training, planning, administration, and logistics, or to provide oversight of component management and base support organizations. (c) Elimination of component commands would hinder close working relationships, coordination, and support of all Services. Integration of the Service component commands into USSOCOM would end a Service element's capability to voice specific concerns from a land, sea, and air perspective on resource needs to their parent Services. It is essential that our components work issues with their respective Services. Elimination of Service component headquarters would stretch span of control. Moving responsibility for unique Service administrative and managerial functions to USSOCOM staff would impede Services' legal responsibility for training, equipping, and sustaining."

USCINCSPACE echoes that, "The Naval Space Command component provides a cadre of personnel who represent USCINCSPACE priorities and have an established role in the Navy POM process. It is my most effective input to Navy POM deliberations."

Finally, the Secretary of Defense, in his 26 September 1988 Memorandum to the Chairman, Joint Chiefs of Staff recognized the importance of the component structure to the unified commands. He said, "The senior military leadership make a compelling case on a number of counts, particularly with regard to preserving the Service components of the Joint commands. I am persuaded that execution of the statutory Service responsibility to organize, train, and equip forces is an appropriate role for the component commanders, thereby freeing the CINCS to focus on their assigned wartime tasks."

Mr. HUTTO. Thank you.

The subcommittee stands adjourned until 9:30 tomorrow morning.

[Whereupon, at 5 p.m., the subcommittee adjourned, to reconvene tomorrow morning, Wednesday, March 1, 1989, at 9:30 a.m.]

DEFENSE PERSONNEL SUPPORT CENTER

HOUSE OF REPRESENTATIVES,
COMMITTEE ON ARMED SERVICES,

READINESS SUBCOMMITTEE,

Washington, DC, Wednesday, March 1, 1989.

bcommittee met, pursuant to notice, at 9:40 a.m., in room yburn House Office Building, Hon. Earl Hutto presiding.

MENT OF HON. EARL HUTTO, A REPRESENTATIVE FROM LORIDA, CHAIRMAN, READINESS SUBCOMMITTEE UTTO. The Subcommittee on Readiness will come to order. ear the Defense Personnel Support Center in Philadelphia s nearly $1.2 billion worth of textiles and clothing in order and equip our military personnel with everything from sleeping bags. It is a tall order to meet this requirement ires a complex system of thousands of transactions with s of companies each year. This system has been jolted by he most pervasive cases of procurement fraud to hit the in recent years.

rruption was widespread and involved conspiracy within cy and outward to industry dating back to the early 1960s. ians, consultants, and manufacturers participated in the to rip off the American taxpayer and the military personare the end users of these products.

rruption was so entrenched that it took some 20 years to and 5 years of investigation to unravel. Years of wiretap, es, informers, and audits produced an avalanche of eviat uncovered a corrupt and greedy system of payoffs, kickibery, conspiracy, and racketeering.

vestigation involved thousands of hours of work by the Department and the Defense Criminal Investigative Servinvestigation has resulted in suspensions, debarments, ntences, and millions of dollars in fines.

mage to our military is difficult to estimate, but it is huge of faulty products delivered to our forces in the field, and caused by fraud and mismanagement of this sector of acquisition.

abcommittee is interested in learning how this situation ved to reach such a critical point and how it was detected. to be assured that necessary corrective actions have been ted.

bcommittee also will be addressing some other matters rethe DPSC mission, including overseas transportation for

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commissaries and disbarment and suspension procedures for wrongdoers.

Mr. Kasich is unable to be here today, but at this time I would like to insert his statement for the record.

PREPARED STATEMENT OF HON. JOHN KASICH, A REPRESENTATIVE FROM OHIO Thank you Mr. Chairman.

In recent years there have been many allegations of instances of fraud, waste, and abuse in the Defense Department.

One of the most difficult of practices to discover and correct is outright fraud. I commend the aggressive efforts by all of the investigatory agencies that have brought this corruption to light and these people to justice.

However, I have serious questions about a system that could allow rampant greed and conspiracy to prosper in such a long-term and widespread manner. The American people expect honesty and integrity in Government.

I hope the system is being significantly revamped to eliminate the possibility of future clothing shortages. We want an efficient and responsive clothing acquisition program free from corruption. We are pouring large amounts of money into managing the acquisition of military textiles and clothing. We need to ensure that the resources we devote to this system deliver quality products on time.

