U.S. Senator and Sun Exchange Fire Over Contract

GSA awarded the contract extension in September, amid an investigation into claims that Sun failed to honor a contract clause that required the vendor to offer the same or better discounts on goods and services to federal customers as what is offered to commercial customers.

The Justice Department sued Sun in April, alleging fraud, and Grassley ordered an audit of both the GSA's contract extension and Sun's corrective action plan in June. According to a March 2007 statement by Grassley to the House Oversight and Government Reform Committee, "alleged fraud on these contracts, involving defective pricing, unauthorized charges, and unpaid discounts is valued in tens of millions of dollars."

In the letter to McNealy posted to his Web site Tuesday, Grassley claims that repeated requests for information from the inspector general as part of the audit were ignored.

"There is a very well documented trail of evidence that appears to show Sun has consistently failed to fully cooperate with audits of this particular GSA Multiple Award Schedule contract," Grassley wrote. "And this problem has existed for a number of years Sun Microsystems has often been praised as having an excellent reputation and for conducting business in an ethical manner. I would think that based on the scope of the alleged violations on this contract in the past, Sun Microsystems would be eagerly seeking maximum transparency on its business operations with the Federal Government today. This is truly a moment for Sun Microsystems, Inc. to shine and to set an example as a government contractor. However, the current situation appears to be rapidly deteriorating into the same old pattern where Sun is fighting and delaying oversight of its government contracts. I assure you that this will no longer be tolerated."

Sun responded to Grassley's accusations in a written statement, claiming that the company has objected to the Inspector General's participation in the process, but that it was fully cooperating and assembling more than 25,000 pages of documents in response to the contracting officer's requests.

Sun filed a formal complaint with the President's Council on Integrity and Efficiency, claiming that the IG is on record as prejudging whether the current contract is a good deal for the taxpayer.

The company also claims to have offered in writing to meet with Senator Grassley to address his concerns.

In a letter of response to Grassley, McNealy stands by the current GSA contract as a god deal for taxpayers.

"[The contract] provides GSA with extremely competitive pricing that we believe is, in many cases, substantially more favorable to the government than our competitors' prices on similar products," he wrote. "The contract resulted from a long, arms length negotiation that was concluded only after GSA had the benefit of all the results of a two year audit. The contracting officer who finalized the negotiations, whose integrity has been unfairly maligned during this process, has emphasized that she is very proud of the end result, as are others in GSA, and that it represents a great value to the taxpayer. We too are confident it is a great contract that provides compelling value. We have always been honored to be a government contractor and remain so today."