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GSA Judge Affirms AT&T Charges of Discrimination

May 17, 1988

WASHINGTON (AP) _ An administrative law judge ruled Tuesday American Telephone & Telegraph Co. was treated unfairly by the General Services Administration and awarded AT&T four telecommunications contracts previously won by regional Bell telephone companies.

However, Judge Vincent LaBella, ruling for the GSA’s Board of Contract Appeals, found that bias against AT&T was not pervasive and refused to award thtion about the bid to its competitors.

AT&T said it was pleased with the board’s decision, but spokesman Herb Linnen said ″above all, we remain gravely concerned about the larger implications of the GSA’s conduct in this entire matter. Clearly, based on today’s decision, something must be done to restore public confidence in the integrity of the GSA’s procurements.″

The procurement, for 12 large electronic switches in the government’s long- distance telephone network, raised concerns about GSA’s handling of bids on contracts for an all-new federal phone system known as FTS 2000, worth as much as $25 billion over 10 years.

But GSA, in a statement reacting to the decision, assured that the people who worked on the switch contracts ″are not responsible for the evaluation of FTS 2000.″ The agency also noted it has taken steps to ensure security of the FTS 2000 procurement, including restricting access to information about bids.

The seven disputed contracts and five won by AT&T - worth a total of $55 million are being investigated by the GSA’s inspector general’s office, the Justice Department and the Senate Governmental Affairs Committee.

LaBella’s decision, with which the other two board members concurred, affirmed many of AT&T’s charges, including the claim that GSA engineer Sureshar L. Soni leaked confidential AT&T price information.

The judge said Soni ″resorted to an auction technique″ by disclosing the price to beat to AT&T’s competitors. He also said Soni improperly accepted gratuities in the form of meals from BellSouth and should not have participated in the contract procurement at all because his daughter was employed by BellSouth.

Soni, who has been reassigned within GSA, refused to answer questions about his role in the procurement, invoking his Fifth Amendment right against self- incrimination in a deposition during the course of the board’s investigation. He also refused to answer questions about his daughter, Neelam Soni, who was hired by BellSouth as a manager-trainee in April 1987 when bids were being formulated.

LaBella ordered the two switch contracts previously won by BellSouth to be given to AT&T because of the disclosures concerning Soni. Earlier in the board’s investigation, BellSouth offered to give up the contracts because an internal probe indicated the company’s bid may have been tainted.

The judge also ordered contracts won by Bell Atlantic for a switch in Philadelphia and by Pacific Bell for a switch in San Francisco be turned over to AT&T. He said the GSA discriminated against AT&T in evaluating its bid for the switches and failed to provide AT&T sufficient information about certain GSA policies.

He ordered the GSA to re-evaluate bids for a Seattle switch, won by US West, but he left undisturbed contract awards to Bell Atlantic for a switch in Washington, D.C., and to US West for a switch in Minneapolis.

He also termed as frivolous GSA’s attempt to turn the tables on AT&T by charging that the company also may have received confidential pricing information and used it to develop its bids.

In conclusion, LaBella said bias and bid-leaking by GSA ″resulted in less than fair treatment of AT&T,″ but he said AT&T ″failed to establish that any of these actions were taken with the specific intent of harming AT&T or benefitting the RBOCs (regional Bell holding companies).″

He attributed the GSA mishandling of the bids to personnel who ″operated with less than a masterful understanding of the actual requirements of GSA and of the terms and conditions of the solicitation.″

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