COMMENTS: Whistle-Blowing & Pentagon Fat
Rehfeld, Barry
The nation's military might is never more impressive than when the Pentagon is battling against those who criticize its efforts to rid the defense budget of waste, fraud, and inefficiency....
...Fitzgerald has been told by Orr's staff that "we have to save him from himself...
...A report by Air Force civilian contract negotiator Robert Hancock reported that P&W's repricing policy on spare parts had cost the government $140 million, and that was only the "tip of the iceberg...
...On top of the final figure was tacked a 15 percent profit—par for a military costplus contract...
...WHILE HORROR STORIES about spare-parts pricing became something of a media sensation last year, little attention was paid to the abusive underlying costs Fitzgerald and others uncovered...
...Yet if anything, the challenges were even greater when he got back than when he had left...
...The evidence gathered at P&W and five other defense contractors—General Dynamics, General Electric, Rockwell International, Lockheed, and Boeing— clearly demonstrated that P&W was not the only company overcharging the government...
...Yet keeping military waste, fraud, and inefficiency in the public eye (that is, j'accuse) may produce only a Pyrrhic victory...
...The most funds Fitzgerald has gotten the Pentagon to spend wisely was when he embarrassed Orr in 1983 into awarding Robert Hancock $10,000 for his good work...
...Fitzgerald publicly denied that this was the Air Force's position and emerged from a meeting with Orr convinced that Orr supported him...
...As a result, now the sound of whistles is more frequently heard above the Pentagon din...
...Yet still, virtually nothing has been done about the abuses at Rockwell or any of the other contractors...
...WITNESS THE CASE of A. Ernest Fitzgerald...
...Rockwell, for example, was billing the government more than 13 times the standard labor rates...
...In a highly suspicious set of moves within 24 hours of each other in March of 1983, the public relations machinery of both P&W and the Air Force issued statements reaffirming that P&W had done nothing wrong...
...Yet rising defense expenditures have brought a corresponding increase in the amount of money being thrown away...
...employees were working at between 6 percent and 50 percent of capacity, and supervisors were filling out time cards in advance...
...The follow-up report also revealed that the government had no idea what it would be paying for the parts when it ordered them and accepted claims by P&W that prices had to be increased four times to reflect higher costs...
...Since then, though, nothing has been done to recover P&W's windfall profits from spare parts...
...THE MOST CONSPICUOUS VICTIM pushed off the Pentagon payroll was George Spanton, an auditor for the Defense Contract Audit Agency (DCAA), who was coerced into early retirement in December 1983 by his superiors after exposing padded executive salaries at P&W's West Palm Beach, Florida facilities...
...When a report was finally completed last fall, the Air Force tried to restrict its release by marking it "for official use only," but Fitzgerald was called to testify before a congressional subcommittee and the results were soon made public...
...The court decided that the Air Force, represented by Secretary Verne Orr, acted in "bad faith" in its grudging settlement with Fitzgerald and would have to be monitored to see if he was being permitted to perform his job...
...Weapons expenditures were fast on their way to taking the biggest chunk out of the defense budget—ahead of such items as operations and maintenance, personnel, research and development...
...Orr came down hard on the Maverick overcharges, but rather than take action against the company sided with those in his office who wanted to deflect the issue by first investigating other contractors' labor practices before taking any corrective measures...
...Controls on time cards were so lax that others have reported that the fraudulent practice of charging work done on other Hughes contracts to Maverick accounts was commonplace...
...The case was struck down by one federal judge and is now mired in the government appeals process...
...was hit with a rare counterpunch when the Merit Protection Board accused him last year of having harassed Spanton—a violation of the Civil Service Reform Act...
...Thus a limited amount of news gets out and less is done about it...
...At the center of Fat City, Fitzgerald found out that Hughes was charging $3,407 for an hour's work that should have cost between $20 and $35...
