Pentagon Uncovers Ills at Garrett AiResearch

A Defense Department review at Garrett Corp. has turned up a wide range of deficiencies in the firm’s AiResearch Manufacturing unit, which has been in turmoil since late last year when 13 purchasing agents were fired in a kickbacks investigation.

The Garrett operation, based in Torrance, has been under examination by a team of Defense Department auditors and contract administrators who are conducting a “systems status review,” according to a Garrett memo obtained by The Times on Wednesday.

Such reviews are undertaken by the Defense Department to look for inefficiencies that drive up contract costs and non-compliance with the complex system of federal regulations that govern weapons buying.

Allied-Signal Unit

A Garrett spokesman said he was not aware of the Pentagon review and could provide no comment. Garrett, a subsidiary of Allied-Signal Inc., produces a diversified line of aerospace products with annual sales of about $2 billion. AiResearch is the leading supplier of aircraft cabin pressurization systems.

The review at Garrett includes an examination of the firm’s troubled purchasing system, which is being investigated both by a congressional committee and by the FBI.

Garrett management conducted its own internal investigation last year and voluntarily notified the Justice Department that it had evidence of illegal bribe-taking by some of its purchasing agents. So far, the FBI has not made any charges.

The Pentagon review of AiResearch’s purchasing operation, as laid out in the memo obtained Wednesday, found a variety of problems in the important area of internal controls. The Defense Department team was said to have found that:

- Garrett has been increasingly making purchases without competitive bidding. The review found that competition in AiResearch’s purchasing declined from 75.7% in 1983 to 48.2% so far this year.

“An adequate management system does not exist to measure competition,” the memo says of the Pentagon team’s findings.

- Records of contract negotiations were deficient. In one case, a “negotiation memorandum for a $135,000 contract was unsigned.”

- Sixteen deficiencies were found in the firm’s price analysis system. In some cases, large purchases were approved with such justification as “looks OK.”

- Unauthorized buying activity exists. “This is characterized by engineers soliciting and receiving quotes and by buyers acting to implement engineers’ orders without regard for good procurement practices,” the memo says.

- Working conditions are poor, the memo says, which generates “poor morale and shoddy workmanship.”

Approval in Writing

The review could result in formal disapproval by the Pentagon of the firm’s purchasing system. That would result in the Pentagon seizing authority to approve all of the firm’s large purchasing orders and subcontracts.

This approval “must be in writing, usually in response to a detailed written request,” the memo says.

Such bureaucratic entanglements are a major burden on a large defense firm. Garrett AiResearch, for example, made about $200 million of purchasing commitments in 1982, according to the firm’s promotional brochures. Having to obtain approval for every major purchase from the Pentagon could cause bottlenecks.

The final decision on whether to formally disapprove Garrett’s purchasing system rests with the Pentagon’s administrative contracting officer at Garrett, Marla Triplett, a representative of the Defense Contract Services Administration. Triplett could not be reached for comment Wednesday.