Sen. Charles Grassley (R-Iowa) wants to know how much money, if any, the government has saved or lost under its contract with Sun Microsystems, and he has asked General Services Administration Inspector General Brian Miller to check it out now.
A hotline complaint alleged that iSun overcharged the government in 2004 for products and services on GSA’ multiple-award schedules, Miller told the House Oversight and Government Reform Committee March 28. As a result, the company’s contract with GSA was extended but not renewed while the IG looked into the matter. Investigations have ensued to determine if GSA Administrator Lurita Doan intervened in negotiations to keep the company on GSA’s schedules.
The extension, which runs through 2009, was negotiated on terms unfavorable to the government, causing the government to lose as much as $30 million when the contract was signed in 2006, Grassley has said. “If the government is getting a fair deal, then I want to know it,” Grassley wrote in a June 5 letter to Miller. “If not, then Congress needs to understand the full scope of the problem.”
The audit Grassley requested would examine the complete Sun sales figures to determine how much money the government has saved or lost since Sept. 9, 2006, when GSA awarded the contract extension. He then wants the IG to compare those numbers to the potential savings based on the price reduction clause (PRC) several previous contracting officers had been seeking for the contract, according to the letter. Those officers were removed from negotiations.
“These contracting officers dug in their heels and sought to protect the government by seeking a very strong” PRC, Grassley wrote. The clause requires a vendor to grant the same discount to its GSA schedule customers that it gives to a nonscheduled customer.
“The PRC would be the first line of defense for ensuring that the government received the most-favored-customer prices, provided Sun submitted accurate and timely information,” he wrote.
Meanwhile, Grassley’s office is interviewing the contracting officers involved, the senator said in an interview with Federal Computer Week. Grassley said his staff will develop a report based on the interviews and release it in July. In his letter, he told Miller to make this audit a priority and have a preliminary report within 30 days and updates from then on.
Grassley said the Justice Department will conduct most of the investigation into Sun and whether it overcharged the government.
“We will still pursue our oversight and try to get more information,” he said.
In his letter to Miller, Grassley wrote that “the adopted GSA tactic” of removing those contracting officers gave Sun the PRC it wanted. “As a result, the PRC that was included in the award last September is based on discounts given to all commercial customers — not just the ones receiving the best discounts,” he wrote.
He also asked Miller to look into contract modifications and the customer sales information from which the discounts were derived. Finally, he requested a full investigation of Sun’s compliance with the corrective-action plan issued in mid-2006, according to the letter.
In a statement, GSA said it will cooperate with the audit and listen to the recommendations.
“The Sun contract extension was a good deal for the American taxpayer that was concluded after Sun provided a corrective-action plan, which was reviewed by the IG and approved by the contracting officer,” a spokeswoman said. She added that the IG requested that GSA not pursue the allegations.
The Office of Inspector General did not immediately return a call for comment.
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