A DynCorp subsidiary and the McLean firm's former chief operating officer pleaded guilty yesterday to charges that they engaged in criminal bid rigging to obtain a $15.8 million electrical contract in 1982.
The guilty pleas came three days before the subsidiary, Dynalectric Co., and an ex-DynCorp official, G. Walther Ewalt, were scheduled to go to trial in the case in federal court in Louisville. Eight months ago, Dynalectric Co. and Ewalt were convicted of criminal bid rigging in a separate case in Atlanta.
Lawyers for DynCorp and Ewalt could not be reached for comment yesterday and a DynCorp spokesman had no information about the company's plea. But a Justice Department official said the guilty pleas, entered in federal court in Louisville, came shortly after U.S. Judge Charles Simpson rejected motions by Dynalectric and Ewalt to enter pleas of no contest, or nolo contendere.
Simpson set sentencing for Jan. 8. According to papers filed by the Justice Department, Dynalectric could be liable for fines amounting to twice its alleged profits from the bid-rigging activities, or slightly more than $6 million. Dynalectric's lawyer, Rodney O. Thorson, had argued in court papers that Dynalectric's maximum penalty under the law should be no more than $1 million.
Ewalt could be fined up to $100,000 and sentenced to a maximum three years in jail.
The pleas yesterday would appear to cap an ordeal that's lasted more than a year for DynCorp (formerly called Dynalectron Corp.). The firm's image was badly tarnished and, briefly, its sizable government contracting business was threatened.
The pleas give the Justice Department another victory in a nearly four-year investigation into the electrical contracting industry. The probe has generated more than 100 guilty pleas or convictions.
DynCorp is one of the Washington area's largest professional and technical services companies with $749.1 million in revenue last year. Ewalt formerly served as president of Dynalectric, the firm's electrical contracting subsidiary. Until earlier this year he was chief operating officer of parent DynCorp.
According to charges in a federal grand jury indictment last April, the alleged criminal conspiracy began on April 22, 1982, when Ewalt met with Kenneth W. Seales, the eastern regional manager of rival contractor Fishbach and Moore Inc., and three other contractors at LaGuardia Airport in New York. At the meeting, the indictment charged, the officials conspired to submit rigged bids on an upcoming electrical contract being let by the Big Rivers Electric Corp., a rural electric cooperative that was building a power station in Ohio County, Kentucky.
As a result of that meeting, collusive bids were submitted and Dynalectric obtained the $15.8 million contract in June of that year. In his decision yesterday, Simpson stated that "although the economic impact of the alleged scheme is uncertain at this juncture, the alleged conspiracies involve sizable amounts of money" and so "may thus be viewed as having some impact" on consumers who receive electricity from Big Rivers.
Seales did not plead guilty yesterday. His trial is set for Monday.
Last July, following the Louisville indictment and the conviction of Dynalectric in the Atlanta case, the Army began debarment proceedings against DynCorp, a move that could have severely hurt the company by reducing its defense business. But the Army has since reached a settlement that permits the firm to continue to bid.
Dynalectric and Ewalt are appealing their Atlanta convictions. DynCorp officials have said that they understand they are not targets of other grand jury investigations arising from the electrical contracting probe.