STEINBRENNER GETS $58 MILLION BAILOUT

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 1, 1993                   TAG: 9302010073
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A/2   EDITION: METRO 
SOURCE: JIM DRINKARD ASSOCIATED PRESS
DATELINE: WASHINGTON                                LENGTH: Medium
STEINBRENNER GETS $58 MILLION BAILOUT
Baseball team owner George Steinbrenner failed in the first round of a contract dispute with the government. But his second try was a sweet success - a $58 million bailout for his family shipbuilding business provided quietly by Congress.
Having already made $16,500 in political contributions to key congressmen since 1987, Steinbrenner enlisted two lobbyists with connections to the Appropriations subcommittees that control Pentagon spending.
The imposing owner of professional baseball's New York Yankees even made a few personal calls on Congress along the way.
Last October, without a single public hearing and without even consulting the government officials who steadfastly refused to pay the claims, Congress quietly added the money to the Defense Department's 1993 budget.
The final amount ordered paid to Steinbrenner's Tampa, Fla., shipyard was even more than he originally sought in negotiations and a lawsuit he filed against the Navy and U.S. Maritime Administration. "It's bad public policy," said Patrick Morris, deputy administrator of the Maritime Administration. Congress, he said, was meddling in an area where it had no proper role.
Steinbrenner accused federal officials of trying to shut his struggling American Ship Building Co. out of an exclusive club of favored contractors, and said Congress was his only recourse. "Every single major shipyard in this country has had problems with the Navy on their contracts," he said, calling his donations to congressional figures during the period a matter of "friendship."
The Navy, afraid of angering its congressional patrons, would Steinbrenner not discuss the case. "The Navy's not going to bite the hand that feeds it," said one Pentagon official.
The dispute arose over two contracts: a 1987 agreement to convert and refurbish a pair of crane ships for a fixed price of $43.1 million, and a 1989 pact to complete two fuel supply ships for $49 million.
The shipyard, like many others in the industry, was starving for work at the time because of dwindling Pentagon business. Federal officials say Steinbrenner bid unrealistically low to win the fixed-price contracts, hoping that he could recover later through appeals for reimbursement. But Steinbrenner said the government saddled him with "rust buckets" that required more extensive repairs than he expected.
The Navy and the Maritime Administration took a hard line. They offered minor price adjustments, but sought for the most part to make the yard honor its fixed-price contract.
Steinbrenner at first went to court, suing to recover $13.3 million in overruns on the crane ship contract and $24 million in "extraordinary contractual relief" on the Navy oilers. But a short while later, he set his sights on Congress' two gatekeepers of Pentagon spending: Rep. John Murtha, D-Pa., and Sen. Daniel Inouye, D-Hawaii, the chairmen of the House and Senate Appropriations defense subcommittees.
Sometime last spring, unknown to the government bureaucrats and lawyers dealing with his claims, Steinbrenner dispatched two lobbyists to Capitol Hill.
Paul Magliocchetti, an aide on the House subcommittee from 1981 to 1987, approached Murtha. William Ragan, a longtime Inouye supporter and fund raiser, approached the senator.
Both lobbyists had made political contributions to Murtha and Inouye; Steinbrenner was a regular giver, too. He had donated $4,000 to Inouye in 1987, when the senator was mounting an unsuccessful bid to become Senate majority leader and gave Inouye and Murtha $1,000 each for last year's elections.
When Inouye and Murtha won final passage of their bill on Oct. 5, it contained provisions awarding American Ship Building the full $13.3 million it had sued for on the crane ships - rendering moot the government's efforts to fight it in court - and ordering a $45 million additional payment for the oilers, some $20 million more than Steinbrenner originally had sought.
Murtha said his action was an attempt to find "an equitable solution" after the problems were brought to his attention by Magliocchetti and Reps. Bill Young, R-Fla., and Sam Gibbons, D-Fla. They, too, have received substantial campaign gifts from Steinbrenner and his lobbyists.

by Archana Subramaniam by CNB