A congressional subcommittee has asked the Interior Department to explain a taped telephone conversation between a federal contracting officer and Data General Corp. executives that "appears to convey important procurement-sensitive information" about a $127 million computer contract just one day before it was awarded to the billion-dollar computer supplier.
An Oct. 25 letter from Representative Peter H. Kostmayer, D-Pa., chairman of the General Oversight and Investigations Subcommittee of the House Committee on Interior and Insular Affairs, to Manuel Lujan Jr., secretary of the interior, said the phone conversation raises "significant new concerns regarding the conduct of this procurement."
In that conversation, Mr. Kostmayer noted, the contracting officer indicated that Data General's proposed bid was not the lowest, saying that the department "threw out the lowest price because of certain conditions upon which those prices were based."
That was in addition to instructions from the contracting officer to " 'act surprised' if eventually notified of the award," wrote Mr. Kostmayer, whose subcommittee is investigating the department's handling of the contract.
"It is disturbing that such a conversation took place before the date of the contract award," Mr. Kostmayer wrote in the Oct. 25 letter, a copy of which was obtained by The Sun. "The contracting officer appears to convey important procurement-sensitive information to Data General, including predictions that it will soon be awarded the contract."
A Data General spokesman said yesterday that the tape, which surfaced earlier this year in the course of a legal dispute with another bidder for the contract, was "old news."
"It's already been reviewed by the courts," said Jim Dunlap of Data General, which is based in Westboro, Mass. "There's nothing new that we can see." He said the tape recording was made "for posterity."
Originally awarded to Data General last December, the disputed contract calls for the acquisition of computer hardware, software and services for the U.S. Geological Survey, a division of the Interior Department. The contract is one of a series of computer contracts.
An Interior Department spokesman said the contract has been suspended pending completion of the congressional inquiry. Mr. Kostmayer asked the department earlier this month to suspend the contract while the subcommittee investigated reports that Data General and the government tried to pay a smaller Virginia computer supplier to drop out of the bidding. At the time, the amount of the alleged payment was not publicly known.
According to the Oct. 25 letter, however, Data General and the Interior Department proposed paying SMS Data Products Group Inc. of Reston, Va., $1.475 million to drop out of the bidding.
The proposed settlement agreement, which was rejected by a federal court, included a payment by the government to SMS of $275,000.
In the Oct. 25 letter, Mr. Kostmayer characterized the agency's earlier proposed payment to SMS as "purely enticement to drop out of the procurement."