House Panel Acts to Block LTV Missile Unit Sale : Defense: A funding bill would prohibit the Pentagon from doing business with the division if a French firm buys it. Security concerns are cited.

WASHINGTON — A House subcommittee has moved to block the sale of LTV Corp.’s missile division to a French firm by voting to bar the Pentagon from doing business with the unit if the French buy it, congressional sources said Thursday.

The move to block the acquisition by the French firm Thomson-CSF occurred Wednesday during a closed session of the House Appropriations defense subcommittee, which was meeting to put together next year’s defense appropriations bill.

The subcommittee finished that process Wednesday but, in line with a policy set by its chairman, Rep. John P. Murtha (D-Pa.), details were being kept secret until the bill goes to the full Appropriations Committee.

However, sources familiar with Wednesday’s meeting said Murtha initiated the action to block the LTV sale by persuading the subcommittee to include language in the appropriations bill that would prohibit Defense Department contracts with LTV’s missile division if it is sold to Thomson.

“The proposed sale has raised a lot of security concerns in Congress,” a source said. While the subcommittee has no authority to block the sale outright, a move to prevent the LTV missile unit from doing business with the Pentagon is “an effective way for Congress to make its feelings known,” the source said.

Dallas-based LTV, a defense and steel firm, is operating under Chapter 11 bankruptcy protection and planned to sell the unit as part of a bid to emerge from bankruptcy. Lockheed Corp. and Martin Marietta Corp., both outbid by Thomson, have led the opposition to the sale.

The planned sale to Thomson was approved by the bankruptcy court last April. But Murtha and other congressional opponents of the sale have cited a Defense Intelligence Agency assessment that reportedly concludes that secret U.S. missile technology would be transferred to the French if the sale goes through.

Thomson-CSF, the U.S. subsidiary of the state-owned French electronics firm, is trying to allay the concerns by negotiating a special security agreement with the Pentagon under which LTV’s classified technology would not be transferred to the French parent company.

Congressional sources said Defense Department officials have told lawmakers that they would not object to the sale if there were such guarantees.

But the deal is still being heavily lobbied against by other U.S. defense contractors, and Murtha’s move to block the sale is likely to be only the opening shot fired by pro-defense industry lawmakers.