Report: No intimidation of GSA contracting officer found in Sun Microsystems negotiations

A General Services Administration contracting officer was not intimidated by agency auditors during the 2006 negotiation of a controversial and highly politicized technology contract, according to an independent inspector general report released on May 19.

Comment on this article in The Forum.U.S. Postal Service Inspector General David Williams investigated whether auditors with the GSA inspector general's office had pressured contracting officer Michael Butterfield to reject a contract renewal proposal by technology firm Sun Microsystems.

In a letter to GSA Inspector General Brian Miller announcing the results of his investigation, Williams said the complaint -- filed by then-administrator Lurita A. Doan -- was based on allegations from agency vendors involved in the dispute.

Sun, which later canceled its contract and quit the GSA Schedules, had used its "lobbying partners to try to shape Doan's views" about the contract renewal, Williams said.

"It also appears that Doan has continued to rely almost exclusively on Sun's executives and consultants to provide her with information about alleged OIG intimidation of contracting officers," Williams wrote.

Miller claimed victory with the report, which he said, "debunks the baseless claims" by Doan.

"It should please everyone interested in this issue to know that independent investigations have again confirmed that the employees of the GSA OIG continue to conduct themselves with professionalism and integrity," Miller wrote in a letter to Sen. Charles Grassley, R-Iowa, who had requested the inquiry.

Miller conducted an internal investigation of the allegations shortly after they were raised in October 2006 and found the charges without merit, said David Farley, a spokesman for the GSA inspector general's office.

In an e-mailed statement to Government Executive, Doan said the intimidation allegations were supported by multiple sources, including government employees, private companies and whistleblowers in Miller's office, none of whom were interviewed by Williams.

"Splashing buckets of IG whitewash on allegations of intimidation will not change the facts," said Doan, who was fired by the White House in April, reportedly because of her feud with Miller. "I fought and lost this battle to rein in IG intimidation and to provide oversight equally to all government employees. This investigation is a travesty and provides two lessons: First, there is, indeed, a double standard. One for IGs and one for the rest of government; and second, the only safety for government employees in an IG's investigation is conciliatory silence. How utterly sad."

The latest finding ends one of the last remaining vestiges of Doan's long-running feud with Miller and closes a vexing and contentious chapter in GSA contracting.

The Santa Clara, Calif., technology firm Sun has sold IT hardware, software and support services on the GSA supply schedules since the late 1990s. In August 2004, the company's primary GSA contract -- a five-year deal to provide IT services -- expired, and officials were unable to resolve several key renewal terms. In the following two years, GSA provided Sun with at least eight short-term extensions as renewal discussions continued.

The controversy erupted on the front pages of newspapers and on Capitol Hill when it was revealed that three GSA contracting officers had refused to accept Sun's proposals and had urged agency leaders to cancel the contract.

The contracting officers balked at Sun's reported refusal to provide competitive discount rates for services and their refusal to honor "price reduction" clauses, which ensure that the government is getting the same price that contractors offer to their "most favored" commercial customers, according to a March 2007 report from the House Oversight and Government Reform Committee.

Miller supported those claims, arguing that the government had paid millions more than Sun's commercial customers for the same products and services during the original five-year contract. Miller forwarded this complaint to federal prosecutors, who opened a false claims suit against Sun and other firms in April 2007. Sun has denied those allegations.

Butterfield, the third contracting officer to handle the Sun renewal case, told committee investigators that the terms Sun offered were "inferior" and did not merit renewal. Butterfield's managers at the IT acquisition center said government customers might have lost as much as $77 million in discounts since 1999 due to Sun's failure to honor the price reduction clause.

Eventually Butterfield was taken off the contract and a fourth contracting officer quickly signed the extension. Critics accused Doan of intervening in the case, a charge she has denied repeatedly.

The controversy re-emerged last summer when Grassley accused Sun of refusing to turn over documents related to an ongoing GSA inspector general audit. Sun Chairman Scott McNealy said he questioned the objectivity of Miller and his staff. The senator later urged Doan to cancel the contract, but she refused. In September, Sun voluntarily canceled its contract and quit the GSA Schedules, citing its problems with Miller.

The postal inspector general's report was highly critical of GSA operations and leadership. At the time of the contract renewal, the Federal Acquisition Service was "dysfunctional," contracting officers were "grossly overextended, the management structure had virtually collapsed, and GSA leadership appeared to be signaling its employees to favor the commercial interests of certain large vendors," Williams said.

"Former administrator Doan met with the top 10 vendors in GSA's schedule program soon after her confirmation, and immediately embraced their complaint that the GSA inspector general was an impediment to good business," he said. "According to published reports, at least four of these complaining vendors were subsequently charged with making false claims in federal contracts. It appears that Doan uncritically applied the vendors' perspective to the Sun contract negotiations, despite strong evidence that Sun had long been engaged in a pattern of misconduct."

Sun officials declined to comment on the substance of the complaint, citing the active litigation between the company and the government. But the company denied ever lobbying Doan about the contract renewal, calling the allegations false. "In addition, while Sun was one of the parties that filed complaints against Mr. Miller and his office, we were never contacted during the course of the Postal Service investigation into those allegations," said Josh Zecher, a spokesman for 463 Communications, a public relations firm that represents Sun.

Doan, who met with Postal Service agents on March 23, criticized the investigators for refusing to broaden their investigation to include other allegations of intimidation by Miller and his deputies. Williams did not interview four former GSA inspector general attorneys who had filed a pair of whistleblower complaints against Miller -- charges Doan says reflect those alleged in the Sun case. Miller was cleared of the whistleblower allegations in April.

"By narrowing the focus of the inquiry to a matter that began two years before I became administrator, and by cherry-picking which persons were interviewed and which parts of these testimonies would be included in the findings, the postal IG was finally, after almost five months, able to sculpt a findings document that justified the GSA IG's previously determined conclusions," Doan said.

Grassley said the findings confirmed his own investigation results indicating that the GSA inspector general's office had done its job, and he put the blame squarely on Doan's shoulders.

"Unfortunately, it appears the allegations of intimidation were just a smoke screen to cover the removal of at least two contracting officers who were actually looking out for the taxpayer instead of Sun Microsystems," Grassley said in a statement. "Rather than allowing the process to work in the best interest of the taxpayer, it looks like top GSA management was more than willing to push away contracting officers who wouldn't favor the interests of several large vendors. It's a sad day for the taxpayer, but now it's time to set aside the tit-for-tat and get to the bottom of the problems within the Federal Acquisition Service."