House Votes to Crack Down on Defense Contractors’ ‘Overhead’ Expense Claims

WASHINGTON — The House voted 411 to 4 Tuesday to crack down on contractors who seek government reimbursement for such expenses as country club memberships, promotional giveaways and political contributions.

“The people are just flat mad” about procurement abuses and are demanding that “something be done,” Rep. Dave McCurdy (D-Okla.) said as the House added the reforms to a budget measure freezing next year’s Pentagon spending at current levels.

“What we’ve been doing in the past is not working,” said Rep. Larry J. Hopkins (R-Ky.). “Maybe defense contractors, like my son, have grown too big for us to whip.”

Stiff Penalties

The amendments would prohibit the Pentagon from paying for a range of “overhead” expenses not directly related to weapons production. Stiff penalties--up to five years in prison for individuals and $500,000 in fines for corporations--would be imposed on violators, and the Pentagon would be given subpoena power to help enforce strict new accounting procedures.

The reforms were drafted by Reps. Bill Nichols (D-Ala.) and Charles E. Bennett (D-Fla.), chairmen of two Armed Services subcommittees, which earlier this year disclosed that contractors were seeking reimbursement for such costs as traffic tickets, entertainment and lobbying.

The House also approved, 416 to 0, another provision calling for increased competition in weapons systems by cutting down on the number of “sole source” contracts. At present, “the system rewards exaggeration and overcharging--the more the cost, the more the profit,” said Rep. Gerry Sikorski (D-Minn.).

Rep. Thomas N. Kindness (R-Ohio), who cast one of the four votes against the amendments, said the abuses were turned up by the Pentagon itself and argued that the new laws “will result in enormous confusion and litigation.”

Litany of Problems

“Addressing country club membership is cute but it does not establish more competent contractors,” Kindness said.

But Nichols, reciting a litany of questionable costs billed by contractors, told the House: “It is beyond question that legislation is required to improve the process.”

Similar to Senate Reforms

The amendments, similar to a package of reforms approved last month by the Senate, were added to a bill freezing at $292 billion the Pentagon’s budget for the fiscal year beginning Oct. 1. House leaders hope to complete action this week on the measure.

The Senate, approving $10 billion more than the House, has already voted to let spending grow with inflation. Differences between the House and Senate versions will be worked out later by a conference committee.