Defense Contracts

In view of the continuing instances of fraud, bribery, unconscionable prices and profits in the defense industry, which have been assisted by willing Pentagon officials, isn't it past time to revive the World War II Renegotiation Act? Many of us who have had experience with the Renegotiation Act will recall that each major World War II and Korean War defense contract was reviewed on an after-the-fact basis, covering all aspects of contract performance, after which the Renegotiation Board, composed of a number of conservative and knowledgeable persons appointed by the President, made a determination whether profits were excessive or unconscionable and, if deemed excessive, decided the amount, if any, the contractor was required to refund to the government on that contract.

Pentagon investigators have begun an inquiry into whether the Defense Advanced Research Projects Agency, which helps develop cutting-edge technology for the military, showed favoritism when it gave $1.75 million to a company co-owned by the agency's director and run by her father. The Pentagon's inspector general said it would examine DARPA's contracts over the last two years with RedXDefense, a Maryland-based contractor that builds devices to detect trace amounts of explosives. The technology is used to help find roadside bombs in Iraq and Afghanistan.

Ultrasystems Inc. said its Ultrasystems Defense & Space Inc. subsidiary was awarded about $8.8 million worth of new contracts and contract extensions by the Department of Defense. The contracts involve systems engineering and computer simulation programs. Irvine-based Ultrasystems Inc. is a high-technology engineering company involved with numerous defense and space systems projects. The company also develops, engineers, owns and operates electrical power-generation facilities.

Robert Murtha for years has made a sizable living working with companies that rely on Pentagon contracts over which his uncle, Rep. John P. Murtha (D-Pa.), holds considerable sway. He has maintained that his uncle played no role in his defense-related work, much of it secured without competition. Newly obtained documents, however, show Robert Murtha mentioning his influential family connection as leverage in his business dealings and holding unusual power in his dealings with the military.

A Rancho Bernardo businessman whose virtually dormant firm bid on more than 50 government defense contracts, was indicted Friday by a federal grand jury and charged with three felony counts of making false statements to a government agency and on a bank loan application. The indictment alleges that Dove Electronics owner Aldwyth Roach lied to the Department of Defense in an attempt to secure between 50 and 60 contracts for electronic components.

Congress approved $22 million in defense contracts for San Fernando Valley defense firms ITT Gilfillan and L-3 Communications Ocean Systems, Rep. Howard Berman (D-Mission Hills) announced Friday. "These funds will preserve good jobs in the Valley, and hopefully lead to the creation of significant new employment opportunities in the near future," Berman said in a statement.

Two San Fernando Valley defense contractors have received a combined $12 million in awards from the Pentagon as part of the federal government's 1998 defense budget. Allied Signal Ocean Systems in Sylmar will receive $8 million to refurbish 20 towed array sonars, which are used by the U.S. Navy to track enemy submarines and surface ships. ITT Gilfillan in Van Nuys won a $4-million contract to continue its development of antenna technology used in unmanned aerial vehicles.

The New York-based Loral Corp. pleaded guilty to three felony counts today for its attempts to influence improperly the award of two defense contracts. The company admitted it paid defense consultant William M. Galvin $578,000 to obtain confidential bid information about an Air Force advanced radar warning contract and a Navy contract to build a blimp. The company agreed to pay $5.77 million in fines, civil penalties and reimbursement for the cost of the investigation.

John Power, who runs a small Southern California defense factory, has seen the military spending boom create new business opportunities in his industry--but not all of the type that the Pentagon has in mind. Crooked purchasing agents at major aerospace firms have established their own growth industry, Power said, one based on taking cash kickbacks and expensive gratuities in exchange for awarding Pentagon subcontracts.

Seven senior members of the House Armed Services Committee said Tuesday that the Pentagon should add a clause to future defense contracts to ensure that any illegally gained profits can be recovered by the government. "There is an urgent need to protect both the national security and the interests of the U.S. taxpayer in defense procurement," they said in a statement.

Taking particular aim at overruns in defense spending, President Obama pledged Wednesday to save up to $40 billion a year through a government-wide overhaul of federal purchasing. The White House is backing legislation by Sens. John McCain (R-Ariz.) and Carl Levin (D-Mich.) to reform defense spending. But the president also has ordered his budget office to develop new rules by this fall for the way everyone in government does business.

The Justice Department is investigating whether British defense giant BAE Systems, which supplies Bradley fighting vehicles to the U.S. military and is becoming a major player in the U.S. defense industry, paid bribes to win contracts in Saudi Arabia, Chile and elsewhere, federal officials confirmed Thursday.

Boeing Co. reported Wednesday that first-quarter earnings climbed 27% as it continued to rack up large passenger jet orders and defense contracts. Net income rose to $877 million, or $1.13 a share, from $692 million, or 88 cents, a year earlier. Revenue rose 8% to $15.37 billion. Analysts surveyed by Thomson Financial were expecting the company to post earnings of $1.01 a share. Boeing shares rose $1.02, or 1.1%, to an all-time high of $94.69.

Only a few years ago, Advanced Arm Dynamics Inc. was making artificial limbs for civilians. But today, the Redondo Beach-based company has a more high-profile client: the Pentagon. Advanced Arm Dynamics, an 8-year-old company that makes advanced prostheses for upper body amputees, has been awarded more than $70 million in defense contracts in the last year to outfit wounded American soldiers returning from Iraq.

Remember the leaner, faster, high-tech military promised by Defense Secretary Donald H. Rumsfeld? It now looks like the cold realities of waging war on the ground may push those dreams -- and big paydays for defense contractors -- further into the future. As 2004 ended, defense stocks were reeling due to the prospect of Pentagon budget cuts in the new year. Shares of Lockheed Martin Corp., Northrop Grumman Corp., General Dynamics Corp. and Boeing Co.

Boeing Co. has won a $928-million contract to field the ground-based component of a planned U.S. missile defense shield, the Pentagon announced Monday. The Pentagon's Missile Defense Agency said the cost-plus-award fee would cover construction and non-construction efforts at a missile defense site in Huntsville, Ala., in fiscal years 2005 through 2007. The Pentagon this weekend scrapped the first flight test in nearly two years of the planned missile defense shield because of bad weather.

Only a few years ago, Advanced Arm Dynamics Inc. was making artificial limbs for civilians. But today, the Redondo Beach-based company has a more high-profile client: the Pentagon. Advanced Arm Dynamics, an 8-year-old company that makes advanced prostheses for upper body amputees, has been awarded more than $70 million in defense contracts in the last year to outfit wounded American soldiers returning from Iraq.

Alliant Techsystems Inc. said Tuesday that it was teaming with UAL Corp.'s United Airlines to compete for a contract to equip U.S. commercial aircraft with missile defense systems. Bids must be submitted by Dec. 8 to the Homeland Security Department, which will move quickly to award a contract to begin supplying the devices to commercial airlines, said Brian Roehrkasse, a department spokesman. An Alliant defense system is in use on 1,100 U.S.

Lockheed Martin Corp. beat Raytheon Co. for work worth as much $843 million to make laser targeting devices that allow Air Force F-16 pilots to drop bombs with more precision from higher altitudes at day or night. Lockheed's Orlando, Fla., Missiles and Fire Control unit will develop and build as many as 522 of the so-called advanced targeting pods through 2010, with first deliveries in January 2003. The cost includes warranties, spare parts and logistics support, the Pentagon said.