CARLUCCI FREEZES PAYMENTS ON 9 NAVY CONTRACTS ACTS IN RESPONSE TO FBI EVIDENCE OF BIDDING LEAKS

Defense Secretary Frank Carlucci froze new payments Friday on more than $1 billion in Navy contracts described in FBI affidavits as possibly tainted by leaks of inside bidding information.

Carlucci acted a day after release of court papers detailing telephone conversations wiretapped by the FBI and alleging that a defense industry consultant had used his relationship with a Navy procurement officer to obtain confidential federal contract data.The consultant, Marcus Saunders, talked as if he were passing cash to Navy official George Stone, FBI agents said in the sworn statements.

Carlucci named nine projects, none of them major weapons systems, on which the Pentagon will immediately halt progress payments in the first major crackdown on contractors since the Pentagon procurement scandal broke last month.

He said the Pentagon was reviewing all contracts with companies named in the documents - including those with Litton Industries Inc., Hazeltine Corp., Emhart and Norden Systems Inc., Carlucci said.

He also said the Pentagon is moving to suspend Stone, a division chief for the Navy's Space and Warfare Command. It also is seeking to bar Saunders, Varian Associates Continental Electronics Manufacturing Co. and Varian employee Joseph Bradley from doing further business with the Pentagon until the allegations are cleared up, he said.

The value of the contracts on which payments were frozen exceeded $1.2 billion.

According to the FBI affidavits, Navy official Stone read a list of sealed bids from 10 companies competing for a $120 million aviation control contract to Saunders, an Alexandria, Va., consultant who preceded him in his job.

The affidavits said investigators believed Saunders is in possession of dozens of other confidential government documents or data relating to the nine contracts.

The affidavits, the first to be made public in the scandal, said Saunders generally shared the information with Thomas Muldoon, a Washington consultant who has worked for Norden Systems Inc., one of the bidders. It said Muldoon also was "considering working" for other competitors.

Saunders, who was fired from his Navy job in 1982 for insider stock trading, lives with Marilyn Burgess, the ex-wife of another Navy procurement official, the affidavits revealed.

One of the two affidavits unsealed by a federal magistrate said that in January, Saunders helped Stone move into his new home - and the next day forwarded more information to Muldoon about the contract.

The agent said she believed "that Saunders is paying Stone for this information he is now receiving," noting Saunders' taped remarks that he had been "paying a lot in expenses to get information on specific programs."