Sun Microsystems' business relationship with the government may come under scrutiny next week when an embattled General Services Administration administrator testifies before a congressional committee about why allegedly overpriced technnology contracts were approved by the GSA.
Government contracts to Sun came under fire after the administrator for the GSA moved forward to approve them despite warnings from her staff and the administration auditor that a Sun contract was allegedly overpriced, according to a recent story in the The Washington Post.
Lurita Doan, the GSA administrator, will testify on June 7, before the Committee on Oversight and Government Reform. The issue of the Sun contract, which was renewed last fall and set to expire in August 2009, may be addressed at the hearing, according to a committee staff member.
The U.S. Justice Department, meanwhile, is planning to intervene in a whistle-blower lawsuit filed by Norman Rille, a former senior manager in Accenture's Information Delivery Architecture Group, and Neal Roberts, a former partner with Deloitte Coopers & Lybrand (which later became PricewaterhouseCoopers), against Accenture, Sun and Hewlett-Packard. The complaint alleges the companies paid unlawful kickbacks to secure government contracts and committed fraud by failing to disclose to the government complete pricing data.
Although the Justice Department is intervening in part of the case, it is required to file its own lawsuit, which may come as early as next month, a spokesman for the agency said.
Dell and Electronic Data Services also were named in the complaint. The Justice Department has declined to intervene in the case against Dell and has yet to make a determination regarding EDS, the spokesman noted.
Representatives for both Sun and EDS note they have taken appropriate measures in securing their government contracts. HP also defended as "appropriate" its partnerships and business practices with the government.
"We feel the (GSA) prices we negotiated were fair and the best rates," said Kathy Engle, a Sun spokeswoman. "We have followed their processes all along and have cooperated with the audit. We maintain a solid relationship with the GSA."
She declined to comment on possible action by the Justice Department, noting the agency has not yet filed its lawsuit against the company.
EDS, meanwhile, has "consistently performed in accordance with the terms and conditions of its contracts" with the federal government and applicable laws and regulations, said Travis Jacobsen, an EDS spokesman.
EDS, which receives more than 30 percent of its revenue from local, state, federal and international governments, also said it does not believe the issue has or will have a material affect on its financial performance or operations.