Legal Expenses of Defense Firms

Your editorial (“Stop Picking Up the Tab; Legal Indemnification of Defense Contractors Is No Longer Justified,” March 31) raised a good point; that taxpayers should not have to pay legal expenses of private contractors working for the U.S. Department of Energy (DOE) where the taxpayers’ and the contractors’ interests are not the same.

I could not agree more wholeheartedly.

While the federal government has in the past offered complete indemnity from legal costs in order to attract private industry to perform certain national defense work for the department, that policy no longer exists.

New top-to-bottom accountability rule changes instituted by me last June will ensure that if a contractor makes a mistake, and the court rules against the contractor, the contractor, and not the taxpayer, will pay expenses incurred in its legal defense. This new accountability rule is in addition to the provisions of the Major Fraud Act of 1988, which also forbids the payment of legal expenses by a federal agency to a contractor if that contractor loses a suit brought by the government, and only permits a partial, but by no means certain, reimbursement if that contractor should win.

Under its recent plea agreement, Rockwell International is expressly forbidden from seeking reimbursement from DOE for any of its $18.5 million fine, as well as its legal and other expenses in defending the charges to which it pleaded guilty, that were sustained since Jan. 1, 1990. As to other expenses, the plea agreement permits Rockwell to seek, but in no way guarantees, reimbursement under its contracts with the government.

JAMES D. WATKINS

Secretary of Energy

Washington