A Case of Rank vs. Privilege

By TED GUP

When it comes to railing at swollen military budgets, Congress talks a good game. But where constituents are concerned, legislators all too often pull out the purse instead of the paring knife. One such sympathetic Senator is Republican Arlen Specter of Pennsylvania: thanks to an amendment he tucked into a defense appropriations bill, a Pennsylvania firm stands to gain as much as $10 million to cover cost overruns on a fixed-price contract with the Navy.

The favored company is the Pittsburgh-based Dravo Corp., which in 1983 underbid four other builders to win a $102.9 million contract to construct a steam plant for the Navy at the Portsmouth, Va., shipyard. When Dravo discovered its design would not work as promised, it had to redesign the plant. By August of last year, the company faced increased costs of almost $25 million. Dravo's Washington Lobbyist Martin Hamberger did not waste time trying to persuade unsympathetic Navy brass to renegotiate. Instead he went to Specter, asking for a bailout. The Senator received $9,500 from Dravo's political-action committee for his 1986 re-election campaign. Last September Hamberger gave Specter a draft of what he wanted -- an amendment to the defense appropriations bill that directed the Navy to reimburse Dravo for its overruns.

Hamberger argued that the Government got a better plant than it had bargained for. Specter would not comment on the matter; a staffer said the Senator "did nothing for Dravo that he doesn't do regularly for Pennsylvania companies, many of whom are not contributors." Buried in the 97-page bill, Specter's measure was approved with little fuss, and it later became part of last year's $290 billion defense appropriation. Congress added a dash of austerity: a $10 million cap was put on the amount Dravo could be reimbursed.

No one had told the Navy about the measure. "Why should I?" asks Hamberger. "That's not my job." The Navy was infuriated. "It was all done before we knew anything about it," said a senior Defense Department official. "It was an abhorrent exercise of legislative prerogative." Last spring the Navy persuaded Republican Congressman Robert Badham of California to offer an amendment to the 1988-89 defense authorization bill banning the use of funds to reimburse Dravo. "It was an extremely dangerous precedent," says Badham. "It gives a whole new dimension to bidding and contracting: If all else fails, go to the Congress."

But Badham's measure has been trumped by a rider from Republican Congressman Herbert ("Sonny") Callahan of Alabama, who proposed that the Pentagon reimburse Dravo for losses incurred between last October and such time as the repeal is signed into law. Callahan too has reason to be sympathetic: Dravo is a major employer in his district around Mobile. The Dravo PAC has also provided him with $4,000 in recent years.

Still smarting from being outmaneuvered, the Navy is auditing the Dravo project and continues to lobby against the relief measure. "It's a matter of principle," said the senior Defense official. "When you sign a contract, you're supposed to produce. We have got to draw a line on this one and tell the world that's the way it should run." That is just what Congress has been telling the Pentagon all along.

With reporting by Jay Peterzell/Washington