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DOCUMENT RESUMI,
03648 - [B2854102]
[Payment of Kickbacks by Subcontractors and Purchasing System
Waaknesses at Raythecn Company's Microwave and Tube Division,
Waltham, MaE sachusetts]. PSAD-77-1E6; B-1777L48. October 6, 1977.
2 pp, ' enclosure (8 pp.).
Report to Secretary, Department of Defense; by Richard W.
Gutmann, Director, Procurement e.nd Systems Acq-isition Div.
Issue Area: Federal Procurement of Goods and Services:
Reasonablezess of Prices Under N%',tiated Contracts and
Subcontracts (19C4).
Coptact: Procurement and Systems Acquisition Div.
Budget Function: National D.z~ense: Lepartment cf Defense -
Procurement & Contracts (058).
Organizaticn Concerned: Raytheon Co.
Congressional Relevance: Hcuse Committee on Armed Services;
Senate Committee on Armed Services.
Authority: Anti-Kickback Act, sec. 3, as amended (41 U.S.C.
51-54). A.S.P.R. 23.
Three subcontractois admitted paying an estimated
$125,00C in kickbacks to the buyer for the Raytheon Company,
Microwave and Power Tube Division, Microwave Tube Operation, in
return for purchase crders placed in support of negotiated
Defense contracts awarded to Raytheon. The three subcontractors
admitted paying kickbacks to the Raytheon buyer from about 1962,
1970, and 1971, respectively, until April 1975.
Findings/Conclusions: About $46,000 of the $125,000 paid to the
Baytheon buyer by the subcontractors may be recoverable on
behalf of the United States This is the amount whicL can be
documented as kickbacks pai6 from 1970 through April 1975
related to negotiated Cov-rnment prime contracts. Much of the
documentation for the period prior to 1970 was destroyed by the
time of the review of the case. Inadequacies in some company
procurement policies and procedures, failure tc follow others,
and general inattention by Raytheon's management to its
purchasing operation contributed tc the creaticn of an
environment in which the kickbacks were paid for 13 years.
Recommendations: The Secretary of Defensa should initiate action
to recover thE $46,000 in kickbacks which has been documented.
The Secretary should also circulate this case ti, all Defense
contract administration offices as an illustration of serious
internal control and procurement problems. There is a need for
an anti-kickback contract clause prohibiting gifts and
gratuities to serve as a means of fostering public policy
against giving kickbacks, gifts, and gratuities. (SCI](ViewImageLocal?handle=hein.gao/gaobaawdb0001&div=1&collection=&method=preview&ext=.png&size=3)