Newly disclosed conduct by American Telephone & Telegraph Co. during bidding for $55 million in federal telephone contracts last year raises "serious questions" of irregularities by the company, the General Services Administration said yesterday.
As a result, the GSA recommended that AT&T be denied a bigger share of the contested contracts pending the outcome of investigations into the awarding of the contracts. AT&T denied any wrongdoing.
GSA's move turned the tables on AT&T in a complex investigation that began in October at AT&T's behest. The company alleged that GSA officials leaked secret information to competitors about its bid for rights to operate 12 long-distance switching centers for the federal government.
The investigation for comparatively small contracts has drawn unusual attention, because GSA this year is to begin taking bids for a much larger telecommunications job, the operation of an all-new federal phone and data system known as FTS-2000. Those contracts would be worth $5 billion to $10 billion over 10 years.
The GSA's action followed disclosure Wednesday that AT&T had said in written testimony that a GSA official had told an AT&T employee during a July 28 meeting that its bid for a Washington area switching center "was not good enough to win" and that the GSA official had unsuccessfully pressed to determine what its final bid would be. AT&T later lowered its bid, but the contract went to competitor Bell Atlantic Corp., one of the nation's seven regional phone company.
AT&T yesterday said that weeks before the meeting with the GSA official -- a division chief named Sureshar Soni -- the company and GSA had agreed that AT&T's $40 per line bid for Washington did not constitute a 10 percent savings over the present service, as GSA was requiring, and that the company had informed GSA it would file a lower bid. It had not yet submitted it when the meeting took place.
"When he indicated to us that our $40 Washington offer was not good enough, he was stating the obvious," said Carly Fiorina, AT&T's national account manager for the GSA. She said AT&T did find Soni's request for the final bid to be unusual but decided it did not warrant seeking an investigation.
AT&T yesterday released copies of a June 17 letter from GSA informing the company that its overall plan "has been determined to be unacceptable as proposed" and was invited to submit a new bid. A reply letter from AT&T two days later, also released in part by the company, said the Washington bid price would be addressed in a separate filing.
GSA deputy administrator Paul Trause said yesterday he had no information to contradict AT&T's explanation of events. But he said that "these new allegations need to be examined through the discovery process and by the criminal investigations."
In a letter to AT&T yesterday, GSA general counsel Clyde C. Pearce Jr. said that "this disclosure, if true, obviously raises questions as to whether AT&T profited from the proprietary information of other companies" seeking the contract. "It raises serious questions about why this information was not reported to the Inspector General or the Department of Justice," he wrote.
Soni, a division chief in GSA, has been the focus of the investigation for several weeks now. Last month, Senate investigators said they had concluded he may have leaked information about AT&T's bid price to Bell Atlantic and BellSouth Corp., another regional company that successfully bid against AT&T.
Bell Atlantic has denied getting proprietary information. BellSouth later said that an internal investigation had found evidence of wrongdoing within the company and offered to turn its contract winnings, switches in Atlanta and New Orleans, over to AT&T.
GSA said yesterday it would oppose AT&T getting these or Bell Atlantic's switches until the full facts are known.
A federal appeals board yesterday denied a motion by AT&T that it be awarded BellSouth's contract.