WASHINGTON – Senator Chuck Grassley today asked the Administrator of the General Services Administration to look at following the Inspector General’s recommendation to give a 30-day notice of cancellation of the contract with Sun Microsystems. During the 30-day period, Sun would have an opportunity to comply with the terms of the contract by supplying all requested info needed for the audit.
The contract with Sun has been the source of much controversy. Over the last several months, the company has failed to comply with requests by the General Services Administration Contracting Officer and the Inspector General for information for an audit requested by Grassley. Sun has recently supplied additional information, but has yet to provide information on the Corrective Action Plan. This Corrective Action Plan was initiated by Sun to correct the company's past contractual deficiencies, and was a major determining factor in the awarding of a contract extension to Sun last September. The Senator has been concerned that Sun has not complied with its contractual obligations by cooperating with the audit.
“I don’t understand why Sun won’t cooperate. What do they have to hide?” Grassley said. “When both the Inspector General and the Contracting Officer agree that Sun is in violation of the contract, it seems to me that it’s time for Sun to comply.”
Grassley has been investigating the actions of the General Services Administration in monitoring and extending the Multiple Award Schedule contract with Sun Microsystems as well as interaction between the Inspector General and the Administrator at the Agency.
Grassley is expected to release a staff report in the upcoming weeks that will provide further insight and explanation into his investigation.
Here is a copy of Grassley’s letter to GSA Administrator Lurita Doan.
August 24, 2007
Administrator Lurita Doan
U.S. General Services Administration
1800 F Street N.W.
Washington, D.C. 20405
Dear Administrator Doan:
I am writing to follow-up on Inspector General (IG) Miller’s August 13th report to you which states, in part, that current “circumstances warrant immediate notice of contract cancellation” of Sun Microsystems Contract Number GS-35F–0702J.
A copy of IG Miller’s report to you is attached.
On June 5, 2007, I wrote to IG Miller, asking that his office “conduct a full and thorough audit of the current Sun Microsystems contract” to include an assessment of the Price Reduction Clause, various contract modifications pertaining to new product categories, and compliance with the corrective action plan.
IG Miller’s August 13th report was triggered by Sun Microsystems reported failure to comply with contract clause C.26 and provide pertinent data in support of the audit I have requested. This contract provision requires Sun to give GSA “access to and the right to examine any books, documents, papers, and records of the contractor involving transactions related to this contract for over billing, billing errors, compliance with the Price Reduction Clause and compliance with the Industrial Funding Fee and Sales Reporting clause of this contract.” IG Miller and Contract Officer Teresa Henderson have both made formal, written requests for the information in question, beginning on June 13, 2007.
On July 26th and August 2 nd Sun produced substantial quantities of materials. These documents were subsequently delivered to the Office of the IG (OIG) auditors. A review by the OIG auditors indicates that the Sun response was incomplete and unsatisfactory. Then on August 20th Sun provided more information. Although this material is still under review, preliminary indications are that Sun’s latest submission includes extensive but still incomplete sales data and no information whatsoever on the corrective action plan. Sun’s response to the IG’s and contract officer’s data requests is therefore still incomplete and unsatisfactory Without all the requested information, the IG cannot complete the audit that I have requested.
IG Miller is a duly deputized Inspector General of the United States Government. He was nominated by the President of the United States and confirmed by the U.S. Senate. He is empowered by the IG Act to conduct audits and investigations, including the audit of Sun Microsystems Contract Number GS-35F-0702J. I expect him to conduct this audit consistent with that authority and to complete the job in a timely manner.
Quite frankly, Administrator Doan, I do not understand why Sun would refuse to cooperate fully with this audit. Why is Sun refusing to provide all pertinent contract information as required by the contract? Why is Sun apparently afraid to open its books for inspection? This makes no sense to me. It makes me wonder: Does Sun have something to hide?
In view of IG Miller’s August 13th report to you, I now ask you to find a way to resolve this issue.
As you may know, the IG’s independent legal counsel has rendered an opinion on Sun’s general response to the data request. The IG’s independent legal counsel has concluded that “Sun’s two letters forwarding its documents production, on July 26 and August 2, 2007, failed to provide any explanation for its omission of the critical commercial sales data and supporting agreements. As such, Sun has clearly failed to comply with the requested production.......Continued failure to provide this needed sales data would represent a failure on the part of Sun to comply with contract clause C.26.” Admittedly, Sun has provided more - but still incomplete - sales information since this opinion was rendered on August 6th. However, all the requested information pertaining to the corrective action plan is still being withheld by Sun.
Contract Officer Henderson has reached essentially the same conclusion as the IG’s independent legal counsel, but she extended Sun’s documents production deficiency to clearly cover the Corrective Action Plan. She states in a letter to Sun Microsystems dated August 15th: “The Examination of Records Clause [C.26 of the contract] is comprehensive and includes all of the data requirements requested in the OIG’s letters of June 13 and August 7, 2007. Since the Corrective Action Plan ties into Sun’s accounting systems, procedures and practices and it was incorporated in the contract by bilateral modification, it too is covered by the Examination of Records Clause...... Sun is obligated by contract to provide the requested data and pertinent documents.”
If Sun is failing to comply with the terms of the contract, then I respectfully request that you consider initiating the cancellation of the contract as recommended by the Inspector General. The cancellation notice would give Sun 30 days to comply with contract clause C.26. If Sun complied with all requests from the contract officer and OIG auditors during that time period, then the notice could be withdrawn.
I look forward to hearing from you and learning about how you intend to address the problem identified in IG Miller’s August 13th report.
Sincerely
Charles E. Grassley
Ranking Member