Public Works Center Is in the Public Eye : Scandal: The maintenance arm of the Navy has been rocked by bribery indictments, but officials say the problem is not widespread.

Only one arm of the Navy is prepared to provide electricity to a docked destroyer, exterminate cockroaches in 6,800 San Diego military homes, pave roads or rent red, white and blue bunting.

As the maintenance crew of the Navy, the Public Works Center expects none of the spotlight that occasionally bathes its more glamorous brethren who man the ships and fly the planes.

But in recent months, the Navy center has been in the news. And it hasn’t been good.

Four civilian Navy employees pleaded guilty to accepting gifts and another pleaded guilty to soliciting bribes, after being indicted by a federal grand jury. Three companies and three salesmen who offered gifts to Navy employees in hopes of wooing more military purchases were also indicted.

And officials say at least one more company and another individual will be indicted in the months ahead.

“People are people and we all make mistakes,” said Capt. Timothy Kelley, commanding officer of the San Diego Public Works Center, the Navy’s largest, with an annual budget of $366 million. “They did something wrong and they were caught. I believe it’s not widespread.”

Dennis Usrey, regional director of the Naval Investigative Service, which conducted a one-year investigation of the center, said: “PWC has helped us all along. They’ve taken an aggressive approach to ferreting out any improprieties.”

San Diego’s center made 26,412 purchases for maintenance repairs at a cost of almost $21 million in fiscal 1989, said Michael Stames, an assistant senior activity civil engineer. Figures on the amount spent by the air-conditioning repair department, the one involved in the indictment, were unavailable, but it “is very small in comparison to the total,” he said.

The center, located at the 32nd Street Naval Station, employs 2,200 people. Of those, 13 are officers and the rest are civilians.

To prevent its employees from being vulnerable to bribery, the center is rigorously enforcing its existing regulations that prohibit an individual who requests supplies from picking them up--narrowing the opportunity for a company to reward people for their purchases, Kelley said. The center also has internal auditors who review purchases and monitor a trail of paper left by the forms required to make a purchase. These auditors would notice, for instance, if any one company was selling an inordinate share of goods to the Navy, Kelley said.

As an extra precaution against bribery, the center also uses undercover agents to pose as employees and vendors, he said.

“It’s the only way you can run a business,” Kelley said. “We go the extra step. What we do is no different than any large company in town.”

Kelley is quick to point out that the center itself blew the whistle on the 15-man air-conditioning repair department, which belongs to the 900-person maintenance crew. The one-year investigation of the air-conditioning repair department began in February, 1988, after a center employee notified his supervisor after noticing that some colleagues were accepting gifts from vendors. For three months beginning in May, 1988, an undercover agent worked in the department.

As the end of the investigation nears, Assistant U.S. Atty. George Hardy has indicted three companies that supply the center with parts, tools and chemicals, and three salesmen for offering trips and merchandise to employees in the air-conditioning and refrigeration equipment maintenance department in 1987 and ’88. Indicted were Jeyco Products Inc. of San Diego and its salesman, John D. Johnson; Polytech Industries of Los Angeles and its salesman, Harold Irwin Levine, and Las Palmas Distributors Inc. of Escondido and its salesman, Jacob Lubarsky.

Officials with the three companies declined to comment. The companies have not yet entered pleas.

“In the commercial field, there’s a lot of ‘you scratch my back and I’ll give you a trinket.’ But in government, you can’t take anything at all,” said Michael Bourke, assistant regional director for Naval Investigative Service.

The three indicted companies allegedly offered goods to center employees who recommended their products. The gifts included televisions, videocassette recorders, microwave ovens, vacuum cleaners and tools. Federal prosecutors allege in the indictment that one company, Las Palmas, also offered a trip to Hawaii.

Of the four Navy repair personnel--all civilians--three have since retired or resigned, Kelley said. The four pleaded guilty to misdemeanors or charges of receiving unlawful salaries, said Hardy, the assistant U.S. attorney. They were sentenced Sept. 7 to probation of two or three years and fines of $1,000 or $2,000. They are: Gary L. Morris, Samuel Turner, Clinton A. Pringle and Ginger E. Strouse.

