A federal jury in Alexandria yesterday acquitted Computer Sciences Corp. and four individuals of charges they defrauded the General Services Administration in connection with a $100 million computer contract in the mid-1970s.
After the verdict was returned in U.S. District Court in Alexandria, Judge Richard L. Williams suggested from the bench that remaining criminal charges against the contractor are "not a case so much as . . . a lovers' quarrel."
"At some point it gets counterproductive and I hope counsel the prosecution will look at it realistically before we go into trial" on the remaining charges, Williams said.
In 1981, Williams dismissed a 57-count indictment against CSC, a giant California-based communications and computer firm, and six individuals. A federal appeals court later reinstated the charges, some of which were subsequently dropped. The verdict yesterday was in the first of three trials scheduled by Williams to resolve the remaining criminal charges against CSC and other defendants.
The Alexandria jury, which heard nine days of testimony that often explored highly technical areas of computer technology, yesterday acquitted each of the defendants of five counts of mail fraud and two counts of making false claims for payment from GSA.
The four individuals acquitted yesterday were John W. Luke, a CSC executive who was put on administrative leave after the indictments; Erwin L. Allen, a former CSC employe who is now a private consultant; Herbert G. Blecker, head of the Icarus Corp. of Maryland, which worked with CSC in the GSA contract; and Peter C. Loux, who left CSC to join Icarus.
The trial centered on a 1972 contract between CSC, which employs 5,000 people in the Washington area, and GSA to provide extensive computer services, including one called "COST," which was used by the Energy Research and Development Administration to analyze production of alternative fuels.
In the trial, prosecutors alleged that in 1974 CSC and Icarus, which owned software rights to COST, quarreled over how to divide income from the service. The prosecution contended that the two firms resolved their differences by raising the price on the service by 50 percent. The government argued that the two firms repackaged the service, gave it a new name and claimed it was improved when it was actually the same COST system.
The defendants denied that they had lied to the government and argued that federal officials were kept fully informed of changes being made in the service. The defense argued that the new service was in fact an improvement over the old one, which together with higher costs to the company justified a higher price.
CSC spokesman Bruce Plowman yesterday said the company was confident that the remaining charges against all the defendants are groundless. "We regret the expenditure of so much time and money that this has required, both from the company's point of view and the taxpayers'," Plowman said.
When asked about Williams' suggestion that the government consider abandoning the remaining portion of its case, Justice Department prosecutor William Lynch declined comment except to say, "The next case is set for trial June 27th."
CSC has been a major supplier of computer software and communications services to the federal government through civilian and military contracts. The fraud case against the company stemmed from a lengthy federal investigation of corruption at the General Services Administration.