Sun Microsystems quits GSA multiple award contract

Sun Microsystems Inc. announced Friday that it is canceling its multiple award schedule contract with the General Services Administration amid an ongoing investigation into the contract's renewal and the company's pricing for information technology products and services.

Sun released a statement Friday saying it had notified GSA that it was canceling its current 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," the company stated. "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 has been the subject of controversy since February, when Sen. Charles Grassley, R-Iowa, ranking member of the Finance Committee, accused GSA Administrator Lurita Doan of intervening in the process of renewing Sun's contract. Sun and Doan have since come under further scrutiny by the House Oversight and Government Reform Committee, Grassley and GSA Inspector General Brian Miller.

Miller testified in March before the House committee that Doan's decision to go against the judgment of three career contracting officers and choose Sun's higher-priced offer "means that the U.S. taxpayers will inevitably pay far more for government IT products and services than they should."

The controversy has heated up in recent months, as Grassley accused Sun of refusing to hand over documents necessary for an ongoing IG audit, which he requested. Sun Chairman Scott McNealy, in a letter to Grassley, responded that he had handed over all necessary documents and had "serious concerns regarding the objectivity of this particular inspector general on this particular issue."

On Aug. 24, Grassley wrote to GSA requesting that the agency cancel its contract with Sun. Doan refused to cancel the contract but asked that the President's Council on Integrity and Efficiency look into the accusation that Sun was not cooperating with the inspector general, and into "the systemic and disturbing problem of the lack of cooperation" between industry and the GSA inspector general.

It is unclear how Sun's withdrawal will affect the ongoing investigation. The GSA Office of the Inspector General did not return calls for comment.

"I'm surprised that Sun has chosen to do this prior to the completion of the IG audits that I requested last June," Grassley said in a statement. "I don't know why Sun made this decision. Government contractors should be expected to fully cooperate with inquiries by government officials and congressional oversight. The real customers, the American taxpayers, deserve nothing less."

According to a source familiar with the contract, the possibility of the contract being canceled has come up several times, and GSA and Sun worked together to reach this decision.

The source said the decision to cancel the contract was in response to a multitude of issues, including Sen. Grassley's inquiry and the ever increasing political nature of the dispute given the involvement of Doan, Grassley and House Oversight and Government Reform Chairman Henry Waxman, D-Calif.

Josh Zecher, a spokesman for 463 Communications, the public relations firm used by Sun to issue its announcement, said the company's withdrawal from the GSA contract did not boil down to a full-on retreat from the federal marketplace. "Sun still has a major stake in the federal government business," Zecher said.

Doan said GSA is working with its agency customers to "move forward" and make sure their IT needs are met.

"I believe American taxpayers get the best deal when we allow our professional contracting officers to negotiate and manage the relationship with our vendors," Doan said in a statement. "Unfortunately, this process was taken in another direction."