Senator criticizes Sun, U.S. contracting agency

A U.S. senator ripped into Sun Microsystems and the U.S. General Services Administration (GSA) during a speech on the Senate floor on Wednesday, but both the company and the agency disputed the senator’s information.

Sen. Chuck Grassley, a longtime critic of Sun’s contracts with the U.S. government, repeated allegations that top GSA managers interfered in contract negotiations with Sun. The GSA coordinates government-wide contracts for U.S. agencies.

GSA executives “put pressure on the contract officer to sign a potentially bad contract,” Grassley said Wednesday. “All the evidence suggest that this particular contractor had been overcharging the government for years.”

Sun, still facing a lawsuit in Arkansas over government contracting procedures, has painted Grassley’s complaints as a misunderstanding about a disagreement between GSA administrator Lurita Doan and the agency’s inspector general’s office. The GSA’s inspector general has accused Sun of overcharging government agencies by more than $25 million in contracts dating back to June 1997.

Grassley, in his speech, accused Sun of cancelling its GSA contract before an audit he requested was completed.

“Now, if this contract was such a ‘good deal for America,’ as has been suggested by Sun and GSA management, then you would think Sun would rush to cooperate,” he said. “They did not. Instead, for three months, Sun complained to me, procrastinated, withheld information, and fought the audit at every step.

“Why would Sun cancel a contract it fought so hard to get?” he added. “Did Sun have something to hide?”

Grassley called on the GSA to fix its contracting procedures. He forwarded the results of a confidential audit of GSA and Sun to several government officials, he said.

Grassley’s speech was “not based on accurate information,” Sun said in a statement late Wednesday. “Sun produced all the information requested by the contracting officer and, only after that production was complete, did we cancel the contract.”

Sun cancelled the GSA contract in mid-September. It did not give a reason for backing away from the contract, but said it would continue to fulfill other government contracts not affiliated with the GSA multi-award contract. “We took this step reluctantly, as we have always valued our relationship with GSA and its team of committed professionals,” Sun said in a statement then.

The GSA, in a statement, also disputed Grassley’s information. “He uses false innuendo to impugn the motives of GSA management, and based on his statement regarding his investigation of the Sun Microsystem’s matter, this investigation appears to be a conspiracy looking for a theory,” the GSA said.

The Sun contract was “a good deal for the taxpayer,” the spokesman added.

The questions about Sun’s contracts surfaced in September 2004, when the GSA Office of Inspector General received a hotline complaint about the company’s pricing, according to March congressional testimony from Inspector General Brian Miller.

In July 2005, the GSA told Sun resellers the agency was cancelling Sun’s contract, because the company was allegedly charging government customers more than some commercial customers. Sun avoided the cancellation by agreeing to drop some prices.

Sun remains a defendant in an Arkansas lawsuit alleging a multimillion-dollar kickback scheme involving IT vendors’ work on numerous U.S. government contracts.

In August, IBM and PriceWaterhouseCoopers (PWC) separately agreed to pay the U.S. government a total of $5.3 million to settle the Arkansas allegations that the companies solicited and provided improper payments on technology contracts with government agencies. The lawsuit alleges that Sun and several other tech vendors provided kickbacks to systems integrators in exchange for favorable recommendations to government agencies.

Sun has until March 2008 to respond to complaints in the lawsuit, brought by a former employee of PWC and a former employee of Accenture. In August, the U.S. Department of Justice joined the lawsuit against Sun and the other vendors.