Pentagon watchdogs go sniffing for cost overruns

For years, reformers on Capitol Hill and elsewhere have said a vigilant watchdog was needed to chase down the Pentagon's weapons cost overruns.

As the Reagan administration begins an arms-buying effort likely to exceed the peak Vietnam war years, it seems certain that it will do so under the eye of a new watchdog that is accountable to Congress.

The House of Representatives already has passed legislation establishing an independent inspector general for the Defense Department. And the Senate has just taken up a similar measure, with the blessing of the White House.

Under 1978 legislation 12 inspectors general were established (three were added later) to ferret out fraud, waste, and abuse in most federal departments. Because of opposition from the Carter administration, however, the Pentagon (along with the Treasury and Justice Departments) was not included. It was felt that an independent inspector could harm national security and interfere with the ''chain of command'' at the necessarily military Department of Defense.

But President Reagan was elected on a promise to severely tighten up government. He said the Pentagon would be no exception, and firm steps have been taken to curb waste and mismangement.

On the surface, it would seem that the Defense Department -- with its largest-ever peacetime buildup -- is to escape the budgetary knife. But Secretary of Defense Caspar W. Weinberger and his principal deputy, Frank Carlucci, have a long history of demanding efficiency in the government organizations they oversee. Back in the mid-1960s, they worked together at the Department of Health, Education, and Welfare, and pushed hard (unsuccessfully) for an independent inspector general.

At the Pentagon, they have appointed a new assistant secretary for review and oversight and given him 100 criminal investigators. Under their direction, use of the ''hot line'' to receive tips on waste and fraud has increased several-fold. And clear progress has been made in curbing such abuse.

But what one administration giveth, another may take away. A subsequent administration could do away with this new internal Pentagon watchdog set up by the Reagan initiative. Thus the push for a statuatory, independent inspector general that would have to be confirmed by and report to Congress.

Under Joseph Sherick, the new assistant secretary of defense for review and oversight, the Pentagon during a recent six-month period conducted 33,600 audits questioning $12 billion in military contracts. Some $3.5 billion in questioned costs were disallowed, and 27 major cases of potential fraud were referred to the Justice Department.

Proposed legislation to set up an inspector general answerable to Congress would likely increase that kind of activity.

The House-passed version would make the new Pentagon watchdog independent, as are those created under the 1978 law. The Senate version, written by William Roth (R) of Delaware, is a compromise that takes into account Defense Department concerns about protecting national security.

Here, the secretary of defense could veto investigations by the inspector general, but he would have to tell Congress about any vetoes and explain why within 30 days. Regular semiannual reports would have to be made to Congress, as well as notification within seven days of instances of fraud or mismanagement.

Pointing out that he has yet to stymie any of Mr. Sherick's activities, Deputy Secretary of Defense Carlucci told Senator Roth's Committee on Governmental Affairs that such situations as a rescue mission or sensitive research project ''would only arise very rarely.''

Others, including Sen. David Pryor (D) of Arkansas, wonder why the Pentagon should have special consideration when the Department of Energy (which designs and tests nuclear warheads) does not.

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