THE US Navy Department's announcement Tuesday that it was lifting its ban on new contracts with the General Dynamics Corporation left too many unresolved issues to be very reassuring. Defense Secretary Caspar Weinberger imposed the freeze on payments under existing contracts and awarding of new ones on the defense industry giant March 5 after congressional probes disclosed improper charges by General Dynamics for such things as entertainment, travel, and even dog-boarding.
Pentagon officials found ``no pattern of corruption'' on the part of the company, explaining that it was ``simply doing what regulations allowed.'' That should provide grist for the congressional mills -- particularly hearings planned by US Rep. John Dingell (D) of Michigan this fall.
The agreement announced this week looks more like a financial settlement and a means to get on with building nuclear submarines than resolution of the problems that beset the defense-contract system. General Dynamics has promised a ``comprehensive ethics program'' for its employees; it has dropped $111 million of $158 million in disputed claims under existing contracts; and withdrawn another $55 million of payment requests; and it will pay a $676,283 fine for illegally spending $67,283 for gifts to Adm.
Announced at the same time were new Pentagon contracts for General Dynamics: $616 million to build the 12th Trident missile sub and $658 million in other contracts, including $23 million to design a new attack submarine, the SSN-21.
Announcement of the new contracts is significant because it indicates that more than $1 billion worth of Navy work was being held up by the General Dynamics ban. Congressional sources say that the Pentagon is some $20 billion behind in spending of funds already appropriated.
Inability to put funds already in hand to work makes it difficult to justify new requests. Members of Congress had little trouble voting for a virtual freeze in defense spending this year: Constituents back home weren't happy, they found, about the General Dynamics expense acccount and Pentagon purchases such as $400 hammers.
While defense contractors must be held to account -- and only time will tell whether the rather mild penalties assessed against General Dynamics will have the desired effect -- the Defense Department needs to examine its own procedures. It is incumbent upon President Reagan to see that this is done. Contractors should not have access to loopholes -- or friendly Pentagon associates -- that afford the opportunity for misspending the taxpayers' money.
Clearly, the relationship between the Defense Department and military contractors -- particularly the half-dozen or so that dominate the industry -- is in need of more-thorough airing.
The eventual reform that appears necessary won't be easy to accomplish. The huge defense bureaucracy is like a supertanker under full steam: It takes a long time and careful steering to alter its course.