Apple May Lose Big Defense Contract

Business

Don Clark, Staff Writer
The San Francisco Chronicle

February 6, 1990

Apple Computer Inc.'s largest sale to the federal government could be reversed in the wake of a General Accounting Office ruling that Apple's Macintosh system did not meet a key Air Force specification.

The GAO, the investigative arm of Congress, last week advised the Air Force to reopen bidding to supply the service's new worldwide command and control system.

The ruling came in response to a protest by Martin Marietta Corp., a losing bidder on the contract.

Under the contract awarded in August, Cupertino-based Apple would supply at least 10,000 Macintoshes and possibly up to 80,000 of the desktop computers over several years, plus software and peripheral devices.

Honeywell Inc., based in Minneapolis, was named prime contractor and had teamed up with Apple to hook together the hardware and software. The initial phase of the Air Force contract was set at $164 million, but the total potential value was expected to grow to $600 million.

The award was widely regarded as a breakthrough in Apple's struggle to win acceptance in the lucrative government market, and in delivering operating software called Unix that is preferred by federal agencies. Therefore the GAO's ruling was seen as a blow.

""It definitely puts a cloud over Apple's federal efforts, primarily because they hyped the contract so much," said Bob Brewin, a senior writer at Federal Computer Week, a trade publication that follows government purchasing.

The GAO's recommendation is not binding on the Air Force, but usually carries considerable weight. ""In nearly all cases the agency carries out our recommendation," said David Ashen, a GAO associate general counsel.

The GAO sustained Martin Marietta's complaint that the Macintosh systems did not adequately meet the Air Force's requirements for capability called ""multitasking" - the ability for a PC to perform more than one chore at once.

For example, a user might type out a report while the computer automatically makes calculations in a spreadsheet program.

The Air Force originally asked bidders to supply computers that could do at least 10 tasks at the same time, the GAO's eight-page decision said.

The Macintosh IIx computers could meet that requirement for some specialized tasks that use Apple's version of the Unix operating system.

But the GAO found that key application programs based on the conventional Macintosh operating system, such as word processing and drawing, could only work one at a time.

The GAO didn't ask the Air Force to terminate the contract outright. Instead it recommended that the service clarify its requirements on multitasking and seek new final offers from Honeywell, Martin Marietta and other bidders.

""Following evaluation, the Air Force should terminate its contract with Honeywell if appropriate," the GAO decision said.

An Air Force attorney said the agency is considering whether to comply with the recommendation. Representatives from Honeywell and Apple stressed that they will continue to fulfill the contract, noting that the GAO didn't ask that it be terminated.

""Basically what we are doing is waiting to hear from the Air Force what their position is going to be," said Greg Shuk, director of Apple's federal systems group. ""It's too early to tell what this means."