19. A cost overrun scandal with Electric Boat helped trigger Rickover’s downfall
In 1981, Rickover testified before a Congressional committee that the only two shipyards building submarines for the US Navy were defrauding the taxpayers. Rickover accused Electric Boat and Newport News Naval Shipyard of submitting fraudulently low bids to build submarines, after which they submitted claims for reimbursement for cost overruns. According to the Admiral, “Both yards have a battery of lawyers whose sole job is to file claims”. Rickover told Congress that though overruns occurred at both yards, Electric Boat, a division of General Dynamics, was considerably and measurably worse. He testified, “Apparently, Electric Boat’s bidding tactics were aimed at trying to force Newport News out of business”. Rickover asked Congress for legislation to reform the bidding and awards process. Electric Boat called foul and claimed the cost overruns occurred as a result of demands for greater testing and evaluation of their work, which inaccurately labeled some as substandard.
As the controversy flared and Rickover demanded the Navy not pay for fraudulent overruns, he continued his practice to ride each new submarine on its initial sea trials. He was aboard USS La Jolla for its trials in the summer of 1981. He oversaw a maneuver known as a “crashback”, a test of the ship’s braking ability when the engines are thrown into reverse. The ship temporarily lost control, and contractor personnel aboard for the test quickly blamed Rickover. There were no injuries and little damage. Following the incident came claims that over the years Rickover had accepted gifts from Electric Boat and other contractors, which in later interviews Rickover freely admitted. He gave many of them away to members of Congress. The combination of the near-accident, the gifts scandal, and his opposition to the Navy paying for fraudulent overruns finally gave the Navy the opportunity to retire him.