Pentagon to Pay for Half of Cleanup : Government: Lockheed will be reimbursed for environmental decontamination costs in Burbank, GAO says.

WASHINGTON —  The Department of Defense will reimburse the Lockheed Corp. for more than half of the projected $263-million tab for environmental cleanup at its Burbank plant, the General Accounting Office reported Thursday.

The GAO reported that the Pentagon will pay for a substantial amount of the $3.1 billion in cleanup costs for the nation’s 15 largest defense contractors, including Lockheed. The findings were made public at a House subcommittee hearing in Washington held in response to disclosures that the Defense Department has been quietly reimbursing contractors for a portion of their environmental cleanup costs.

Some committee members and GAO and Pentagon representatives appeared to agree that the contractors deserved some reimbursement. Environmentalists at the hearing argued that the Defense Department should investigate more closely whether these contractors violated pollution regulations and, if so, that they should be forced to pay the full price for fouling sites.

The controversy arose after disclosures that the Pentagon was paying a share of the environmental decontamination expenses of a number of defense contractors--including Lockheed for the cleanup of its Burbank property.

Lockheed expects the Burbank cleanup to cost $263 million of the $385 million it will spend to restore sites around the country, Ronald R. Finkbiner, the company’s vice president for contracts and pricing, said in testimony before the House government operations subcommittee on legislation and national security.

Lockheed expects to recover between 50% and 70% of the $385 million through reimbursement from the Defense Department and other government contracts, Finkbiner said.

A GAO investigation was requested last year by Rep. John Conyers Jr. (D-Mich.), chairman of the subcommittee, and Sen. Barbara Boxer, then a House Democrat from Greenbrae, in response to a November, 1991, report by The Times revealing that the Pentagon had been reimbursing defense contractors for their environmental cleanup costs.

Facing significant financial liability at a number of the nation’s 1,200 Superfund cleanup sites, many defense and aerospace companies have been reimbursed under a general contract regulation that allows the government to pay for “reasonable” and “ordinary” expenses necessary to the contractor’s business.