United States General Accounting Oface /~%ass 

Testimony 

llllllllllllll ll 

138235 

For Release on Investigation of Apparent 

Delivery Preferential Treatment of a 

Expected at 

9:30 a.m. EST 

Friday 

February 24, 1989 

Potential Contractor by the U.S. 

Army Strategic Defense Command8 

Statement of 

Robert P. Murphy 

Associate General Counsel 

Before the 

Subcommittee on Oversight of 

Government Management I 

Committee on Governmental 

Affairs 

United States Senate 

GAO/T-OSI-89-1 / 

GAO Form 160 (12/W) 
. 

Mr. Chairman and Members of the Subcommittee: 

We are pleased to be here today to discuss a matter included 

in our 1987 investigation of apparent favoritism towards of a 

potential contractor at the U.S. Army Strategic Defense Command. 

On July 13, 1988, we provided testimony concerning our 

investigation before the House Subcommittee on Legislation and 

National Security. 

The investigation was coordinated with the U.S. Army 

Criminal Investigation Command, known as the Army CID, and 

established apparent preferential treatment in the conduct of a 

procurement by Lieutenant General John Wall, then Commander of 

the Strategic Defense Command. Specifically, we discovered that 

General Wall took actions creating the appearance of preferential 

treatment for an engineering consulting firm, BDM International, 

Inc. 

In July 1986, General Wall directed that BDM be made the 

interim contractor for a major new research initiative, pending 

the award of a permanent contract. The Strategic Defense Command - 

was aware that BDM intended to compete for this new contract. We 

learned that on December 19, 1986, at General Wall's direction, a 

meeting was held to plan the acquisition strategy for the 

. 
permanent contract. At General Wall's invitation, a senior 

executive of BDM was present, and was the only contractor at the 

meeting. This gave BDM information not then available to other 

potential offerors, giving the appearance of an advantage over 

others. Individuals at the meeting have stated that they felt 

the presence of a BDM executive was inappropriate and gave a 

negative appearance to the meeting. 

Our review of this procurement determined that in April 

1987, 74 requests for bids were distributed to various potential 

bidders, but only 1 proposal, BDM's, was submitted. BDM was 

awarded the 7-year, $108 million contract on September 14, 1987. 

As I stated earlier, we jointly investigated the General 

Wall matter with Army CID. At the conclusion of the Army CID 

investigation there was a difference of opinion as to whether the 

information provided at the December 19, 1986, meeting violated 

Army Regulation 600-50, "Standards of Conduct for Department of 

the Army Personnel." Two provisions of these standards are 

relevant. Paragraph 1-4(f) prohibits action "that might result 

in or reasonably be expected to create the appearance of," among _ 

other things, "giving preferential treatment to any person or 

entity." Paragraph 2-l(g) prohibits the release to a business 

concern of "any knowledge" Army personnel may have "concerning 

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proposed acquisitions or purchases." This paragraph states that 

such information must be released to all potential contractors as 

nearly simultaneously as possible and through designated agencies 

to avoid giving one firm an advantage. 

The Army CID investigating agent reports that attorneys from 

the Office of The Army Judge Advocate General and attorneys for 

Army CID concluded that acquisition information had been provided 

to one potential contractor in violation of Army Regulation 600- 

50. According to the same source, a procurement attorney for the 

Army Material Command concluded that unless it was established 

that the information provided gave BDM an advantage, there would 

be no violation of Army Regulation 600-50. As a result of this 

view, the investigating agent was instructed to reinterview 

witnesses to determine whether BDM received an advantage from 

information it received on December 19, 1986. The results of 

these subsequent interviews were inconclusive. Army CID then 

concluded that, irrespective of the view of the Army Material 

Command attorney, actual advantage to a potential contractor is 

not required for a violation of Army Regulation 600-50. Army CID 

then recommended that action be taken against General Wall. In 

May 1988, the Army Vice Chief of Staff issued a written reprimand 

to General Wall. The following month, General Wall retired from 

active duty. 

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In December 1988, partly,as a result of the General Wall 

. 

investigation, the Chief Counsel for the Strategic Defense 

Command issued detailed guidance regarding the release of 

information about acquisition plans. This guidance was a result 

of his belief that potential systemic problems could be avoided 

by reemphasizing the governing standards of conduct. A copy of 

this guidance is attached to my written statement. 

Mr. Chairman, this concludes my statement. We will be 

pleased to respond to any questions at this time. 

