Payment of Kickbacks by Subcontractors and Purchasing System Weaknesses at Raytheon Company's Microwave and Tube Division, Waltham, Massachusetts

PSAD-77-166: Published: Oct 6, 1977. Publicly Released: Oct 6, 1977.

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Three subcontractors admitted paying an estimated $125,000 in kickbacks to the buyer for the Raytheon Company, Microwave and Power Tube Division, Microwave Tube Operation, in return for purchase orders placed in support of negotiated Department of Defense (DOD) contracts awarded to Raytheon. The three subcontractors admitted paying kickbacks to the Raytheon buyer from about 1962, 1970, and 1971, respectively, until April 1975.

About $46,000 of the $125,000 paid to the Raytheon buyer by the subcontractors may be recoverable on behalf of the United States. This is the amount which can be documented as kickbacks paid from 1970 through April 1975 related to negotiated government prime contracts. Much of the documentation for the period prior to 1970 was destroyed by the time of the review of the case. Inadequacies in some company procurement policies and procedures, failure to follow others, and general inattention by Raytheon's management to its purchasing operation contributed to the creation of an environment in which the kickbacks were paid for 13 years.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should initiate action to recover the $46,000 in kickbacks which has been documented. The Secretary should also circulate this case to all DOD contract administration offices as an illustration of serious internal control and procurement problems. There is a need for an anti-kickback contract clause prohibiting gifts and gratuities to serve as a means of fostering public policy against giving kickbacks, gifts, and gratuities.

    Agency Affected:


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