November 1, 1995 in Nation/World

Bonuses To Follow Satellite Blunders Executives Who Presided Over ‘93 Disasters In Line For Millions

Newsday
 

In 1993, executives of Martin Marietta Corp. apologized for a string of disasters that ended up costing taxpayers $2.3 billion.

But now, those executives would get an $11 million bonus - backdated to 1993 - under a plan approved by the Clinton administration.

The fine print in what some congressional critics call a secret agreement between the Pentagon and Lockheed Martin Corp. shows Defense Secretary William Perry rewarding the company for work during the year that Martin Marietta accidentally destroyed a $l billion spy satellite package and lost three more satellites in space worth $1.3 billion.

Taxpayers picked up the $2.3 billion loss from the mishaps because neither the defense contractor nor the federal government had insurance, according to Air Force, National Aeronautics and Space Administration and other federal officials.

The $11 million is part of a controversial $31 million Pentagon payment to officials of the nation’s largest defense contractor. Under the plan, taxpayers would finance a third of the $92 million bonus package the executives gave themselves for staging the merger of Martin Marietta and Lockheed earlier this year.

Pentagon regulations prohibit paying any costs associated with “change in control” of defense corporations. To get around the ban, Perry approved a special agreement with the company that would allocate the $31 million to past and future contracts.

A copy of the agreement showed that most of the $92 million in bonus money went to Norman Augustine, chairman of Martin Marietta and now president of Lockheed Martin, and 439 other Martin Marietta executives and directors. Augustine got $8.2 million from the merger bonus.

The money was broken down in the agreement as an “amended and restated long-term performance incentive compensation plan” for 1993.

Perry and his aides have insisted that the Pentagon’s share is unrelated to the company’s bonus package and merely part of “incentives” the executives would have gotten even if there had been no merger. But Air Force officials familiar with the company’s 1993 record said the defense chief erred in picking that year.

“It was one screw-up after another in 1993,” said one Air Force officer.

On Aug. 2, 1993, Martin Marietta’s Titan 4 rocket exploded after liftoff, destroying an Air Force KH11 digital imaging satellite, a Lacrosse imaging radar and other electronic spy systems. In the next two months, Martin Marietta’s $1 billion Mars Observer satellite went silent in outer space; NASA later blamed a ruptured fuel line caused by a faulty design. A failed “kick motor” was cited for the loss of Landsat 6, Martin Marietta’s $220 million earth monitoring satellite; and a short circuit was the culprit for a $100 million weather satellite.

Despite the poor performance in 1993, the company was protected as are other defense contractors by agreements that guarantee profits over and above the cost of programs.


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