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Top Pentagon Buyer Resigns in Wake of Conflict-of-Interest Claim

August 20, 1985

WASHINGTON (AP) _ Mary Ann Gilleece, whose stormy tenure as a top Pentagon purchasing official produced frequent run-ins with Congress, has resigned her post in the wake of a probe that found she violated conflict-of-interest rules.

The Defense Department announced Ms. Gilleece’s resignation in a brief statement Monday, saying she had based the decision on a Pentagon reorganization that eliminated her job.

But three days after she reportedly had notified superiors of her decision, the Pentagon’s inspector general formally recommended that ″Ms. Gilleece be removed from acquisition-related responsibilities,″ the inspector general’s investigative report indicates.

The investigation was launched last month when it was revealed publicly that Ms. Gilleece had solicited consulting business from defense contractors. Although the investigation concluded there was no evidence to support criminal charges, it added Ms. Gilleece had flouted the Pentagon’s own internal conflict-of-interest regulations.

″Based on our findings in this matter, we have concluded that the actions taken by Ms. Gilleece, and the ensuing publicity, have so compromised her ability to perform her rule-making and policy-setting role that she can no longer effectively serve the department in such a position,″ the report released by the Pentagon states.

Until recently, Ms. Gilleece was the deputy undersecretary for acquisition management, making her overseer of the rules that govern defense contracting. A lawyer and former counsel to the House Armed Services Committee, she was appointed to the $70,500 job in April 1983.

She subsequently came under fire from congressional critics - Republican and Democratic alike - for defending the military contracting system despite scandals involving overpriced coffeemakers, toilet seat covers and airplane ashtrays. Sen. Mark Andrews, R-N.D., recently charged that she ″loves this relationship - the almost incestuous relationship - between the industry and the Pentagon.″

Ms. Gilleece’s job was abolished formally last month in a major reorganization, at which point she became a special aide to Dr. James Wade, the Pentagon’s new assistant secretary for acquisition and logistics. Before that reorganization became effective, she asked more than two dozen defense contractors if they would be interested in utilizing the services of a consulting firm she was thinking of forming.

Ms. Gilleece consistently has refused to respond to queries by reporters, referring questions to the Pentagon public affairs office. That office declined Monday to discuss the investigative report or her resignation, beyond issuing a statement asserting ″she resigned because her job was abolished.″

The department added ″she submitted her resignation on Aug. 13, to be effective Aug. 23.″ The investigative report by Pentagon Inspector General Joseph H. Sherick is dated Aug. 16.

According to the investigative report, Ms. Gilleece began disqualifying herself from participating in decisions that might affect the firms she had contacted only after Wade told her to do so.

She subsequently dropped the idea of forming her own firm in late June, and on July 24 advised Wade she had notified the companies of her decision.

While there is no evidence Ms. Gilleece participated in any Pentagon buying decisions involving the specific contractors to whom she had written, she did participate in at least one policy-making session involving ″programs that would appear to be of interest to firms Ms. Gilleece had approached concerning her planned firm,″ the investigation found.

″We believe that when Ms. Gilleece began to pursue the establishment of a consulting firm ... she violated (the Pentagon’s rules) by engaging in a business activity that placed her private interests in conflict with the duties and responsibilities of her (Department of Defense) position,″ Sherick’s report said.

Additionally, Ms. Gilleece recently was asked to explain her relationship with Frank Bane, a Washington executive of TRW Inc., a major defense contractor. The Wall Street Journal reported in June that the Alexandria, Va., home listed as Ms. Gilleece’s address is owned by Bane.

A spokesman for Sen. Carl Levin, D-Mich., who has been investigating the matter, said Monday Ms. Gilleece had acknowledged she held a second trust on the property. Spokesman Phil Shandler said the senator asked her for more information but was told there would be no elaboration because she was leaving the department.

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