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Putting a Tighter Rein on the Pentagon's Private Consultants

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IN early 1987 a defense industry consultant named William Parkin was hired by a United States Navy office to write a report on managing major purchases. He recommended employing an outside company to handle key parts of the deals. He even steered Navy officials toward a company named TCASY that he said met their needs. What he did not tell them was that he had a financial interest in TCASY.

Mr. Parkin later told TCASY's president that he had the inside track on the job and could thus raise his price, ``and then pay Parkin 10 percent,'' according to a federal affidavit.

One of the bigger catches of the Justice Department's ``Ill Wind'' investigation into defense procurement fraud, Parkin has since been convicted of related charges. His profession, the free-wheeling one of consultants who advise contractors and the Pentagon alike, has emerged as a central area of the Ill Wind probe.

Though it sounds narrow and technical the fight over consultants could have widespread implications for defense procurement. Consultants are ubiquitous in the Pentagon. For the armed services, they do everything from preparing the charts and overhead-projector slides beloved of military briefers, to drafting sensitive weapon specifications. For contractors, they advise how to market their products in the maze of the Pentagon bureaucracy, as well as engineering support and other technical services.

The criminal action of individuals does not mean a whole profession is corrupt. But a recent investigation by the Defense Contract Audit Agency (DCAA) concludes that there may be some systemic problems with the way defense consultants do business.

A series of audits by the DCAA found that 20 percent of the consultant fees charged to the Pentagon by contractors as overhead costs were ``questionable.'' The audits were a follow-up to a more-limited probe last year that reached a similar conclusion.

DCAA officials scrutinized 27 top defense companies. They found $53.7 million in fees that they felt were suspect, out of $269 million in total consultant charges.

The primary reason for questionable costs was ``the contractors' inability to provide adequate evidence of the nature and extent of the services received from the consultants,'' according to the audit. In other words, no one could prove what the consultants had done for their money.


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