Pentagon Official Quits in A-12 Turmoil : Defense: Procurement chief Betti did not warn Cheney of a likely $1-billion cost overrun on the jet. Three Navy officers have been removed.

The Pentagon’s procurement chief, John A. Betti, resigned Wednesday amid intense criticism over his failure to warn Defense Secretary Dick Cheney that a $1-billion cost overrun was looming on the Navy A-12 attack jet and that the aircraft would be a year late.

Although Betti’s departure was officially characterized as a voluntary resignation, defense experts on Capitol Hill said it was a foregone conclusion that Betti had been fired for errors in judgment identified last week in a report issued by the defense inspector general.

The hasty exit by Betti is unlikely to be the end of the A-12 debacle, since Deputy Defense Secretary Donald J. Atwood has yet to complete a review of the matter and report to Cheney. Members of Congress are increasing their demands for a full probe that could threaten other Pentagon officials and put the entire A-12 program in jeopardy.

Betti, a former Ford Motor Co. executive, served as undersecretary of defense for acquisition since August, 1989, earning an annual salary of $96,600. He said he plans to return to a private sector job.

The inspector general report found that Betti had failed to notify Cheney that a member of his own staff had estimated that the A-12 program would overrun its budget by $1 billion. Instead, Betti passed on to Cheney “general assurances” that the program was in good shape, which came from the aircraft’s prime contractors, McDonnell Douglas and General Dynamics.

As a result, Cheney appeared before the House Armed Services Committee on April 26 to deliver the results of a comprehensive review of four major aircraft programs and portrayed the A-12 program as being in good condition.

Only five weeks later, however, Cheney was embarrassed when McDonnell Douglas and General Dynamics disclosed to the Pentagon that the A-12 program was headed for financial disaster and would be a year late.

A subsequent Navy investigation and the inspector general’s audit found that critical information about the program never reached Cheney. Three senior Navy officials were removed from their jobs last week.

In a letter to Betti released by the Pentagon, Cheney said he accepted Betti’s resignation “with the deepest regret” and praised him for “dedicated and successful efforts to strengthen the acquisition process.”

Betti said in a statement that he intended to return to the private sector and wanted to exit government service before a new ethics law becomes effective at the beginning of next year that would restrict his employment options. No mention was made in Betti’s statement or Cheney’s letter of the A-12 incident.

A senior Pentagon official said Wednesday that Betti’s departure was certainly linked to the A-12 incident, but he stopped short of saying that Betti was fired. He added that an unrelated reorganization of the procurement system that is under study could downgrade Betti’s job and leave him with less authority.

On Capitol Hill, however, the resignation was clearly viewed as Cheney’s ax falling over Betti.

“A lot of staffers on the Hill knew this was coming, but not this quickly,” said one key committee aide. “Cheney is positioning himself so that this looks like he is cleaning house after the disciplining of the three admirals last week.”

Meanwhile, McDonnell Douglas and General Dynamics are working on a revised cost estimate to complete the A-12 development, which many defense experts are worried will reveal another bombshell. The A-12 was supposed to cost a maximum of $4.78 billion, and the two companies have already indicated they will exceed that under their cost plus contracts by $1 billion.

The Navy report and the inspector general’s report both found that Gaylord Christle, a member of Betti’s staff, performed an independent cost analysis of the A-12 and found after only two days that the program was headed for a $1-billion overrun.

Betti told investigators for the inspector general that he considered Christle a “new kid on the block” in the A-12 program, since he had only recently been granted security clearance on the A-12.

Shortly after receiving Christle’s report, Betti called General Dynamics and McDonnell Douglas officials and discussed his concern about the A-12 cost with them. He then sent a memo to Cheney reporting the contractor’s views, according to the report.

“In our view, Mr. Betti erred in accepting those general assurances without insisting that the Navy and/or the contractor demonstrate the errors in Mr. Christle’s data or methodology, and he failed to exercise a necessary degree of skepticism,” the inspector general’s report said.

BACKGROUND

In one of the most severe actions in its history, the Navy said last week it would require Vice Adm. Richard C. Gentz, commander of the Naval Air Systems Command, to retire no later than Feb. 1. It also issued letters of censure against A-12 program executive officer Rear Adm. John F. Calvert and A-12 program manager Capt. Lawrence G. Elberfeld. The Navy said the officers failed to provide accurate information about the A-12’s problems.