Pentagon Official Rejects Demands to Bar Northrop : Defense: The procurement chief admits to a House panel that he has never reviewed evidence from many federal probes.

The Defense Department’s procurement chief rejected demands by a congressional panel Friday to bar Northrop from Pentagon business but admitted under intense and hostile questioning that he has never reviewed the evidence gathered in more than a half dozen federal investigations against the contractor.

In a hearing before a subcommittee of the House Energy and Commerce Committee, several members called for Northrop’s debarment. Their cries followed a Justice Department recommendation, which surfaced Thursday, that Northrop be excluded from future military contracts because of its criminal fraud conviction for faking tests involving nuclear cruise missiles.

During Friday’s grueling, six-hour session, the committee also:

Excoriated Northrop Chairman Thomas V. Jones for refusing to appear before the committee and for saying he would assert his Fifth Amendment rights against self-incrimination if summoned to testify. A spokesman said Jones would invoke the Fifth Amendment only concerning questionable payments the company made to South Korean power brokers while trying to sell its F-20 fighter to that country’s government.

Attacked Jones personally for his 1974 conviction for the secret funneling of illegal corporate contributions to political campaigns.

Heard from a whistle-blower who for the first time publicly asserted he was fired after demanding that Northrop be more truthful in its reports on the costs of the B-2 bomber.

Northrop spokesman Tony Cantafio characterized the entire hearing as “a summer rerun of allegations and charges.” He said there is no case for debarring Northrop and instead said a suspension by the Air Force of one of the company’s divisions should be lifted.

Jones came under scathing attack for his criminal record and for his refusal to appear. Jones refused to appear “on the grounds that one of his several attorneys is in Africa,” said Rep. John Dingell (D-Mich.), committee chairman.

“In terms of a continuing criminal enterprise, the (Northrop) abuses start at the top,” Dingell charged. “Thomas V. Jones . . . is a convicted felon who admitted to such things as money laundering, illegal campaign contributions, providing hush money for the Watergate burglars, perjury before a grand jury, suborning the testimony of subordinates, as well as foreign bribery.”

Despite the committee’s seething anger about Northrop’s alleged abuses in its defense work, Under Secretary of Defense for Acquisition John A. Betti said his staff of Pentagon officials see “no evidence of misconduct in their day-to-day dealing with the company.”

But Betti later acknowledged that he was not aware the military services had repeatedly waived contract requirements in the cruise missile program after allegations arose that Northrop’s equipment was deficient and that Northrop was covering up the deficiencies.

Betti said he was also unaware of letters introduced in the hearing by Assistant U.S. Atty. William Fahey warning military officials that such waivers would harm the government’s case in the investigation of the faked testing. The waivers were granted anyway.

Committee members spent hours going through a litany of such evidence against the firm, asking Betti if he was aware of convictions, investigations and other damaging information. In most cases, Betti said no.

“You don’t know what your managers are doing, your managers don’t know what Northrop is doing, your costs are going up and you have criminal investigations going on,” Dingell said. “I am worried that no one knows what is going on.”

Despite the committee’s attacks, Betti, a former Ford Motor executive, said: “I don’t know of any action to debar the corporation. I have no reason to recommend it.”

In an interview, Betti said debarring a major defense contractor such as Northrop would raise new and difficult questions. “What would we do with the B-2? What would we do with the major programs if they were debarred?”

“The information I have is that Northrop is working diligently to fix the problems they have,” Betti said in the interview.

But Betti acknowledged to Dingell that he had never contacted the Justice Department until recent days, after talking with the committee staff about its concerns. Betti said he has never discussed the current criminal probe into the B-2 bomber program with the B-2 program manager.

But the views of the committee members were quite different.

“It is clear from the facts before us that the disbarment of Northrop is reasonable, responsible and required,” Rep. Gerry Sikorski (D-Minn.) said at the hearing.

Rep. Jim Slattery (D-Kan.) vowed: “I am not going to vote another dime for this corporation until Thomas Jones is gone. We will not tolerate people who won’t come before the Congress and . . . who threaten to exert their Fifth Amendment rights.”

Jones said in an affidavit to the committee that he would assert his Fifth Amendment right to not incriminate himself if forced to testify under oath.

Cantafio, the Northrop spokesman, said Jones has told the committee that he will be willing to testify in the future. He said that Jones’ lawyer is in Africa, but also that Jones’ daughter was recently diagnosed with a serious medical condition and is in the hospital.

Cantafio said Jones’ statement that he would invoke his Fifth Amendment right pertains only to questions about the Korean payments.

Two federal grand juries are investigating whether Northrop violated provisions of the U.S. Foreign Corrupt Practices Act by making payments to Korean intermediaries in hopes of influencing the government to buy F-20s.

The committee also heard testimony from Jean-Francois Troung, a former financial controller at Northrop’s B-2 bomber division in Pico Rivera.

Troung testified under oath that he was instructed by management at Northrop to falsify reports to the Air Force.

He said he was threatened with firing if his financial reports did not reflect well on the B-2 program. He cited two key examples of reports that were falsified. The company filed a quarterly “estimate at completion,” which provided the Air Force with a forecast of all future B-2 program costs, but the reports provided low estimates.

Secondly, Troung said problem analysis reports that supposedly evaluated the progress of the bomber program were fabricated by management.

In his prepared testimony, Troung said that when he refused to falsify his own reports, his manager falsified them for him.

Troung said the company misrepresented its costs in 1988 reports to the General Accounting Office. Troung was a GAO auditor before working at Northrop.

As one of eight financial controllers on the B-2 program, Troung said he never came in contact during a two-year period with Pentagon auditors or with the Pentagon’s plant representatives in Pico Rivera.

Troung finally told Northrop’s vice president of finance, Ken Berchtold, that he intended to resign unless Northrop reported the truth about “how out of control the B-2 finances were.”

Two days later, security agents locked his desk and walked him out of the plant. Troung alleged, “Northrop’s clear policy was to prevent the escape of negative information from Northrop to the government that would expose escalating costs and the lack of progress.”