Engine maker Pratt & Whitney possessed sensitive documents that rival General Electric Co. had submitted to the Defense Department in competing for contracts worth hundreds of millions of dollars, the FBI told a judge last week in its nationwide investigation of Pentagon bribery, fraud and leaks.
Meanwhile, two published reports said former Navy Secretary John Lehman may have warned defense consultant Melvyn R. Paisley that his activities might be the subject of a federal investigation. The reports appeared Sunday's editions of The Washington Post and the Los Angeles Times, both of which quoted sources close to the investigation.The FBI assertion regarding Pratt & Whitney was made in a search warrant obtained to seize materials from the offices of Eugene Tallia, vice president of Pratt & Whitney and head of the company's Washington office. Pratt & Whitney is an operating unit of United Technologies Corp.
A copy was obtained by the trade paper Defense Week and made available Saturday to The Associated Press.
The investigation - which Sen. John Warner, R-Va., a former Navy Secretary, calls "the most widespread case I or anyone else has ever seen" - has been going for two years, but was such a well-kept secret that even President Reagan was in the dark until this week.
It involves allegations that defense contractors paid consultants and government officials for secret Pentagon information that was useful in winning contracts. So far, government sources said, about 275 grand jury subpoenas have been issued to companies and individuals and the FBI hassearched contractors' facilities across the country.
The search warrant that came to light Saturday focuses on the relationship between Tallia and two Washington consultants who previously emerged in the procurement investigation - Paisley and William Galvin, a United Technologies consultant.
It sought "statements of work proposals, agreements, purchase orders, invoices, bills, correspondence, memoranda, notes and other documents relating to Pratt & Whitney and its employees and Galvin and Paisley or their corporations" from 1985 on.
Paisley, a former Boeing Co. executive, is a central figure in the broadening investigation. Then-Navy Secretary Lehman recruited Paisley in 1981 to be his assistant secretary of the Navy for research, engineering and systems. Paisley resigned from the post in April 1987 - at the same time Lehman left the Pentagon - and he became a consultant for United Technologies and also for the nation's No. 1 defense contractor, McDonnell Douglas, as well as other defense manufacturers.
The Los Angeles Times report said federal investigations are pursuing information that Lehman warned Paisley that he was apparently being investigated. The Times report quoted sources as saying the alleged warning took place before Lehman left office.
However, The Washington Post quoted a source as saying the alleged warning came after both men had left government service. The Post said questions about Lehman focus on whether he may have obstructed justice.
However, the Los Angeles Times said its sources stressed that the information was "nothing close" to strong enough to consider charges against Lehman.
Lehman has not returned numerous telephone calls from The Associated Press seeking comment on the investigation. The Los Angeles Times quoted him as saying Saturday from his McLean, Va., home: "It would be inappropriate of me to comment on an ongoing investigation," and saying he would do so after the probe was completed.
Asked to comment Saturday on the probe, Larry Bingaman, a spokesman for United Technologies, said: "We're cooperating fully with the investigation."
In a related development, sources who declined to be identified told The Associated Press Saturday of a conversation between federal prosecutor Henry Hudson, who is spearheading the investigation, and Sen. Charles Grassley, R-Iowa, a critic of Pentagon spending policies.
Grassley and aides met with Hudson for 15 to 20 minutes Thursday afternoon and then the two met alone for another 30 to 40 minutes.
After Hudson laid out the scope of the probe, the sources said, Grassley - aware of the close ties among Paisley, Lehman and Everett Pyatt, assistant Navy secretary for shipbuilding - asked if Lehman was a target of the investigation. Hudson answered with a blunt, "No comment."
Paisley and Pyatt have not returned numerous phone calls seeking their comment.