the awarding of weapons contracts "has put price alone far too high" in the Pentagon's procurement decisions and placed some of the nation's major defense firms at risk of failure.

Bankruptcies Feared

New Pentagon procurement policies have made U.S. defense contractors liable for roughly $10 billion in new expenses, Packard said. The burden of those new policies may push many major defense contractors to the brink of financial ruin within several years, forcing the federal government either to bail out the failing companies or lose their manufacturing services for good, Packard warned.

"A much simpler option would be to go back to the contracting policies that have been used in the past," including contracts that allow defense firms to bill the Pentagon for early research and development charges and for unexpected growth in the cost of building weapons, Packard said.

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