Computer Firms End Bids, Cite Air Force ‘Favoritism’

Two Massachusetts computer companies have decided to drop out of the bidding race for a lucrative Air Force computer contract, claiming that the $4.5-billion deal unfairly favors American Telephone & Telegraph Co.

Digital Equipment Corp. in Maynard and Wang Laboratories Inc. in Lowell have notified the Air Force that they will no longer participate in the bidding for the five-year contract, which is believed to be the largest computer contract ever.

The successful bidder, to be named by September, will provide more than 20,000 mid-size computers with printers, software and maintenance to the Air Force, Army and other defense entities throughout the world.

Maury Domengeaux, an analyst with International Data Corp. in Framingham, Mass., said Wednesday that “elimination of the two major players opens the competitive process to many smaller companies,” especially AT&T;, which “has the best chance to win the bid.”

Others probably still in the bidding process, according to Domengeaux, are International Business Machines, MCI Communications, Unisys Corp., Hewlett-Packard, Texas Instruments, Prime Computer and Honeywell-Bull.

‘Low Price’ Expected

Air Force spokesman Andrew Bilinski refused to release names of companies still involved, but he said the Air Force is “extremely pleased by the level of competition.”

“We expect that because of the strong competition for the contract, the government, and ultimately, the taxpayers, will be offered a low price for this equipment,” he said.

In a letter dated Dec. 23, Digital told the Air Force it was dropping from the competition because engineering and development costs to meet the contract’s stipulations were prohibitive.

Wang also said it was unable to compete because of the way the contract is written.

Wang spokesman Joseph Roy said the company “concluded that the chances of competing successfully for the reward were low. In our judgment, it was not economical for us to pursue further this procurement opportunity.

“Wang expects to compete fully for future large federal (contracts) specifying federal and industry standards.”

Both companies, claiming that the contract favors AT&T;, went to court last year to change the document’s language. The Air Force ruled that it acted properly in requiring computer companies to base their bids on AT&T;’s Unix software, a computer software operating system that was valued at $3.7 billion in 1986.

In an appeal hearing, the General Services Administration Board of Contract Appeals upheld the Air Force’s ruling but said additionally that the contract’s language should be modified to eliminate ambiguities and bias.

Arguments Disputed

The Air Force plans to use the Unix for future computer purchases to increase efficiency and lower costs, Bilinski said.

Domengeaux said arguments by Digital and Wang that the contract is unfair “don’t hold water. AT&T; will license Unix for a nominal fee. Digital historically has neglected the Unix market.”

Domengeaux said he believes that Digital was attempting to delay the contract bid so the government would be forced to switch its major computer operating system from Unix to Posix, a portable operating system with components unique to federal standards.

Herb Linnen, a spokesman for AT&T; in Washington, said the company was allowed by the Bell network divestiture in 1984 to enter the computer market.

“We’re new to the computer industry, but we get more effective day by day,” Linnen said.