Dymally, along with House Armed Services Committee Chairman Les Aspin (D-Wis.), has written a series of letters to Pentagon officials objecting to the phasing out of a major contract that had been Univox's principal source of business.
Under Army contracts, Univox produced water purification machines, called ROWPUs (Reverse Osmosis Water Purification Units). Univox has built $75 million worth of ROWPUs under Army contracts issued to it as a minority-owned firm, without competitive bidding.
Grayson contends that he was originally promised $200 million worth of Army contracts to build ROWPUs but was illegally cut short by the Army when top-level officials decided to seek competitive bids.
Univox has twice bid on ROWPU contracts competitively and lost on both occasions.
"Their bids weren't even close to the lowest," said Col. Craig McNab, an Army spokesman. The bids received by the Army in 1985 and 1986 on ROWPU units dropped the price from the $116,000 that Univox was charging for each unit to $65,000 each, saving the government $11 million, McNab said.
But McNab added, "The ROWPU units that Univox built for the Army were perfectly fine, and I stress that." Indeed, interviews with other Univox military customers indicate that, whatever other problems the company may have had, it built products that met with customer acceptance.
McNab said the Army decided to open the ROWPU contracts to competitive bids after the Small Business Administration "graduated" Univox from its special minority status.
Claim of 'Conspiracy'
Grayson, with strong support from Dymally, said the Army never fulfilled the SBA's plan to divert $200 million worth of business to Univox.
In a letter to Army Secretary John O. Marsh Jr., Dymally alleged in February that Army officials at Ft. Belvoir, Va., were engaged in a "conspiracy" that broke the law in terminating Univox's ROWPU work.
In fact, the halt in Army orders for ROWPU units created a financial crisis that contributed to the EDA loan problems and ultimately to the Chapter 11 filing.
Dymally is seeking to have a share of $250 million worth of future ROWPU production diverted directly to Univox. The Army is planning to open those contracts to competitive bids.
Assistant Secretary of the Army J. R. Sculley last month directed the auditor general of the Army to investigate Grayson's allegations. A report is expected shortly.