Sun pulls out of GSA schedules contract

Sun Microsystems, mired for months in a battle with the General Services Administration and the agency's inspector general over pricing policies and audit practices, announced Friday it would cancel its Multiple Award Schedule contract as of Oct. 12.

“We took this step reluctantly, as we have always valued our relationship with GSA and its team of committed professionals,” Sun officials said. “Sun and GSA have enjoyed a successful relationship as partners for a number of years during which Sun has provided government agencies with some of the industry’s most innovative, energy-efficient, open-source and secure computing systems.”

Sun officials said the company will remain a federal contractor, but it won’t have a GSA MAS contract.

In a statement Friday, Lurita Doan, GSA administrator, said, "Taxpayers get the best deal when we allow our professional contracting officers to negotiate and manage the relationship with our vendors. Unfortunately this process was taken in another direction."

GSA officials are communicating directly with its customers on how the agency will move forward "and continue to meet their needs," Doan said.

Last week, Doan had asked a third-party -- the President’s Council on Integrity and Efficiency -- to review the case, which began with an IG investigation into Sun's product pricing but evolved into a dispute about government access to proprietary business data.

The IG's office had accused the company of withholding records requested as part of the investigation. But Sun Chairman Scott McNealy in July said the company was cooperating and had turned in more than 25,000 pages of documents. Sun officials also felt that the IG was biased, having said publicly that the contract was bad for government.

Even Congress got into the act. Sen. Charles Grassley (R-Iowa) in letters and statements over the last several months said Sun needed to comply with the IG’s requests for information under the rules of the contract.

On August 24, the senator asked Doan to cancel GSA’s contract with Sun, but Doan said she wouldn’t interfere in contracting process.

In a statement Friday, Grassley said he was surprised by Sun’s decision to pull out of its contract.

“I don’t know why Sun made this decision,” he said. “Government contractors should be expected to fully cooperate with inquiries by government officials and congressional oversight.”

Experts say Sun's decision will have far-reaching effects.

Larry Allen, president at the Coalition for Government Procurement, said on Friday that political meddling pushed Sun to cancel its schedules contract.

“That sets a dangerous precedent for government acquisition,” Allen said. “It doesn’t matter if you make a good-faith effort to comply, if an official or the IG has it in for you, you’re in trouble.”

GSA is the big loser in the situation, as Sun has other governmentwide acquisition contracts, Mark Amtower, a partner at Amtower and Co., said in an e-mail. “This should be a seamless, symbiotic relationship: the government needs Sun and the government is Sun’s biggest customer.” More companies he's spoken to are rethinking their schedule offerings, he said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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