Officials of a consulting firm spent $2,000 on meals for John A. (Jack) Svahn, then Social Security commissioner, and other Social Security officials in the two years before winning a lucrative subcontract to help redesign the system's computer operations, the General Accounting Office said yesterday.
"We are referring the matter to the Department of Justice," Milton J. Socolar, special assistant to the comptroller general, told a House Government Operations subcommittee. The panel is headed by Rep. Jack Brooks (D-Tex.), who had requested a GAO investigation of the contract involving the firm of Deloitte Haskins & Sells (DH&S).
Socolar said the period involved was between the end of 1980 and the awarding of a contract to Electronic Data Systems (EDS) in December 1982, with DH&S as chief subcontractor.
The initial contract to EDS was for $6.3 million, but Socolar said that the work involved will cost an estimated $32 million by the time it is finished and that about one-fourth to one-third of the money will be paid DH&S for its subcontract.
In rebuttal testimony, Svahn, now President Reagan's assistant for policy development, and other officials and company officers did not deny that the meals occurred but insisted that the contract was not discussed and that the dinners and lunches were friendly occasions.
The GAO found that the firm, for which Svahn worked before becoming commissioner in 1981, picked up the meal tab for Svahn on 12 occasions and for Nelson J. Sabatini, now acting deputy commissioner, who signed the 1982 contract award, 15 times.
Socolar also said that, at various times during the two years, "personnel from DHS were provided highly visible office space" at the Social Security headquarters in Baltimore, in rooms which were adjacent to Svahn's office and "used on a continuing basis."
Among those who GAO said used the space were James S. Dwight, a longtime friend and former boss of Svahn in the Department of Health, Education and Welfare and an associate of Svahn at DH&S; DH&S systems expert Vito G. Petruzzelli, and Michael Brush, identified as a DH&S manager "brought in to work at SSA substantially full-time" over that period.
The subcommittee voted to subpoena Marshall S. Mandell, former deputy SSA commissioner, whose lawyer, Brooks said, had advised him that Mandell, fearing self-incrimination, would not testify .
Brooks also said that, on Oct. 31, a caller purporting to be an employe of Rep. Connie Mack (R-Fla.) asked the panel for material not made public on the investigation.
When a messenger arrived, Brooks said, the panel staff learned that the package was to be delivered to the DH&S office here. Dwight said he did not not know who sought the data.
Under oath, Svahn called the GAO report "very onesided, very slanted and inaccurate." He said that he "had nothing to do with the award of the contract" and that it was handled by lower-level officials . He said he did not know who would get the award "until the morning it was made."
In addition, he testified, Petruzzelli and Dwight were occupying offices near his because they had worked on Reagan transition teams in 1980 and were doing follow-up work on various transition papers. "I do not believe they were there for two years" on any regular basis but perhaps two months at various times, he said.
Svahn said he is "sure that I did" have dinner with Petruzzelli or Dwight, but he denied discussing the contract then and said he had entertained them, too. "Sometimes I have paid; sometimes he [Petruzzelli or Dwight] has," Svahn said.
Sabatini said he was not involved in development of the computer modernization. "I never discussed the . . . contract" with Petruzzelli and Dwight, and in awarding it, the SSA simply followed the recommendations of technical and advisory committees, he said.
Sabatini said he lunched and dined with the DH&S officials but in friendly, personal meetings. He said he often footed the bill to entertain Petruzzelli.
Petruzzelli described the meals the same way, saying the contract was not discussed, and estimated that he spent no more than 60 days over two years at the SSA office.
DH&S officials denied that Brush spent most of his time at the agency for two years and said any company employes were there to work free on transition papers or discussing two smaller computer projects.