Air Force made SAIC exception

An unsigned Air Force memo urging procurement officials to ask Science Applications International Corp. for more detailed pricing information than is normally required pertains only to SAIC.

It is not intended to be a new agencywide policy, according to Charlie Williams Jr., the Air Force's deputy assistant secretary for contracting. Williams' assurance came in response to a letter from Alan Chvotkin, senior vice president of and counsel at the Professional Services Council.

"It is uncharacteristic for an Air Force memo like that to be dated but unsigned," Chvotkin said, shortly after sending the council's March 29 letter. "That leaves open the question of whether it is a trial balloon or something real."

In the Air Force's response, Williams wrote: "The notice was issued to address and remediate a specific circumstance with SAIC.... It does not have a broader application. I want to emphasize that the notice does not reflect a change in Air Force contract pricing policy."

The memo, dated Feb. 11, refers to a pending Justice Department lawsuit alleging that SAIC officials padded the company's profits while performing an environmental cleanup contract at Kelly Air Force Base in San Antonio. Justice officials say SAIC officials illegally withheld information about their pricing.

Science Applications International Corp. has agreed to pay $2.5 million to settle the false claims case at Kelly Air Force Base. The settlement was announced April 27.

Air Force officials had first sent out an alert regarding the litigation Dec. 20, 2004. The February memo was intended to further explain the issues involved, according to the text of the document.

Published accounts and legal correspondence indicate that the case against SAIC began with a whistleblower, project manager Michael Woodlee, who believed that the company was getting more profit from the Kelly project than was spelled out in the fixed-price contract. Justice took over Woodlee's case last year.

The Air Force memo, called a Defective Pricing Notice, instructs contracting officers to request additional information from SAIC when the company bids, including copies of any risk analyses the company has performed, the minutes or reports related to any meetings about pricing, and the nature and amount of any contingencies included in the proposed price.

To some observers, however, it was not clear whether the Air Force directive was intended to apply more broadly. Chvotkin said his only concern was whether the more demanding requirements were meant to apply to everyone.

“In a bilateral negotiation, you can request just about anything," he said. "They have a lot more flexibility in a one-to-one relationship than they do in adopting a policy that affects many.”

SAIC officials are fighting the lawsuit and dispute the Air Force's notice, according to published accounts.