The Department of Health and Human Services yesterday proposed that the government bar Paradyne Corp. from any new government contracts for three years, alleging that the Florida computer company mispresented its equipment when it won a contract from the Social Security Administration in 1981.
Harvey Pitt, who represents Paradyne, said that the company "denies that it misrepresented anything," that Paradyne won the contract fairly and that a debarment from doing business with government agencies would be "wholly unwarranted."
The Securities and Exchange Commission already has filed suit against the company -- which had 1983 sales of $135 million. The SEC charged that Paradyne won the Social Security contract by deception. The SEC case is scheduled to go to court on June 10.
A spokeswoman for the Department of Health and Human Resources said that the Paradyne computer system is working well now, but that it did not when it was installed -- mainly because Paradyne misrepesented the equipment during the procurement process.
But Pitt said the problems were minor -- mainly involving operators turning the machine on and off too frequently -- and that, when a faulty microchip supplied by a subcontractor was replaced after an investigation by Paradyne, the problems were ended.
Under the debarment procedure instituted by the department yesterday, Paradyne will have 30 days to respond to the charges and then the case will be heard by an administrative law judge or some other independent evaluator. If the judge rules in favor of debarment, the ruling will go to the General Services Administration, which is in charge of all government procurement.
But the department said it will not suspend the contract in question -- which ultimately could be worth up to $100 million to Paradyne -- because without the equipment and the maintenance the contract calls for, Social Security would be disrupted.
If Paradyne is debarred, the government still could purchase its equipment and services if an agency head decided there is "a compelling reason" to do business with Paradyne.