By Matthew Schofield, McClatchy Newspapers –
WASHINGTON — Two powerful U.S. senators want the Pentagon to consider suspending or blocking one of the nation’s largest defense contractors from government work because a subsidiary has admitted selling software to China that it knew would be used for military purposes.
In a letter to the secretaries of defense and state, Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., said the sale by Pratt & Whitney Canada, a division of United Technologies, raised concerns that the deal “may have caused significant harm to our national security.”
The contract involved selling software designed for civilian helicopters that the company knew “would be used by China to develop its first modern attack helicopter,” they wrote to Pentagon chief Leon Panetta and Secretary of State Hillary Clinton.
The deal also could have meant access to a $2 billion civilian helicopter market in China, according to Justice Department documents.
The letter came after Pratt & Whitney Canada pleaded guilty to federal criminal charges from the Department of Justice stemming from the development of the Chinese Z-10 attack helicopter. In addition to that guilty plea, United Technologies and another subsidiary agreed to pay a $75 million fine for breaking export laws related to defense materials and for failing to report the matter quickly and honestly.
Justice delayed charges against United Technologies and the other subsidiary for two years, providing that they pay the fine and hire an independent monitor to make sure they’re following exports law.
McCain and Levin called the crime “enormously troubling.”
Lt. Col. James Gregory, a Pentagon spokesman, said the letter had been received and that a response to Levin and McCain would be forthcoming.
In a statement, United Technologies said it had “greatly improved our compliance infrastructure, and have revitalized our ethics programs.” The company said it understood “the important role export controls play in safeguarding U.S. national security … we take these obligations very seriously.”
United Technologies, based in Hartford, Conn., is a top 25 defense contractor. It earned $58 billion last year. Losing the opportunity to bid on federal contracts could cost it billions in lost revenue.
The charges against United Technologies appear to raise questions for the defense industry during a time of declining spending.
Micah Zenko, a foreign policy and national security expert at the New York-based nonprofit Council on Foreign Relations, said contractors increasingly were concerned that as the United States spent less on the military, they would need to seek out more foreign clients.
“The need for exports is increasing, and China is a primary market for that,” he said.