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Defense funds spent on perks for employees, audits discover

Two audits of seven defense contractors by the General Accounting Office turned up $4.9-million in illegal or questionable charges passed on to the government by the companies. That was in addition to $4.4-million in charges that the Pentagon's own contract watchdog agency had rejected.

The first audit report by the GAO, Congress' investigative arm, released Thursday examined expenses submitted by six small defense contractors. The study found $2-million in illegal or questionable expenses in addition to $1-million rooted out by Pentagon contract auditors.

The report covered six small defense contractors: Electromagnetic Sciences of Norcross, Ga.; Foster-Miller of Waltham, Mass.; MA-COM of Wakefield, Mass.; Sippican of Marion, Mass.; Sparta of Laguna Hills, Calif.; and SRS Technologies of Newport Beach, Calif.

The second GAO study, also requested by Sasser, examined E-Systems of Dallas, a top defense electronics firm. Auditors identified $2.9-million in illegal or questionable charges in addition to $3.4-million uncovered earlier by the Pentagon. E-Systems spokesman John Kumpf declined to comment on the GAO report.

Abuses uncovered by the GAO among the small companies included:

Bills from five contractors for $24,000 in alcoholic beverages. The bills included one submission for $1,621 in government reimbursement for a "working" dinner attended by 21 employees and for which the bar tab amounted to nearly half the total.

About $333,000 in bills from a contractor for travel to Jamaica, Grand Cayman Island, Hawaii and Puerto Vallarta, Mexico, for business meetings.

$14,000 over two years for tickets and parking for Boston Red Sox baseball and Boston Celtics basketball games. Also from the same company: $10,000 for "schooner rentals" for 40 employees and their guests, $12,000 in cable television charges for retirees and $5,800 for running shoes for employees.

But Sen. Jim Sasser, D-Tenn., chairman of the Senate Budget Committee, said in a hearing Thursday that neither the companies involved nor the Defense Department were unique in this regard. "The point is that this abuse is happening all over government," he said.

In fact, previous audits of major defense firms turned up numerous instances of contract money used for such purposes as country club memberships, yachts and gifts.