Payment Freeze in Fraud Probe May Be Ended

The payments freeze that Defense Secretary Frank C. Carlucci dramatically imposed last week on aerospace contracts implicated in the Pentagon procurement fraud probe may soon all but melt away, Pentagon officials have confirmed.

“The freeze is in limbo now,” a Navy spokesman said. “A change may be just around the corner.”

Carlucci imposed a freeze on payments for nine weapons systems a day after court records in the procurement investigation were unsealed. He said the Navy needed to review the contracts, whose total value was placed at about $1 billion, to determine whether they might have been tainted by fraud and bribery.

Review Discloses Little

A week later, however, Navy spokesmen are indicating that the review has disclosed little and that payments may be resumed soon.

The spokesman said Carlucci was believed to have met Friday with Lawrence Garrett, an undersecretary of the Navy who is reviewing the cases. He said any decision to lift the freeze would be up to Carlucci and other top-level Defense Department officials.

Announcement of the freeze last Friday brought immediate complaints from aerospace companies that they were being punished before being found guilty of any wrongdoing. It was also suggested that the freeze was a political maneuver to deflect pressure on the Pentagon to wring out procurement abuses.

‘Lot of Accusations’

“There were a hell of a lot of accusations last week that the Navy and the Department of Defense weren’t being aggressive enough at looking into the programs implicated in the investigation,” a Navy spokesman said. “So Carlucci announced the freeze.”

Still, in the ensuing week, little else was done.

For example, Litton Industries Inc., a Los Angeles aerospace company that makes a communications terminal linked to the probe, said Friday that it has not received any official notice of the freeze from the Pentagon. A company spokesman said that Litton Data Systems, which makes the devices in Colorado Springs, Colo., is continuing to produce them under a two-year, $23.5-million Navy contract.