AUSTIN, Tex. — Anyone looking for clues about how Ross Perot can operate in the corridors of power might consider what he did 12 years ago when Texas officials nearly took away the government data processing contract on which he built his name as a businessman.
Perot was vacationing in London in July, 1980, when the news hit like a thunderclap: Texas officials said they would transfer the state's four-year, $2-billion Medicaid processing contract from Perot's Electronic Data Systems to an upstart New York firm.
Three days later, an angry Perot was at home, and the officials were wavering. Twenty-four months after that, Perot still had the contract, two bureaucrats were out of jobs and a frustrated competitor was laying plans to sell its health-care business.
It was a dazzling coup. Perot pulled it off through a blitzkrieg of controversial secret meetings with state officials--detailed in previously undisclosed court records--along with a barrage of allegations against his adversaries and an expensive lobbying campaign like few the state has seen.
It also is an episode demonstrating the traits that are now at the center of questions about how the Texas billionaire, who is planning an independent presidential candidacy, might govern. Perot supporters see them as evidence that Perot is a man who could get things done even in an age of governmental gridlock. But it is also the kind of story that convinces the skeptics that, although Perot was never found to have done anything improper, the diminutive doer sometimes does too much.
It was "an episode that, like a dead mackerel in the moonlight, both shines and stinks," the Austin American-Statesman editorialized at the time.
However it is interpreted, the story portrays the way Perot often accomplishes his goals: by going to the top, using his network of contacts and media skills and never hesitating to spend his fortune or make blistering personal attacks if he believes they will help him achieve his ends.
"This showed me the man really knows how to play hardball," says Frank N. Ikard, an Austin attorney who represented Perot's rival for the contract in the early going. "He orchestrated every political string in the state government. . . . People in Texas always knew you didn't challenge Perot on his home turf. After this, outsiders knew it too."
For Perot and his firm, the stakes in the Texas contract fight were considerable: Medicaid, the federal-state health care plan for the poor, aged and disabled, was paying Perot's company to process claims and handle premiums for 700,000 Texans--the largest such contract in the country. Since 1974, when it first received the business, EDS had used the prestige and profits associated with the contract to help it expand into other states.
When the state put the contract out for bids again, Perot's company reported that the Medicaid processing work was providing it with profits of $3.8 million a year. But rival Bradford National Corp. of New York City put the figure at $9.6 million a year and submitted a competing bid it said would save taxpayers $20 million to $50 million annually.
After almost a year of study, the staff of the Texas Department of Human Resources and its consultant agreed that the state would be better off switching contractors. They found Bradford's bid to be cheaper and technically superior, as judged by several criteria.
In addition, it was disclosed later, the state staff sometimes found EDS employees to be difficult to deal with.
The award was announced July 15, 1980, and all hell broke loose in the following months as Perot himself stepped into the affair. Threatening lawsuits and accusing the state staff of purposefully misinforming the human resources agency's governing board about the relative merits of the bids, Perot mobilized EDS to dig into the background of the contract-award panel, the competing firm and the consultants and experts hired by the state.
Returning from London, Perot began hopscotching across the state in his jet for a series of secret meetings with the three members of the human resources board that oversees the big agency. Between July 18 and July 25, according to his own deposition in a lawsuit he filed to keep Bradford from enforcing the new contract, Perot met secretly with board Chairman Helmar Moore four times, with member Raul Jimenez three times and with member Terry Bray once.
When it was disclosed that the board members were hearing only EDS's side of the dispute, without giving equal time to the competition, Bradford officials denounced the sessions as a violation of law and all rules of fairness. Lt. Gov. William P. Hobby said that if state law did not forbid such meetings, maybe it should be changed to do so. Two state representatives called for hearings to investigate the situation.
