CONTRACTORS ROUTINELY OVERCHARGE PENTAGON BY MILLIONS, REPORT SAYS

A Pentagon probe has found that major U.S. military contractors routinely charge the Defense Department hundreds of millions of dollars in frequently unjustified payments, the New York Times reported on Friday.

Citing a report it obtained of the investigation, the Times said the Pentagon found that neither its rules nor the contractors' own policies adequately prevented the government from paying improperly for privately arranged consulting work.Such consulting work can only be billed to the Defense Department if it directly benefits the military, a standard that was not always met, the Times said.

Five cases have been referred to criminal investigators, the newspaper said. Pentagon officials were unavailable for comment.

The investigation, by the Defense Contract Audit Agency, included examination of the books of 12 major military contractors, the Times said.

The audit is separate from a Justice Department criminal investigation focusing on Pentagon procurement, including the role of consultants in designing and selling weapons.

The report, which did not specify which companies were involved in improper billing, listed the following firms as among those examined:

Boeing; General Dynamics; Hughes Aircraft; IBM; Litton Industries; Lockheed; Martin Marietta; McDonnell Douglas; Northrop; Raytheon; Unisys; and United Technologies. These 12 account for almost one-third of the prime contracts awarded by the Pentagon each year, the paper said.

According to the Times, the report showed the 12 companies billed the Pentagon for $237 million in one year for professional fees and consulting costs, including $43 million in "questionable" expenses.

The audit found the companies could not give adequate description of the services provided by consultants, and that some improperly billed for consultants performing lobbying or legal work.