A General Services Administration official apparently gave employees of the Chesapeake & Potomac Telephone Co. and an Atlanta-based phone company key confidential data about a competitor's bid for federal telecommunications contracts worth millions of dollars, according to an investigation by the Senate Governmental Affairs Committee.
C&P, however, yesterday denied that the company had received what it regarded as confidential information about the bid of its competitor, American Telephone & Telegraph Co. The Atlanta company named by the committee, Southern Bell Telephone & Telegraph Co., said it was studying the matter.
Committee Chairman John Glenn (D-Ohio) last week sent the investigation's findings to GSA Administrator Terence Golden, whose agency awarded the contracts. "These allegations cast doubt on the integrity of GSA's procurements and can lead to continued public doubt concerning the proper expenditure of taxpayer dollars," Glenn said in a letter to Golden.
Congress and the telecommunications industry are closely watching the outcome of this and two other investigations into the contracts. The outcome is being viewed as a test of whether GSA will be capable next year of fairly awarding much larger contracts -- estimated to be worth $5 billion to $10 billion -- to create an all-new federal telecommunications system known as FTS-2000.
The contracts currently under scrutiny -- worth a total of about $55 million -- were for providing and operating 12 computerized switching centers to route calls for the government's existing long-distance network. AT&T currently provides all of that switching service.
In October, GSA awarded five of the centers to AT&T and the rest to subsidiaries of five of the country's seven regional phone companies, including C&P and Southern Bell. However, AT&T later filed a complaint at a federal disputes board, saying the bidding had been rigged against it. Subsequently, investigations were initiated by the Senate committee, GSA's inspector general and the Justice Department.
Glenn's allegations involve S.L. Soni, the former head of GSA's network engineering division, which assisted in evaluating bids. GSA announced last week that it had received unproven allegations against Soni and he was being transferred to other duties pending resolution of the various investigations. Soni's lawyer last week declined comment on the allegations.
According to Glenn, an unidentified official at C&P told committee staff that in repeated, one-on-one meetings with Soni, Soni gave him the "price to beat." That price was a dollar figure that corresponded precisely to AT&T's initial bid, Glenn told Golden.
The C&P official reportedly said he had no knowledge of whether Soni received inducements from the company to provide the information and that on the rare occasion when the two men ate together at restaurants, Soni always paid for his own meals. The C&P official said that the company did not rely on the data given by Soni and said it was so close to the publicly known price that AT&T was charging for the existing federal service that it gave C&P no advantage.
C&P spokesman Web Chamberlin said last night that prior to bidding, C&P had checked with GSA to confirm that its bid had to be less than what AT&T was currently charging. "GSA confirmed that fact," Chamberlin said. "C&P did not understand such confirmation to include any reference to AT&T bid information." Chamberlin confirmed that C&P employees had spoken with Soni but said that the content of the conversations was nothing like that reported by the committee.
"C&P's bid was developed independently and was substantially less than the published tariff rate," Chamberlin said. "To this day, C&P does not know the amount of AT&T's bid." Chamberlin also said that C&P employees had never given meals or gratuities to GSA procurement officials.
Glenn also quoted an official at the second company, Southern Bell Telephone & Telegraph Co., as saying that in an unsolicited phone call, Soni told him that Southern Bell would need to beat a particular price, given as a dollar range. That range, investigators said, conformed generally to the price in AT&T's sealed bid.
The Southern Bell official, the committee reported, said that the information was not used in formulating the company's bid. But Glenn's report noted that another witness who is not affiliated with the company said that the information was used in that way.
According to Glenn, the company official said that Soni had been the guest of Southern Bell for at least five meals at restaurants in the Atlanta and Washington areas. The company employee denied knowledge of any other possible inducements having been given to Soni. Senior Southern Bell officials attended the meals, the official reportedly said.
BellSouth Corp., Southern Bell's owner, declined to discuss the allegations in detail yesterday. "BellSouth is still conducting its own internal investigation," said spokeswoman Kathleen Hughes.
"At this time, we still don't have all the answers and feel there is no point on commenting on a piecemeal basis. We want to be absolutely certain of the accuracy of our responses in this matter. We have cooperated fully and will continue to do so," Hughes said.
In his letter to Golden, Glenn said that in uncovering the allegations, his staff had conducted about 30 interviews and reviewed stacks of documents.
Its investigations are continuing, the committee said, with unconfirmed leads suggesting that proprietary information may have been leaked to at least one more of AT&T's competitors.