In a different case this fall, officials alleged that a purchasing agent in the center’s transportation department solicited bribes. Rodrigo Plata Montefalcon pleaded guilty to demanding and receiving money and a share in future purchases from potential government contractors. Sentencing is scheduled for next month.

“The cases are similar in that government employees violated the public trust and used their jobs to obtain goods or money,” said Ernie Simon, special agent in charge of the regional fraud unit at Naval Investigative Service. “The overriding factor is greed.”

Most employees in the air-conditioning repair department earn no more than $35,000 annually, and the freebies were alluring. The flow of gifts reportedly ran unchecked.

“It was pretty easy because it’s pretty common,” said one former employee, who was recently indicted and agreed to an interview on the condition that his name not be used. “It was getting out of control.”

The repairman said paper work requirements had gotten so slack that sometimes salesmen would fill out forms for him and bring them to the supervisor. He estimated that on a monthly basis, he probably spent about $2,000 in purchasing chemicals and parts.

Vendors frequently arrived on Navy bases with gifts of binoculars, hats, T-shirts, mugs and videocassette recorders, and they usually offered to take repairmen out to lunch, he said. The interviewed repairman said he declined most gifts, but could not resist the offer of a $500 videocassette re order.

“The salesman finally offered me something I couldn’t refuse. I didn’t need the little gifts and I knew they were illegal,” he said. “Sometimes it’s hard to say no.”

For Navy officials, the news of the scandal was disheartening, especially because they had worked in recent years to improve the center’s reputation.

Public Works Centers were formed after World War II to serve nine Navy shore stations from Florida to the Philippines. The nine centers now have a yearly budget of more than $1 billion and employ 15,000 people.

Each center builds and repairs roads, maintains housing and buildings, provides electricity, collects trash and disposes of hazardous waste, and services the cars, trucks and heavy equipment used to repair ships. And all of them, according to a center brochure, battle an image of being too costly and incompetent.

“PWCs acquired a reputation of being overpriced and poorly managed, and disparaging anecdotes about them became Navy lore,” the brochure says.

During the mid-1980s, center officials began working with the Navy Industrial Improvement Program to streamline and improve their repair services.

And many centers now boast dramatic progress. For repairs, the center in Pearl Harbor cut its emergency response time from 6.3 to 1.3 days. In Yokosuka, the response time to routine service requests was cut from 8.5 to 4.4 days. The Subic Bay center reduced its response time from 298 to 75 days for major work that costs more than $25,000.

At the San Diego center, which serves bases from Miramar to Imperial Beach, repairs take slightly longer than the average.

In 1985, the nine centers took an average of 2.3 days to respond to a request for an emergency repair; three years later, the response time had dropped to 1.5 days. The San Diego center takes 1.7 days to respond to an emergency request.

While the centers take an average of 7.1 days to respond for “routine repairs,” the San Diego center takes 9.5. For minor work, or repairs that cost less than $10,000, the average center takes 43.8 days; San Diego takes 61.

“Right now we are a little slower,” Kelley said. “It’s more a result of the tremendous volume of work we have in the system.”

Maintenance work accounts for almost one-third of the San Diego center’s annual budget, or about $100 million. Only providing electricity, which nets about $150 million yearly, generates more money.

San Diego’s center has jumped ahead in the energy field, according to Kelley. This fall, it received a federal award for reducing the San Diego-based Navy’s energy consumption by almost 13% over a three-year period, which netted a savings of $5.5 million.

The center was able to do that by installing co-generation systems, or power plants; launching a program to reduce energy use during expensive rate hours, and starting a program to trap steam. It also renegotiated its rates with San Diego Gas & Electric Co.

According to Kelley, the center is also increasingly able to respond not only to the needs of its customers but to disasters such as the Bay Area earthquake, to which it sent 25 mechanics and pipe fitters, as well as backhoes and other equipment to help with repairs at Northern California bases.

“We set higher standards and we demand them,” Kelley said. “What happened was a black-and-white case of another human being making a terrible mistake.”