U.S. Billed for Tailhook Junket by McDonnell : Defense: But the contractor switched to a company-paid account after reports of sexual harassment by Navy officers.

McDonnell Douglas Corp. sent more than 30 employees, including one of its senior executives, to the Navy’s 1991 Tailhook convention and billed the Defense Department for the expenses--including golf outings, tennis tournaments, X-rated movies and employee salaries for the four-day event.

But six weeks later, when reports began to emerge that scores of women had been sexually assaulted or harassed by Naval officers at the Tailhook event, McDonnell switched the billing to a company-paid account, according to company expense reports obtained by The Times.

The General Accounting Office, which audited McDonnell’s Tailhook expenses, is expected to assert today at a House Energy and Commerce Committee hearing that the charges were part of $2 billion in improper billings to so-called overhead accounts by government contractors in fiscal 1991.

A McDonnell spokesman said Tuesday that the St. Louis-based firm, the nation’s largest defense contractor, would have no comment on the disclosures until after the hearing.

The GAO audited $2.6 million of McDonnell’s corporate overhead charges billed to the government and found that 64%, or $1.5 million, were clearly not allowable under government standards or were open to question. (Overhead relates to general business expenses that are spread across all of a defense firm’s contracts.)

The Tailhook junket, which cost about $60,000, is just one example of those allegedly improper charges in 1991--a time when declining Pentagon budgets were forcing cancellations of major weapons programs and reductions in military manpower.

No allegation has ever been made and there is no evidence that any McDonnell Douglas employee or any other contractor employee participated in the sexual assaults on women that made the Tailhook event so notorious, an official in the Pentagon’s inspector general office said Tuesday.

The audit comes eight years after a similar examination of defense company overhead charges uncovered substantial abuse.

In the mid-1980s, an executive for General Dynamics Corp. billed the Pentagon for the cost of lodging his dog, Furston, at a kennel while he attended a meeting at a vacation resort, also at government expense. The incident became a symbol of defense industry perks at taxpayer expense.

As a result of those disclosures, reforms were later enacted that were intended to tighten up practices, eliminating charges for country club memberships and certain entertainment expenses. Pentagon auditors increased their scrutiny on overhead accounts and company officials received additional training.

But the new GAO audit, requested by Rep. John D. Dingell (D-Mich.), chairman of the committee, has raised questions about exactly how much practices have actually changed.

In a statement issued Tuesday, Dingell said, “After abuses were exposed in the 1980s, it is disappointing that contractors are continuing to bill the taxpayers for substantial amounts of questionable costs.”

McDonnell’s charges for Tailhook came in the same year that the aerospace company was pleading to the Pentagon for a $1-billion bailout. That request was rejected early in the year, but the company continued to benefit from expedited contract payments in 1991.

The McDonnell expense reports show that the firm’s director of Navy programs billed a $630 golf outing as a “business conference” expense. The report does not say whom he entertained, but the game required the rental of two golf carts. The auditors also discovered that some of the McDonnell officials had viewed X-rated movies in their hotel rooms at taxpayer expense. The auditors were able to determine that the movies were X-rated because the hotel charged $9.95 for those, while other movies cost $7.95, according to committee staff members.

Both the GAO and the Pentagon audit agency subsequently ruled that the Tailhook expenses could not be legitimately billed to the government. A number of contractors attended the convention, but so far only McDonnell’s billings have been audited.

Those bills, submitted a few days after the convention ended Sept. 8, 1991, contained a code for an overhead account that would be billed to the Defense Department. Then, on Dec. 11, company officials crossed out the account code and wrote a new number related to a company-paid account.