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Congress Quietly Threw $58 Million Life Preserver to Steinbrenner With

February 1, 1993

Congress Quietly Threw $58 Million Life Preserver to Steinbrenner With PM-Steinbrenner-Contributions, PM-Shipbuilding Woes

WASHINGTON (AP) _ Baseball team owner George Steinbrenner failed in the first round of a contract dispute with the government. But his second try was a sweet success - a $58 million bailout for his family shipbuilding business provided quietly by Congress.

Having already made $16,500 in political contributions to key congressmen since 1987, Steinbrenner enlisted two lobbyists with connections to the Appropriations subcommittees that control Pentagon spending.

The imposing owner of professional baseball’s New York Yankees even made a few personal calls on Congress along the way.

Last October, without a single public hearing and without even consulting the government officials who steadfastly refused to pay the claims, Congress quietly added the money to the Defense Department’s 1993 budget.

The final amount ordered paid to Steinbrenner’s Tampa, Fla., shipyard was even more than he originally sought in negotiations and a lawsuit he filed against the Navy and U.S. Maritime Administration.

″It’s bad public policy,″ said Patrick Morris, deputy administrator of the Maritime Administration. Congress, he said, was meddling in an area where it had no proper role.

Steinbrenner accused federal officials of trying to shut his struggling American Ship Building Co. out of an exclusive club of favored contractors, and said Congress was his only recourse.

″Every single major shipyard in this country has had problems with the Navy on their contracts,″ he said, calling his donations to congressional figures during the period a matter of ″friendship.″

The Navy, afraid of angering its congressional patrons, would not discuss the case. ″The Navy’s not going to bite the hand that feeds it,″ said one Pentagon official.

The Steinbrenner case distills several key issues that will test a reform- minded Congress this year: the role of special-interest donations, the ″revolving door″ through which officials pass between government and lobbying, and the survival of defense contractors with a slimmed-down Pentagon.

The dispute arose over two contracts: a 1987 agreement to convert and refurbish a pair of crane ships for a fixed price of $43.1 million, and a 1989 pact to complete two fuel supply ships for $49 million.

The shipyard, like many others in the industry, was starving for work at the time because of dwindling Pentagon business. Federal officials say Steinbrenner bid unrealistically low to win the fixed-price contracts, hoping that he could recover later through appeals for reimbursement.

But Steinbrenner said the government saddled him with ″rust buckets″ that required more extensive repairs than he expected.

The Navy and the Maritime Administration took a hard line. They offered minor price adjustments, but sought for the most part to make the yard honor its fixed-price contract.

Steinbrenner at first went to court, suing to recover $13.3 million in overruns on the crane ship contract and $24 million in ″extraordinary contractual relief″ on the Navy oilers.

But a short while later, he set his sights on Congress’ two gatekeepers of Pentagon spending: Rep. John Murtha, D-Pa., and Sen. Daniel Inouye, D-Hawaii, the chairmen of the House and Senate Appropriations defense subcommittees.

Sometime last spring, unknown to the government bureaucrats and lawyers dealing with his claims, Steinbrenner dispatched two lobbyists to Capitol Hill.

Paul Magliocchetti, an aide on the House subcommittee from 1981 to 1987, approached Murtha. William F. Ragan, a longtime Inouye supporter and fund raiser, approached the senator.

Both lobbyists had made political contributions to Murtha and Inouye; Steinbrenner was a regular giver, too. He had donated $4,000 to Inouye in 1987, when the senator was mounting an unsuccessful bid to become Senate majority leader and gave Inouye and Murtha $1,000 each for last year’s elections. His American Ship’s political action committee also donated to both.

Steinbrenner said he began pushing his interests on the political front only after another shipyard, Bethlehem Steel’s facility at Sparrow’s Point, Md., won its own $40 million bailout from Congress.

When Inouye and Murtha won final passage of their bill on Oct. 5, it contained provisions awarding American Ship Building the full $13.3 million it had sued for on the crane ships - rendering moot the government’s efforts to fight it in court - and ordering a $45 million additional payment for the oilers, some $20 million more than Steinbrenner originally had sought.

Murtha said his action was an attempt to find ″an equitable solution″ after the problems were brought to his attention by Magliocchetti and Reps. Bill Young, R-Fla., and Sam Gibbons, D-Fla.

Both Florida lawmakers also have received substantial campaign gifts from Steinbrenner and his lobbyists.

″Every shipyard’s in trouble,″ Murtha said. ″The incentive to cheat is such a problem. They lowball them (contracts), and then they can’t do the work. That’s the position they have to take.″

But to government officials, Congress’ action was a sneak attack.

Debbie Kossow, a Justice Department lawyer handling the crane ship case, was sent a copy of Murtha’s bill by a colleague late last July. ″Not true,″ she wrote in the margin. ″Never asked to comment on bill or these allegations.″

Government investigators had alleged Steinbrenner was trying to charge the government for mistakes made by his workers.

For example, welders accidentally cut into electrical cables, requiring the cables to be repaired; a fire on one ship damaged other electrical cables; and a hatch cover was dropped while being lifted by a crane, falling onto another cover and requiring repairs to both.

Steinbrenner is currently serving out a suspension from running the day-to- day operations of his baseball team, the Yankees. He is due to resume control March 1.

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