Business Notes DEFENSE CONTRACTORS

Despite its efficiency in carrying out Operation Desert Shield, the Pentagon is a paper tiger when it comes to penalizing its contractors for fraud and other crimes. Just last February Northrop pleaded guilty to 34 counts of falsifying test results on key parts for cruise missiles and AV-8B Harrier jump jets. In part because of those abuses, the Pentagon banned the company from receiving new contracts. But the Defense Department disclosed last week that it has waived the ban to allow the Navy to buy 104 more Harrier gyroscopes (total price: $300,000), which are made only by Northrop. Because the gyroscopes last only about two-thirds as long as promised, the Navy has been grounding the planes. At least 10 of the jets are now stationed in the Persian Gulf. Says John Conyers of Michigan, chairman of the House Government Operations Committee: "Northrop is a case study in botched Pentagon procurement."