SEC violated procurement law when it purchased $1 million worth of equipment from Apple

Tue, May 31, 2011

Legal, News

A strange story emanated from our nation’s capital last week when the Washington Post reported that the SEC violated procurement law when it purchased over $1 million in computer equipment from Apple. Not only that, but the purchased equipment malfunctioned and failed to work as advertised.

Now the reason why the SEC’s actions were wrong here is that they were required by law to seek out other competitive bids from other companies. For some strange reason, however, it chose not to and gave Apple its business exclusively.

The report also doesn’t let Apple off the hook, alleging that the company was aware of the SEC’s budget and tailored its offerings around that. In doing so, however, Apple left out “essential equipment that the SEC was subsequently forced to purchase”, to the tune of $773,000. The deal was done at the behest of a push (read: effective) Apple salesman who reportedly was subject to “appropriate action” in light of his conduct.

In January 2008, an Apple salesman made a pitch for equipment sold by Apple and manufactured by Cloverleaf Communications.

Instead of doing its own engineering analysis, the SEC relied primarily on the pitch by the Apple salesman, the report said.

“I think they bit it hook, line and sinker,” an SEC employee, whose name was redacted from the report, told the investigation.

The agency passed up a chance to try the equipment free, despite the fact that Cloverleaf “was virtually unknown and untested,” the report said.

The agency justified its use of a no-bid contract by saying Apple was the only vendor that could supply the Cloverleaf equipment, but it did not establish that Cloverleaf was the only product that would fit the bill, the report said.

Going back to the SEC for a second, they were also in the wrong for disclosing their budget to Apple in the first place and for purchasing the Apple equipment before coming up with a written justification for it.

Now these initial findings were first relayed back on December 14, 2010 but were only recently made available following a Freedom of Information Act request from Reuters.

via Washington Post


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