...Those who persist often find a Congress, and most newspapers, with little stomach for working through mazes of bureaucracy and highly technical weaponssystem data to support the struggle of one lone voice, while a highly organized Defense Department public-affairs mill issues reams of rebuttal grist under the rubric of "national security...
...The military's most troubled project was already running up staggering costs, rising from a contracted $140,000 to nearly $4 million for each of 97 missiles...
...Its pronouncement on the subject was all the public got to digest, even though Fitzgerald had performed a follow-up study confirming all of Hancock's findings and documenting that behind the huge increases in spare parts costs were not clerical errors but labor costs 20 times P&W's own rates, ranging between $150 and $300 for an hour's work...
...Yet in nearly three years he has been unable to make necessary improvements...
...and attended to Fitzgerald's findings, but he has always backed off or not followed through in the face of opposition...
...The Hughes issue followed the same course...
...The Air Force's desire for secrecy was then made obvious...
...And, once again, no one has laid a glove on the contract abuses...
...Orr has regularly supported (or was it lip service...
...The Pentagon has effectively stymied him in the two programs he latched onto as soon as he returned...
...The day before he was to speak before another congressional subcommittee last year, Assistant Air Force Secretary Richard Harshman prevented him from appearing as a representative of the Air Force...
...His only alternative is to keep digging and speak out whenever he can—if he can...
...With the stakes so high, defense contractors and military program managers—who often work for contractors when their military careers are over—were more reluctant than ever to turn a critical eye on their booming livelihood, even though Pentagon-watchers across the political spectrum have produced estimates that as much as half of the military procurement budget ($99.5 billion for fiscal 1985, of which the Air Force will get $42.0 billion) could be saved through cost-cutting measures...
...The only way he could get his findings aired, without losing his job again, was to slip his written testi153 mony into the congressional record...
...Spanton's one-man battle may be considered a triumph when compared to the record of Congress...
...At the heart of this stagnation is more of the imaginative foot-dragging and stonewalling of Orr & Co...
...Defense employees bent on blowing the whistle on abuses run up against stone walls of superiors, are intimidated, transferred, or even fired...
...The facts showed, as Fitzgerald knew they would, that there were widespread abuses...
...Fitzger152 aid's specialty is getting the most work for the fewest dollars out of contractors...
...The Air Force's chief civilian cost analyst—who blew the whistle on the C-5A cargo plane's cost overruns of $2 billion in 1968 and was later fired for his honesty—returned to ferreting out waste, fraud, and inefficiency in military procurements in the spring of 1982 after winning a 13-year court battle...
...Though the budget is widely conceded to be riddled with fat, the Pentagon has always succeeded in defusing the issue by attacking the bearer of bad news, not the news itself...
...The charge, though, was an isolated blow...
...The Air Force claimed that the new prices were largely accurate and that many of the huge increases could be attributed to clerical error in the original pricing...
...Further court wrangling would distract Fitzgerald from his work...
...In the first case, the military program manager for Hughes Aircraft's Maverick missile asked him to review the company's financial needs for the missile program at the Air Force's Tucson, Arizona, facilities where the Maverick was being built...
...DCAA Director Charles 0. Starrett, Jr...
...Thus whistle-blowing or simply "telling the truth," as Fitzgerald prefers to call it, may be the most dependable game around...
...Fitzgerald has met resistance even within his own department...
...Others, though, have had no alternative routes...
...He has not always been as successful in presenting his views publicly as he was with the report on the contractors...
...Fitzgerald could haul "Bad Faith" Orr back into court, but this would delight the military even more than if he did nothing...
...But to what end...
...It took nearly two years for the data to trickle in, and some generals managing programs blatantly refused to cooperate...
...For instance, a law requiring that a laboratory be established to test parts independently, trumpeted in the fall of 1983, is still without a director...
...Labor rates were also the heart of spare-parts production abuses at United Technologies' Pratt & Whitney facilities in East Hartford, Connecticut, revealed a couple of months later...
...The result...
Vol. 32 • April 1985 • No. 2
