Navy Suspends Official Indicted in Fraud Case

The Navy on Tuesday suspended procurement specialist Stuart E. Berlin without pay for his alleged role in providing inside information about Navy contracts to a number of consultants and companies implicated in the Pentagon fraud scandal.

Berlin, a $74,304-a-year electronics engineer in the Naval Air Systems Command, is the first Pentagon official indicted in the ongoing investigation into corruption in the military procurement program.

According to prosecutors, Berlin was the “silent partner” of several defense industry consultants, providing them with confidential data on Navy electronics programs in exchange for periodic cash payments. Berlin’s lawyer has denied any wrongdoing by his client.

Berlin is the second Navy employee suspended without pay as a result of allegations in the sweeping “Ill Wind” investigation. George Stone, a contract officer in the Navy’s Space and Naval Warfare Systems Command, was suspended last July after a federal search warrant stated that he sold confidential information to a consultant who had served with him in the Navy.

Others to Face Action

The Pentagon also announced Tuesday that it was initiating action against a number of consultants and defense contractors as a result of information contained in indictments and plea agreements filed in federal court last Friday.

Among those identified as now facing action is consultant Melvyn Paisley, the former assistant secretary of the Navy and a key figure in the government’s investigation.

The firms and individuals are being referred to committees of the Navy, Air Force and Defense Logistics Agency, which are being asked to determine whether their actions in attempting to win Pentagon contracts warrant suspension or a permanent ban, called debarment, from future government business.

The actions follow procedures established after the scandal broke last June for dealing with Pentagon officials and outside contractors accused of wrongdoing.

Several other firms and persons tied to the investigation in recently released search-warrant affidavits also will face now Pentagon scrutiny, including the electronics subsidiary of Teledyne Inc.; Hazeltine Inc., and a unit of Unisys Corp.

Teledyne’s electronics unit was named in the indictments returned by a federal grand jury in Alexandria, Va., last week, which accused it of bribery and fraud in the competition for electronics gear for the Navy and Air Force. Hazeltine pleaded guilty to lesser charges and agreed to pay $1.9 million in fines and costs.

Northrop Declines Comment

Prosecutors alleged in a search warrant unsealed last week that a Unisys unit employed Washington consultants who made improper payments to Pentagon officials in exchange for confidential bidding information.

Two divisions of Northrop Corp.--the Precision Products division and Ventura division Aircraft Group--and several employees have been referred to the Air Force’s chief procurement officer for possible disciplinary action stemming from allegations in a search-warrant affidavit of improper payments to consultants.

A Northrop official said that the company would have no immediate comment.

The Air Force also will look at new data contained in the search warrants to determine whether any action should be taken against two other electronics concerns, Loral Corp. and Cubic Corp.

All the firms had been named earlier in connection with the investigation. Tuesday’s actions marked the first time that the Pentagon acknowledged that it was formally reviewing the companies’ behavior in bidding for contracts.

The Pentagon also said that it was reviewing contracts with a number of firms mentioned in affidavits to determine whether the government had been improperly charged for payments to consultants. The Defense Contract Audit Agency, which will conduct the review, said last year that a study of a dozen major defense contractors disclosed that millions of dollars in consulting fees were being improperly submitted for government reimbursement.

The firms that face this review include Aydin Corp., an electronics firm based in Horsham, Pa.; Goodyear Tire & Rubber Co.; Gould Inc.; a unit of Unisys, and Westinghouse Electric Corp.

The companies were named in passing in a search warrant made public last week.