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BellSouth Giving Up Contract Because Bid May Have Been Influenced By Leak

January 23, 1988

WASHINGTON (AP) _ BellSouth Corp. said Friday it will give up a government telecommunications contract because of indications that its bid ″may have been influenced by information passed to the company.″

The company said it was taking the step voluntarily as a result of information that it has uncovered in its own internal investigation of bidding for the General Services Administration contract.

The contract was for two big telephone switches, in Atlanta and New Orleans. The GSA awarded contracts for a total of 12 switches worth $55 million. BellSouth would not divulge the value of the contract.

The Senate Governmental Affairs Committee said this week an official of Southern Bell Telephone & Telegraph Co., a BellSouth unit, told the panel company officials dined five times at the company’s expense with a GSA employee involved in the procurement.

The company also said it had received a phone call from the GSA official, Sureshar L. Soni, in which he indicated the price Southern Bell would have to beat to win the contract, according to the committee.

GSA said late Thursday it had learned for the first time that Soni’s daughter, Neelam Soni, was an entry-level manager of telephone operators for Southern Bell in Atlanta. But BellSouth did not refer to this development in its statement.

BellSouth said it was ″nearing completion of our own internal investigation and have indications that our bid may have been influenced improperly by information passed to the company.

″The manner in which the information was handled in Southern Bell showed a lack of knowledge of GSA rules and in some cases deviations from company policy,″ BellSouth said.

The company also said ″this was an isolated situation and we will take strong measures to see that a similar circumstance does not occur in the future.″

GSA spokesman Joseph Slye said the GSA’s board of contract appeals will decide whether to give BellSouth’s contract to AT&T or send it out for bids for a second time. He said AT&T came in second in the bidding, but he did not know how many other bidders, if any, there were.

He said BellSouth’s withdrawal ″will not slow down GSA’s efforts to determine the full truth″ in its probe of alleged leaks. ″We intend to push forward with all aspects of the discovery process as soon as possible.″

Senate investigators alleged that Soni provided confidential information from American Telephone & Telegraph Co.’s bid to Southern Bell and Bell Atlantic’s Chesapeake and Potomac Telephone Co., both of which were competing for contracts with AT&T. GSA last week reassigned Soni from his position as director of network engineering.

The contract award is being investigated by a federal grand jury and the GSA’s inspector general, as well as the Senate committee. AT&T has asked GSA to remove any officials involved in the switch contracts from the team working on procurement of a new federal telephone system, contracts for which are valued at as much as $25 billion.

Southern Bell and C&P each won contracts for two of the switches. AT&T won contracts for five switches, and for four of those it was the sole bidder. U S West and Pacific Telesis got the rest of the contracts.

AT&T, which had protested GSA’s handling of the procurement, commended BellSouth for its ″prompt″ investigation and its candor. The allegations that confidential information was leaked to bidders emerged during the proceedings that followed AT&T’s protest.

AT&T spokesman Herb Linnen said the target of AT&T’s interest is ″the GSA and the way it handles bidding on major projects.″ He said the company is concerned that ″things are not ship-shape at the GSA and that in the instance of this contract AT&T’s most sensitive bidding information was made available by GSA officials to our competitors.″

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