Workers Cry as Firm Closes in Defense Probe

Under a broiling sun, Linda Eckman fought back tears Friday as she and other employees gathered in a parking lot outside Armtec Inc. to pick up their last paychecks.

“It doesn’t hardly seem fair. We’ve done nothing wrong,” said Eckman, a single mother of two children who only recently got off welfare rolls. “But we got caught up in all this Pentagon political stuff, and now it’s us, the little people, who are being ground under.”

For weeks now, Armtec, a small defense subcontractor, has been at the center of the federal investigation into Pentagon procurement fraud.

On Wednesday, as investigators continued to look into whether the company might have been a conduit for illegal payments to federal officials, Armtec was abruptly shut down. Executives of the giant Unisys Corp., which contracted for virtually all of the work done at Armtec, had notified Armtec that they would no longer do business with the company.

The action triggered indignant protests from Armtec officers and Rep. Bill Chappell Jr.(D-Fla.), who helped bring the firm to his district and who has denied receiving any improper benefits funneled through it.

But there is no solace for the company’s 89 employees, many of them single mothers, innocent victims of the widening fraud probe.

“Maybe this whole thing was too good to be true,” said worker Diane Broadway, a mother of three children, who walked by and put her arm around Eckman. “Whoever thought this little town would get so much attention?”

Boost for Small Town

When Armtec opened its doors in November, 1986, it was a welcome boost for Palatka, a nondescript community of 11,000 about 45 miles south of Jacksonville. For years, the city has had a sluggish economy and no local amenities to compete for tourist dollars.

The firm made wiring assemblies for a shipboard electronic defense system manufactured for the Defense Department by a Unisys Corp. facility in Great Neck, N. Y. The work paid little more than $4 an hour, but Armtec distinguished itself in the community by offering generous medical insurance benefits and paid vacations for its employees.

“In a little town like Palatka, it’s big news when a company like this comes in and offers those kind of benefits, especially for a work force that is not highly skilled,” Mayor Tim Smith said.

‘It Made People Feel Good’

” . . . They made a big difference to the women who found jobs, many of them for the first time in their lives. It made people feel good about themselves,” he said.

But then the Pentagon procurement scandal broke into the open, and life at Armtec changed overnight.

On June 14, about 50 FBI agents raided the company’s one-story assembly building and carted off hundreds of files, accounting slips and payroll records. At about the same time, teams of investigators were conducting searches at 43 other homes, offices and firms around the country.

Sources have said that, based in part on wiretapped conversations among defense industry figures, federal investigators suspect that some money paid by Unisys to Armtec may have been improperly funneled to government officials with influence over the awarding of U.S. weapons system contracts.

Federal officials have said that Chappell, the chairman of the House Appropriations Committee’s defense appropriations subcommittee, is not considered a target of the probe. However, they have acknowledged that they are examining his relationship with several former Unisys executives and Armtec’s founders.

$100,000 Invested in Firm

They include William W. Roberts, retired Unisys executive and Chappell friend who helped establish Armtec and located it in Chappell’s district at the congressman’s request; Charles F. Gardner, a Unisys vice president involved in awarding the wiring assembly contract to the firm, and defense consultant William M. Galvin, who provided a large share of the original $100,000 invested in the company.

The offices of Gardner and Galvin were searched by federal agents last June. A grand jury in Alexandria, Va., has begun reviewing evidence and testimony in the extensive investigation.

Chappell has strongly denied any wrongdoing, saying he was proud to bring a company like Armtec to his district. On Thursday, Chappell said he was “tremendously disappointed” by the plant closing.

“I am hoping that it (the shutdown) will be short-lived,” he said, adding: “My heart goes out to all those people who lost their jobs.”

One other small defense contractor caught up in the investigation also has shut down this summer, but executives of that plant, Whittaker Command Control Systems of Washington County, Ark., have said the 30 layoffs had been planned previously and were not related to the probe.

On Friday, Roberts, Armtec’s president, refused to make a statement. But Robin Argoe, the firm’s assistant controller, insisted that the company had done nothing wrong.

‘Definitely Outrageous’

Suggestions that funds may have been improperly funneled through Armtec are “absolutely wrong . . . it’s definitely outrageous,” she said, adding that Unisys was attempting to shift the focus away from its own operations and turn Armtec into a “scapegoat.”

For their part, Unisys executives said that they had permanently suspended payments to Armtec. Unisys said it based its decision in part on an internal audit that examined the relationship between Armtec and current and former Unisys officers.

Unisys has announced that it is searching for a new subcontractor to manufacture the wiring assemblies for its electronic warfare system.

As for Armtec’s employees, a Unisys spokesman said the firm was putting together plans to “try to help the fired employees as much as possible, to lessen the impact on them.”

On Friday, Armtec workers greeted that pledge with skepticism.

“Who the hell are they kidding?” 21-year-old Valerie Offard asked. “We need jobs today, not in the future. Does anyone care about that?”

‘Top-Notch Solderers’

Juanita Long vigorously agreed. Armtec had enabled “a lot of girls to go from waitressing to being top-notch solderers,” she said proudly, and “now it’s like we’re nobody’s business anymore.”

As they stood for several hours outside Armtec waiting to pick up their checks, many of the women wept openly in one another’s arms. Most said they would look for new jobs but conceded that it would be tough to find equivalent positions--including medical benefits--in a remote little town that has one of northeast Florida’s highest unemployment rates.

A few workers, like Eckman, insisted they would never go back on welfare, but they did not sound so sure as the day wore on. Others wondered how they would make their next car payments and if they would be able to afford day care.

“Tell me just what I’m supposed to do,” Eckman said, swatting a swarm of mosquitoes around her head. “I tried to work myself up from the bottom, but now I’m shot down. I’m a victim of something I don’t understand.”

The women waited from 9 a.m. to about 2:30 p.m. before their checks finally arrived. They vowed to keep in touch with one another and expressed a defiant solidarity throughout the day. And there were some angry discussions, especially on the subject of the politicians or officials who might have been involved in the suspected fraud.

Woman Faints

But the heat began to take its toll, and Betty Hinshaw suddenly fainted. She was taken away in an ambulance, although paramedics indicated that she was not seriously hurt.

The women watched in silence as Hinshaw was driven away; but, after the ambulance had departed, a few of them began to weep.

“It’s OK, honey,” assembly technician Judy Lewis said, putting her arms around a fellow worker. “It’s OK, you’ve just got to be strong.”