Unisys deal target of U.S. probe

October 12, 1990|By Leslie Cauley

The Defense Department inspector general's office is conducting an investigation into possible violations by Unisys Corp. of the Buy American Act -- a law that requires vendors to certify goods as U.S.-made -- in its execution of a $700 million computer contract for the Air Force.

The investigation was revealed in a report, not yet released, by the inspector general's office on the Air Force's handling of the landmark computer contract, known as Desktop III. The contract, which was awarded to Unisys last November, calls for the purchase of as many as 250,000 desktop computers over the next five years.

Unisys beat out several large competitors, including Zenith Data Systems, to win the contract.

According to the report, a copy of which was obtained by The Sun, the probe into potential violations by Unisys of the Buy America Act is not complete. But investigators who disassembled a few computers provided to the Air Force by Unisys found a "high percentage of computer chips, circuit boards and other internal components were not domestically made," the report said.

The Buy American Act establishes a preference for U.S.-made products. To comply with the law, federal contractors must certify that at least half of the components' costs is from U.S.-made parts.

The report, which was prepared at the request of the House Government Operations Committee, said a conclusion about Unisys' compliance with the act could not be drawn until additional information from the company was received and evaluated.

A Unisys spokesman at the company's headquarters in Blue Bell, Pa., said he did not know when Unisys planned to forward the requested materials to the inspector general's office.

However, he said Unisys officials are "convinced we are meeting the buy American provisions of contract."

Though the report didn't offer a conclusion about Unisys and the Buy American Act, it did offer a few insights about the procurement.

According to the report, the Air Force's handling of the mammoth contract was marked by a "sense of unfairness," a contention long held by Zenith Data Systems, one of the failed bidders for Desktop III.

The report noted, for example, that when Unisys' office automation software initially failed to meet contract requirements, the government gave Unisys three time extensions to bring its equipment up to speed. The extensions resulted in the official testing period's being stretched from 15 days to more than six months, the report said.

Similarly, Unisys hasn't been able to meet its schedule as required by the contract, the report said.

As of Aug. 8, only about 11 percent of the equipment orders had been shipped on time, the report said. An additional 38 percent had been shipped but were late, and 51 percent of the unshipped orders were already late.

Investigators attributed most of the shipping problems to administrative ordering errors by the government.

But the repeated delays and the Air Force's seeming tolerance of them "introduced a sense of unfairness," the report said.

Even so, the report concluded that there was no evidence of illegal activity by either side and no grounds for canceling the Desktop III award to Unisys.

That assessment raised the ire of Representative John Conyers Jr., D-Mich., chairman of the Government Operations Committee, who had requested the report.

In a letter to the Defense Department's inspector general yesterday, Mr. Conyers said he was "deeply disturbed" at the conclusion that the procurement was unfair yet legal.

"Your findings that the procurement was both free of illegality and marked by unfairness seem to me to present a disturbing paradox," Mr. Conyers wrote in a letter to Susan Crawford.

"I cannot understand how a procurement that you concede was marked by doubtful equity and questionable fairness could have passed muster" with the Competition in Contracting Act, which ensures full and fair competition in the federal procurement arena.

In his letter, a copy of which was obtained by The Sun, Mr. Conyers said he was "surprised and disappointed" that the finding that the procurement was "marked by a 'sense of unfairness' was not sufficient to prompt a recommendation by you that the procurement be recompeted."

That view apparently was shared by Representative Fred Upton, R-Mich., who characterized the Air Force's handling of the contract as making "a mockery" of procurement laws.

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