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The matter might have died there had a former General Dynamics executive not surfaced with new allegations—and, he claims, tapes and documents to prove them. P. Takis Veliotis, onetime general manager of the company's Electric Boat division, charges that fellow executives routinely lavished gifts and perks on Navy brass. He also claims that the company submitted low bids for contracts and then tried to stick the Pentagon with false claims for overruns.
The retired executive was indicted by a federal grand jury in 1983 for taking kickbacks from a subcontractor. When he fled the U.S. to his native Greece, General Dynamics promptly impounded $6 million of his assets. Veliotis is now bargaining with the Justice Department, which has revived its earlier probe, for some level of immunity from prosecution in return for his cooperation.
Meanwhile, General Dynamics is feeling heat in Washington. Congressman John Dingell, chairman of the House Oversight and Investigations subcommittee, has demanded that the Navy cancel some $5 billion in contracts with the company for the SSN-688 and the Trident submarine because its gifts to Rickover violate Navy regulations.
The broader issue of cost overruns is stirring renewed concern in both Congress and the Pentagon. Congressional investigators are looking into charges that Newport News Shipbuilding overcharged the Navy by some $50 million for the $2.7 billion nuclear aircraft carrier U.S.S.
Theodore Roosevelt, launched last October. "This is a widespread practice," says Republican Senator William Cohen of Maine. "Contractors submit intentionally unrealistic bids and then try to recoup after they get the contract."
The near monopoly enjoyed by shipbuilders once they win a contract limits the Navy's leverage. The Navy hopes to stir competition by splitting shipbuilding awards between two contractors. This month Lehman announced almost $2 billion in awards under such a "dual sourcing plan.'' More competition may serve to keep contractors honest. But many military contractors and Navy brass have, in effect, been shipmates for years; they will not be an easy crew to break up. —By Evan Thomas.
Reported by Bruce van Voorst/Washington