Art Metal-USA Inc., one of the federal government's largest suppliers of office furniture, was suspended yesterday from receiving federal contracts because the firm's president was arrested here last month and charged with bribing a U.S. General Services Administration inspector in an attempt to gain a $25 million contract.
The Newark-based furniture manufacturing firm, which currently has three GSA contracts worth about $9.7 million and was the object of a major Senate fraud investigation in 1978 and 1979, will not be allowed to compete for or receive federal contracts or subcontracts until the completion of criminal proceedings against its top officer, Philip J. Kurens.
A GSA spokesman said the current contracts are not affected by the suspension.
Kurens, 63, who lives in West Orange, N.J., was arrested March 19 by the Federal Bureau of Investigation after a GSA quality assurance inspector was paid $5,000 for information about firms seeking the $25 million contract for ergonomic, or adjustable, desk chairs.
According to an affidavit filed in U.S. District Court here, Kurens also promised to pay the inspector, Lewis R. Holley, $50,000 if Art Metal received the contract.
Sources said Holley, who was first contacted about providing contract information on Feb. 24, immediately told a neighbor who is an FBI agent about the alleged offer.
In his letter notifying Art Metal of the suspension, GSA Deputy Administrator Richard H. Hopf III said the charge against Kurens reflects on his "integrity, business ethics and present responsibility as a federal contractor" and was the reason for the suspension.
U.S. Attorney Joseph E. diGenova said last night that the arrest of Kurens reflected the "increased vigilance" of law enforcement officials regarding government contract fraud. He noted that Kurens' arrest followed by 10 days the conviction of three men for bribery and conspiracy in connection with $2 billion in computer contracts for the U.S. Postal Service and the Small Business Administration.
"All of us in law enforcement need people like Mr. Holley, and I wish to commend him for his courage and integrity in helping to defend the integrity of a government procurement in excess of $25 million," diGenova said.
A woman who answered the company's telephone yesterday said no one was available to comment.
During the Senate investigation, a former Art Metal employe testified that it was "common knowledge" that the company was paying GSA inspectors to overlook shoddy furniture. Kurens and Arthur S. Lowell, the firm's general counsel, invoked their Fifth Amendment rights against self-incrimination when called to testify before a Senate Governmental Affairs panel.
Lowell was later convicted of conspiring to bribe two GSA inspectors assigned to check the quality of paint supplied to GSA by Atlas Paint & Varnish Co. of New Jersey, another of his clients.
Twice during its two-year investigation of Art Metal, GSA attempted to terminate or suspend contracts awarded to the firm, but in each instance it was told by U.S. District Judge Harold E. Greene that its actions amounted to "blacklisting" the company without going through the proper debarment procedures.
A GSA spokesman said yesterday that the contract involved in the alleged bribery was for 14,800 desk chairs that could be adjusted to fit the user and was valued at up to $25 million, for an average cost per chair of nearly $1,700.
According to an affidavit filed in court, Holley first met with Kurens on March 5 at the Barley Mow restaurant, 700 Water St. SW, where Holley turned over a list of other firms seeking the contract. Holley was offered $10,000 if he supplied a list of price proposals of Art Metal's competitors, the affidavit stated.
The men met at the same restaurant on March 19, and Holley was allegedly given $5,000 in cash. Kurens was arrested a short time later. He is free on $50,000 bond.