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Officials Routinely Gave Data to Consultants, Court Told in 1984

June 28, 1988

WASHINGTON (AP) _ Defense Department officials routinely bypassed their own contracting system by giving key documents with classified information to private consultants, according to long-buried court testimony.

A massive criminal investigation of Pentagon contracting practices is centered on the passing of secret information to private consultants, who in turn sold it to contractors.

The system wasn’t widely talked about between the Defense Department and contractors and so ″my mouth fell open″ when a contractor she had never met called to ask her for an interpretation of a document she had written, testified Caroline A. Chewning, who works for the Defense Advanced Research Projects Agency as a program management officer.

But in general Ms. Chewning defended the system.

She said the official contracting system was unworkable, and officials in her agency - which works on futuristic military technology - viewed it ″in the government’s interest″ to cooperate with contractors, ″or else we are hurting.″

In other developments:

-Defense Secretary Frank C. Carlucci said that if military procurement contracts are shown to be tainted, they may be terminated, but he cautioned against hasty reforms. ″I shouldn’t think it would be necessary to have convictions before we act,″ Carlucci told a National Press Club luncheon. ″If we have sufficient evidence that a contract is tainted, we will take action to deal with that situation.″

-The FBI said it investigated Melvyn Paisley prior to his 1981 confirmation by the Senate as assistant Navy secretary for research, engineering and systems, but it would not disclose the results of that check. Paisley moved to the Navy job after a 28-year career with Boeing Co. in Seattle. James Durst, a former Boeing associate, has said that Paisley had bragged of wiretapping competitors and one of Paisley’s three ex-wives, Mildred McGetrick, said she told the FBI in 1981 that Paisley took gratuities and was ″dishonest with money.″

Federal investigators found ″stacks″ of classified federal documents that Paisley had no security clearance to possess when they searched his home and office, The Washington Post reported in Tuesday’s editions, citing unidentified informed officials for the information.

-The Pentagon named six Defense Department officials to monitor the investigation of its procurement practices.

-The House Armed Services Committee said it will open the first congressional hearing into procurement matters since the 2-year-old investigation came to light June 14. The witness will be Robert Costello, undersecretary of defense for acquisition policy.

-Rep. James Florio, D-N.J., asked Defense Secretary Frank Carlucci to investigate whether favorable treatment for the Sperry Corp., now part of Unisys Corp., was arranged by Paisley for work on the Navy’s Aegis ship- defense system. The multibillion-dollar system had been developed and had been almost exclusively outfitted by the RCA Corp. at its facility in Moorestown, N.J., until work was redistributed in 1986 to include Sperry.

Ms. Chewning was a witness at the January 1984 trial in Baltimore of William V. Miller, a private defense consultant who was charged with two counts of conversion and unauthorized sale of government property. Miller was acquitted.

The attorney who defended Miller, Selig Solomon, said in an interview that Ms. Chewning’s testimony likely won the case for the defense. It showed that Miller was accused of taking material that was given to consultants all the time, he said.

Ms. Chewning said ″95 to 99 percent″ of the information that consultants and contractors sought from her section was willingly handed out under the unofficial cooperative system she described. But she said the information was so sensitive that it was given only to those with security clearances.

The Defense Department had no immediate comment on whether the system she describes still exists.

The information handed out described many Pentagon programs in detail, and was used mainly as ″wish lists″ submitted to Congress in the hope that the weapons systems and other projects would be financed.

Ms. Chewning said some of the information set forth the entire Navy research and development program for present and future years.

She testified that among the companies receiving the information were General Electric, E-Systems and RCA. But she said the material was given to consultants and contractors with a ″need to know.″ Those with the need had to have a ″legitimate interest″ in bidding on the programs in the documents, she said.

Explaining why the information was given out, Ms. Chewning said officials in her agency believed it was impossible for a company to submit a well- constructed bid within the normal, 45-day notice period for competitive bidding.

″The government and private industry must cooperate in order to get contracts awarded and material developed, and so forth,″ she said.

″It’s in the government’s best interest that contractors have this information. If they had to go to ‘official channels,’ it may take them six months ... You’re on a tight contract award basis, and you don’t have time for that.″

″The illogic was the government was handing out the very things they were trying to prosecute him for,″ attorney Solomon said of Miller. ″That was the whole stupidity of it.″

The current investigation, coordinated by U.S. Attorney Henry Hudson in Alexandria, Va., is focusing in part on whether Pentagon officials were bribed in return for giving consultants classified information. Some contractors obtained key documents of competitors, the government has alleged in search warrants.

But Ms. Chewning testified that there was also an up-front system through which consultants could get their hands on at least some of the Defense Department information they needed.

″And from your experience, how much information is transmitted in this unofficial manner by the government?″ Solomon asked her at the trial.

″From 95 to 99 percent,″ she replied, adding that ″they are made available to them for free.″ Other Pentagon agencies besides her own had the same policy, she said.

Ms. Chewning said the documents go through a classification process, first in her agency and then at the Pentagon, where the documents are reviewed.

Discussing the sensitivity of the documents, she said, ″You just can’t hand it to someone who doesn’t have a security clearance, just because they want to bid on it.″

″I have not seen them handled in an unsecure manner″ within her office, she said.

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