Weapons buying has `improved'. Pentagon official testifies to more competition, review

The Pentagon's top procurement official claims the military has ``substantially improved'' the way it buys its weapons systems but concedes that more improvements need to be made. Robert Costello, undersecretary of defense for acquisition, told a congressional committee Wednesday that more competition has been injected into the system of awarding defense contracts and tighter review of programs has been instituted within the Pentagon in recent years.

Nevertheless, he contended that wide swings in defense budgets have added to an ``environment in which everyone is out to protect funding for the programs'' and acknowledged contractors ``still have a long way to go'' in improving their practices.

Mr. Costello appeared before the House Armed Services Committee as part of the first congressional hearings on Pentagon purchasing practices since the recent disclosure of the investigation into fraud and bribery in weapons buying. The committee's hearings, as well as ones to be conducted by the Senate Armed Services Committee next month, are steering clear of the criminal investigation and instead focusing on military purchasing.

Still, in his testimony, Costello laid the blame for the current allegations of fraud at the door of ``greed.'' He noted that a changed weapons-buying environment, in which there are often bigger and fewer contracts being let, has contributed to the abuses of the system. But, ``in a word, `greed,''' is the main culprit, he said.

Costello echoed the view of other top Pentagon officials that the alleged abuses are more the result of a few bad individuals than a faulty system. He argued that the current investigation showed more the strength than the weakness of Reagan administration policies.

``So, if we have accomplished so much, why have there been so many cases of procurement fraud?'' he asked. ``Is there more corruption now? We don't think so. Due to our improvements we can conduct viable enforcement to apprehend, prosecute, and jail procurement fraud perpetrators.''

Like many others in the Pentagon and defense industry, Costello contended there is no need for more laws governing purchasing. Instead, he said changes may have to be made in the way some rules are enforced or carried out. A Pentagon task force is looking into changes that may be needed in light of the criminal probe.

One area being looked at is what defense contractors are doing to improve their ethical conduct. Costello said that only 46 major companies have complied with a recommendation by a blue-ribbon panel that they develop internal ``governance programs,'' including a code of conduct, to improve purchasing practices.

He said the Pentagon was now looking at how to enforce compliance with the initiative.

But some lawmakers clearly want the Pentagon to do more. Congressman Nicholas Mavroules (D) of Massachusetts, a member of the Armed Services Committee, said of the Pentagon's efforts in this area: ``I think it's time you took the bull by the horns. Make it [the initiative] a regulation and do it.''

``Quite frankly,'' he told Costello, ``... many in Congress and much of the public at large are more than disappointed, they are tired of hearing about a defense acquisition system that cannot seem to iron out its systemic problems.''

Pentagon officials said they do not yet know whether they will reopen any contracts that may have been tainted as a result of any criminal activity. A Department of Defense task force is reviewing each one already awarded that has been affected by the probe.

Congressman Les Aspin (D) of Wisconsin, chairman of the Armed Services Committee, noted this will be a delicate area. Reopening contracts, he said, could add to costs and delays in weapons systems.

On the other hand, allowing a company to keep a contract for national security reasons, even though they did something wrong, would be rewarding ``malfeasance.'' ``I see this as a very serious problem,'' he said.