Navy Favored IBM Computers, GAO Says
The Navy improperly favored IBM over other manufacturers in buying millions of dollars worth of computer equipment, a congressional study said Wednesday.
In procuring hardware and other equipment for its Standard Civilian Pay System, known as NAVSCIPS, the Navy relied partly on the advice of an IBM technical representative to craft the requirements for its bids, officials from the General Accounting Office told a House subcommittee.
The congressional investigative agency said it also found problems with the Navy’s management, which eventually awarded a $27-million contract for the computer equipment.
“The Navy’s approach resulted in a system design that improperly restricted procurement competition, did not meet the Navy’s requirements and did not work,” Ralph Carlone, an assistant comptroller general, told the government operations subcommittee on legislation and national security.
The service chose a database management system, hardware and 10 processing sites for its pay system that required a computer equal to a bottom-of-the-line IBM mainframe computer.
Mainframes are the largest and most powerful class of computers short of the rare, powerful supercomputers.
“From what we could determine only IBM could fulfill this requirement because it was the only vendor that marketed a mainframe of this size,” the GAO said.
In addition, the GAO found that over a 3 1/2-year period, 90% of the money spent on mainframes was restricted in some way, resulting in only 10% of full and open competition.
In the market of IBM compatible equipment, “84 cents out of every Navy dollar was spent on IBM equipment,” said Rep. John Conyers Jr. (D-Mich.) chairman of the subcommittee.
Derek J. Vander Schaaf, deputy inspector general, said the department’s review of procurement by the Naval Military Personnel Command found that the “command did show favoritism toward IBM in its proposed acquisition and that IBM was heavily involved in the . . . acquisition strategy.”
The department recommended termination of the purchase and in response, the command is rewriting the specifications to eliminate any bias toward IBM, Vander Schaaf said.
“In short, the procurement is now on track,” he said.
IBM is scheduled to deliver its response to the report at today’s session of the subcommittee hearings.
The GAO and Defense Department inquiries were prompted by a November, 1988, letter from six IBM competitors in which they said they had been frozen out of much of the Navy’s business.
The five-page letter was signed by executives of Amdahl Corp., Memorex Telex Corp., PacifiCorp Capital Inc., VION Corp., NCR Compten and Storage Technology Corp.
