A subsidiary of Flow General Inc. pleaded guilty to federal conspiracy and corruption charges yesterday, an hour before the company and five employes were to go on trial in U.S. District Court in Alexandria.
Lawyers for General Research Corp. agreed to plead guilty to the charges after a plea-bargaining session Saturday.
Federal prosecutors then dropped charges against the five GRC employes and dismissed six counts of the original indictment, which accused the company of giving jobs to two Army procurement officers in order to win a $2.6 million contract.
U.S. District Court Judge Albert V. Bryan Jr. set sentencing for June 25. General Research faces a maximum fine of $30,000. Under federal contracting regulations, the guilty plea could lead to government action to suspend the company's right to compete for additional government contracts.
In its plea, the company admitted to a single conspiracy count contained in a criminal information filed yesterday. In addition, the firm pleaded guilty to two counts of the original 20-page indictment--aiding and abetting a violation of a federal revolving-door statute restricting former government employes who enter private business, and aiding government employes in actions that affected their own and the firm's financial interests.
The $2.6 million contract for development of a computer software system to handle Army personnel records was awarded to GRC on Sept. 29, 1980. A competing firm's allegations of possible wrongdoing led to the investigation.
Flow General President Joseph Hall, who in an interview last week said he was "overjoyed we finally have a trial" so the company could prove its innocence, said the firm decided to plead guilty because of "information received in the past few days."
Hall said the company admitted to "technical violations" of federal law as a result of actions that "while overzealous, were not in our opinion criminally motivated."
The company said the five employes involved in the incident "gave us their resignations" yesterday.
Federal prosecutors said in court papers that, if the case went to trial, they would prove that two Army employes and three GRC officials conspired to help the company win the Army contract.
Attorneys for the five individuals insisted their clients were innocent noting that because the charges against them were dismissed, they had no opportunity to reply to the allegations.
The prosecutors alleged in court papers that the two Army employes, Paul Gregory Shinderman, a civilian employe, and Capt. Steven W. Walker illegally provided confidential information to GRC about project specifications.
At an Aug. 13, 1980, meeting at GRC's McLean offices, prosecutors alleged, the two government employes met with company officials Robert Watt, James M. Wroth and Michael J. Maloney to help the company fine-tune its proposal and revealed details of competitors bids.
Prosecutors alleged both men were prohibited by federal law from dealing with the computer project once they left the service, but participated in a September, 1980 negotiating session with the Army after they went to work for GRC.
Shinderman was offerred a $42,000-a-year job at GRC and Walker a $32,000 salary, and both were offered bonuses if GRC won the computer contract, the prosecutors contended.