Adm. Hyman Rickover, accusing shipbuilders of gouging the taxpayer...


WASHINGTON -- Adm. Hyman Rickover, accusing shipbuilders of gouging the taxpayer by knowingly submitting low contract bids, Tuesday called for legislation to thwart cost overrun claims and let the Navy build its own submarines.

The maverick admiral -- father of the nuclear submarine -- said the nation's only two submarine yards were the chief culprits in submitting claims against the government in order to boost their profits.


He identified them as the Electric Boat Division of the General Dynamics Corp., the country's biggest defense contractor, and the Newport News Shipbuilding and Drydock Co.

'Both yards have a battery of lawyers whose sole job is to file claims,' the white-haired Rickover said. 'I deal with hundreds of contractors and I only have this problem with two contractors. They know they can get away with it.'

Rickover, 80, testifying before the defense subcommittee of the House Appropriations Committee, offered 10 recommendations for legislation designed chiefly to end the practice of bidding low on a project only to recoup later with claims for cost overruns.

Rickover also urged legislation to provide for construction of nuclear attack submarines in a naval shipyard.

He said Newport News was more efficient than Electric Boat, which 'has caused the Navy no end of problems' by consistently underbidding its competitor 'and then failing to perform as predicted.'


'Apparently, Electric Boat's bidding tactics were aimed at trying to force Newport News out of the business,' Rickover said.

Electric Boat, with yards at Groton, Conn., and Quonset Point, R.I., has come under fire from the Navy because it is 2 years behind schedule in building the first of nine Trident missile carrying nuclear submarines. The program has been plagued by cost overruns. Electric Boat has blamed the Navy in part for the delays.

Rickover said Newport News, builder of the Los Angeles class nuclear attack submarine, has been averaging 17.6 percent profit.

'The question,' he told the panel, 'is whether the high profits Newport News has been realizing on these contracts reflects true cost reduction or price gouging.'

Rickover's recommended new legislation that would:

--Permit the Navy to award contracts to other than the lowest bidder 'in cases of an apparent buy-in attempt' to prevent unrealistic low bidding followed by inflated claims.

--Establish a one-year statute of limitations on the filing of claims.

--Provide for the government to recoup excessive profits.

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