3 Firms Deny Using Illegal Defense Data

Three of the 16 defense contractors involved in the Defense Department procurement investigation have formally assured the government that they are not using illegal information to win defense contracts, a Pentagon official said here Friday.

Eleanor R. Spector, deputy assistant secretary of defense for procurement, would not identify the three firms but told a meeting of the Air Force Assn. that none of the 16 companies have “officially refused” to sign the required documents.

May Revise Documents

However, some of the 16 contractors “are having problems with some of (the information) we asked for,” Spector said, and, as a result, the Defense Department probably will revise the documents.

Federal agents searched the premises of 16 companies on June 14 in connection with the procurement investigation, and a month later the government established a “certification” requirement for the companies. The Defense Department’s goal was to gain assurances that the companies have not used “illegally or improperly” obtained information to win contracts, Spector said.

Another goal was to reduce the likelihood of “awarding contracts that we might have to reopen later on,” Spector said. “That’s a terribly cumbersome and difficult proceeding.”

Firms Could Be Banned

Companies whose officers refuse to sign the documents will be prohibited from bidding on future defense contracts worth more than $100,000, Spector said. The certification action permits the Defense Department to force companies to return profits if they are proved to have obtained an award illegally.

The investigation stems from the government’s contention that defense industry consultants have bribed Pentagon employees to obtain inside information that was then used by military and aerospace contractors to win multimillion-dollar contracts.

The certification program “does not require the admission that you illegally received anything,” Spector said. “Nobody is being asked to confess to illegal behavior.”

McDonnell Douglas Corp., Northrop Corp., Teledyne Electronics, United Technologies Corp., Cubic Corp. and Varian Associates are among the 16 companies that must certify that they have not received illegal information.

Must Describe Probes

Certification documents must be signed by executives who are “at a level no more than one (step) below the president,” Spector said Friday. Those documents must also describe the internal investigations conducted to gather information for the certification program.

In a related action, Spector said that Secretary of Defense Frank C. Carlucci recently sent letters to executives of the 200 largest defense contractors, which account for 75% of the Defense Department’s procurement budget. Carlucci called for the establishment of “effective” policies that will eliminate “improper business practices,” Spector said.