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Defense Contractor’s Records Criticized

June 17, 1985

WASHINGTON (AP) _ Hughes Helicopters’ records were in such a ″deplorable state″ the company couldn’t document 40 percent of its Pentagon billings questioned by auditors, the chairman of the House subcommittee said.

″Hughes’ accounting system is neither accountable nor systematic,″ Rep. Bill Nichols, D-Ala, chairman of the House Armed Services investigations subcommittee, said Sunday. ″The records we found at Hughes were in a deplorable state.″

Hughes Helicopter, which is owned by McDonnell Douglas Corp., builds AH-64 Apache helicopters for the Army.

Hal Klopper, a Hughes spokesman in Culver City, Calif., referred requests for comment to McDonnell Douglas.

Jerry Meyer, a spokesman for McDonnell Douglas, said, ″when we bought Hughes Helicopter last year, we realized there were deficiencies in their accounting system.

We have been working to correct those deficiencies and are in the process of making sure all necessary documentation is supplied.″

Nichols’ panel began investigating Hughes at the request of Rep. Sam Stratton, D-N.Y.

Stratton, chairman of the Armed Services procurement subcommittee, said he plans to propose a measure on the House floor this week to ″prohibit any payments to Hughes until it establishes an accounting system that can produce the backup data essential for government auditors to check the accounts.″

The Defense Contract Audit Agency began investigating some of Hughes’ billings last February, Nichols said, but suspended its review when the firm couldn’t come up with basic records or supporting documents.

Hughes was unable to come up with 67 percent of the vouchers picked by DCAA investigators, Nichols said. A second search failed to locate 40 percent of the documents.

″I don’t see how any business can operate when it doesn’t have the records of original entry,″ Nichols said.

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