The recent lobbying scandal alleged against a Navy civilian employee and Rhode Island defense contractor are having repercussions for the Rhode Island defense industry, which some are saying could be “disastrous” for the local economy.
In a recent development, the Naval Undersea Warfare Center in Newport has been stripped of its authority to issue contracts, which will have uncertain consequences for the state’s economy, reported the Providence Journal.
The sanction, issued by the Naval Sea Systems Command (NAVSEA), was due to the $7 to $20 million in fraudulent payments from a senior manager at the Newport, Rhode Island naval base over 15 years. Federal prosecutors are alleging that the millions of dollars from the kickbacks were paid to fraudulent companies for work never performed.
“The Navy’s action signals a lack of confidence in the ability of local commanders to exercise control over their responsibilities,” said Loren Thompson of the Lexington Institute, in the Providence Journal. “It’s a very serious action, seldom taken by any of the Navy’s commands.”
The impact of the Navy’s action on the base and companies near the base in Aquidneck Island with Navy contracts is yet to be determined. Yet if the suspension of contract authority turns into a long-term admonishment, local contractors might eventually lose their advantage in the competition for lucrative, high-tech work for the submarine Navy, said S.G. Payne, a former chief spokesman for the warfare center. “That has the potential for being disastrous for the state of Rhode Island economically,” said Payne.
The NUWC employs more than 2,700 people on the base and about 3,000 more people work for private companies that contract with NUWC. It accounts for more than $534 million in contracts annually, with $360 million through companies based in southeastern New England.
Defense contractors on Aquidneck Island are worried that “changes to the process” of contracting could occur at the Newport base and will result in delayed payments to companies, said Judy Chong, spokeswoman for the Rhode Island Economic Development Corporation.
Thompson said there may be delays or complications with the negotiation of new contracts, with “progress payments” for work completed under existing contracts. “When you take something out of the hands of the people who are accustomed to doing something and you give it to new people — particularly with these overtones of wrongdoing — that’s going to slow the whole system down.”
The Navy responded to the disciplinary action in a news release that said the Naval Undersea Warfare Center “will develop a detailed plan” to address the issues raised and “to restore NAVSEA confidence in their contracting and oversight process.”