We would not be holding this hearing if the people who committed these crimes had not been caught. This effort took a lot of cooperation from several Federal agencies, including DPSC officials. I look forward to a constructive dialog. A system overhaul is long overdue, and we will provide whatever assistance is needed to see that these changes take place.

Thank you Mr. Chairman.

We are privileged to have as our first witness this morning Mr. Edward S. G. Dennis, Jr., Assistant Attorney General, Criminal Division, Department of Justice. If you will come forward please, sir?

Until recently Mr. Dennis was the U.S. Attorney for the Eastern District of Pennsylvania. He is accompanied by Ms. Linda Dale Hoffa, one of the United States attorneys who conducted the prosecutions related to the fraud at the Defense Personnel Support Center.

We welcome both of you, and Mr. Dennis, you may proceed as you wish.

Mr. DENNIS. Thank you, Mr. Chairman. I have a prepared statement which I have submitted to the committee, and I would like to make that a part of the record.

Mr. HUTTO. Without objection, the entire statement will be admitted for the record.

Mr. HUTTO. You may summarize as you wish.
Mr. DENNIS. Thank you.

STATEMENT OF EDWARD S. G. DENNIS, JR., ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION; ACCOMPANIED BY: LINDA HOFFA, ATTORNEY

Mr. DENNIS. Mr. Chairman, my involvement with this case was as the United States Attorney for the Eastern District of Pennsylvania and Philadelphia. I think our interest in pursuing these matters was primarily stimulated by the concern expressed by the Congress and by the President over fraud, waste, and abuse, particularly in the area of defense procurement.

One of my earliest undertakings after my appointment as United States Attorney in 1983 was to visit elements of the Defense Logistic Agency in the Eastern District of Pennsylvania, and that inIcluded a visit to the offices of the DPSC. At that time we had a

number of investigations going on in terms of a sister agency, the Defense Industrial Supply Center, which is also located at the same installation. These investigations and prosecutions involved discreet occurrences of bribery and misconduct between contractors and primarily civilian employees.

But during the course of these investigations, as is often the case, some of the smaller offenses gave us an opportunity to develop evidence into corruption on a widescale basis. This corruption centered around a number of individuals who were in high-level positions at the Defense Personnel Support Center.

It has been my experience that where corruption is entrenched, it is very important that the investigating agencies and prosecuting attorneys' offices be sensitive to the opportunities to break into a corrupt network, because oftentimes these offenses are not carried out in isolation. They are a part of a pattern, and in this instance we found that it was part of a pattern that went back some 25 years and involved numerous contractors and Government employees at the Defense Personnel Support Center.

At this time I want to point out, however, that during our investigation we did not uncover any misconduct by military personnel associated with the Center. These were entirely civilian employees. The highest ranking individual who was implicated in this case was one Frank Coccia who was the highest ranking civilian employee at the Clothing and Textile Directorate. In fact he was the Director of that directorate. As you stated, Mr. Chairman, that directorate purchases on an average $1.2 billion in clothing and textiles each year. Frank Coccia, as a GS-15 earning at that time approximately $70,000 a year, had been in that position for some 10 to 15 years.

We found during the course of the investigation that not only was Mr. Coccia corrupt, but that the corruption went from him down to some of the lowest level clerical workers who were being paid bribes of $50 a month to expedite the processing of payments to particular contractors, and that the pattern of corruption was pervasive and that it was not limited to the upper echelons of the civil service there at this center.

There had been rumors for a number of years that corruption was taking place at the center, but the community of contractors and corrupt employees was close-knit. It was a relationship that had developed over a number of years and was a pattern which I think we have seen in other cases of the revolving door where high-level employees leave Government service, become consultants, and use their relationship with their former colleagues and their newfound relationship with contractors to eventually engage in corrupt activities, and to facilitate that corruption by being bag men, by handling the payment of bribes and arranging the terms for bribe payments between the contractors and the employees.

This relationship was one that was present in this case in the person of one Leo Lamer who had been a colleague of Mr. Frank Coccia's for a number of years. I believe he had reached the level of a GS-14 and had gone out into the private sector. But from our investigation we learned that his activities primarily involved being a bribe broker for Mr. Coccia and other civilian employees, and being a go-between between the contractors and these employees.