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RLCfnENCL Ofl Of flC8 $%+8O’m 8ulraCT 

CSSD-LC (600~SOa) Contacts with Industry Concerning USASDC 

Acquisftion Plans ” 

z SEE DISTRIBUTION PRdM Legal Office o*fl 22 Deic 88 CMT 1 

Mr. Hanilton/of/468( 

1. Because of recent events, the Congress and bob are giving renewed emphasis 

to long-standing rsatrictiom on improper release of advance acquisition 

information, .Army R8$JulatiOn 600-50, Standards of Conduct for Army Personnel, 

paragraph 2-lg prohibits DA personnel from unauthorized or improper release of 

acquisitfon information, 

2. Within USASDC, the following guidance applies: 

Before war&begins on the draft scope of work for the initiation of a 

!2&~ct Requirements Package (CRP) potential sources may be QrovjAded&&&-. 

bccees to information about future &ufrements as follows: 

(1) Long range acquisition infonaation or other advance planning 

information should be formally published in accordance with existihg :I 

regulations such as FAR 5.404, AFARS 5.391, and AIi 70-35. 

(2) There is no requirement that technical personnel or others discuss 

planned acquisitions with potential offerors. However, iP discussions am 

undertaken, they will be done on a basis which arrstrres equal access of all ’ 

offerors, Discussions by technical personnel or others may include the 

technical information which allows pctetrtial offerors to detarmine whether the 

planned requirement is within their firm's capabilities and area of intereot EJC 

they may prepare to respond to a solicitation, Government personnel 

have wide latituda in discussing the technical content of propoeed 

solicitations with potential offerors, 

objectives for, 

and items such as background of, and 

the requirement may be covered. In thi8 respact: 

(a) Releaseable background information on the technical requiremrnt 

includes prior contractual history, if known, and technological advances or 

knowledge gained or developed by the government which could be helpful. 

(b) The 'objectives for the technical requiremen,tAwhich may-be 

disc%i%sbd, nOrYnally addr885es the purpose of the requ%&%t- aKa'desired 

results or products. - Di#uussion of additional details may be appropriate, but 

in noeinstanca should oPferors be given a “‘solution” or otherwise be gilren 

advice on lrhown to respond to a future solicitation. 

(3) In adddtfon to technical info&ation, releaseable information on 

program structure, which includes funding ranges, planned solicitation dates, 

and contract duration, ma3 be offered, This information should have been 

previously provided to the public in long range estimates or similar 

publications. The government employee who provides this infonnat&on should 

identify the publication which contains the information, or Stat@ +en and in 

what publication the information will be available. !If the information is not 

contained in published long range estimates, the iriformatfon should be made 

available as early as practicable as provided in paragraph 20(d) below. 

Offerors should be cautioned that all programs discussed are in the planning 

stage and are subject to changes or cancellation. Under no ciroumstancee will 

information normally retained in the government, such as Independent Cost 

PREVIOUS EOITlONs WILL BE USC0 
I 

P.03 

CSSD-LC 

SUBJECT: Contact6 with Industry Concerning USASDC Acquisition Plans 

Estimates, source selection plans, acquisition strategies, and other mattera 

dealing with the contracting procese as opposed to the technical requirement 

be released. 

(4) Copies of information provided during any discussions, must, 

consistent wtth security restrictions, be mad8 available to all other 

interest8d potential 6ourcbs. When new information io provided during a 

particular briefing, an information sheet should be prepared by the 

briefing offica which advises potential sources of the new information and h 

detail8 may be obtained, The sheets should b8 coordinated with th8 Contract 

and Acquisition Management Offics and released to potential sources by _ 

coqn~~a~t,,E~tracting of fioer, 

(5) The use of viewgraphs or other briefing material to standardize 1 

presentations is encouraged. 

security restrictions. 

All discussions must comply with applicable 

b. Once work begins on the draft scope of work for initiation of the 

Contract R8qUirem8nta Package (CRP) process, 

phase of an acquisition has begun. 

the development and preparation 

contracting officer. Further communication will be through th: 

Before the solicitation is released, these communicatic 

may include technical meetings as long as they are und8r the monitorahip of t 

contracting officer. Once the solicitation ia issued, th8 rules contained in 

the solicitation apply and questions of potential offerors will be answered i 

the manner requested by the contracting officer. 

through the contracting officer, 

Normally, this is in writlrA 

Accordingly, during this phase, potential 

offerors having questions will be directed to the contracting officer for 

information, 

gove&ment, 

Under no circumstancas will information normally retained within the 

such as Independent Cost Estimates, 6ourc8 selection plans, the 

status of evaluations, the content of competing propoetals, and other matters 

dealing with the contracting process b8 r818as8& l ' 

.?-'. -v Fe. ., - .- 

3. Broad Agency AnnOUnC8388nts and other special solicitation method6 Will 

follow the rules applicable to the solicitation type. Under no circumetance* 

will offerors be promised or otherwise be given reason to believe that they 

will be provided a contract unless and until selected in accordance withapplicable procedures. 

Y 

DISTRIBUTION: 

A (less USAEDH) 

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