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Selling to Uncle Sam: Is the Army following the rules?

When some congressmen received a small booklet entitled ''You're Not Supposed To Get Mugged By Your Own Army!'' from a disgruntled New York City electronics firm last year, their amusement rapidly turned to alarm and anger.

Feeling that he had been deliberately frustrated in his efforts to sell high-technology equipment to the US Army, Loebe Julie, the president of Julie Research Laboratories (JRL), a small Manhattan electronics concern, commissioned a booklet from Maryland cartoonist Dick Hafer that graphically related an ''agonizing series of rebuffs and rejections'' to which he claimed to have been subjected.

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Although the booklet has the format of a comic book, the charges contained in it aren't at all funny. In essence, ''Mugged'' accuses the Army of questionable bidding procedures, of refusing to give JRL an opportunity to demonstrate its wares, and of buying rival equipment that is both more expensive and less effective.

The specific issues raised by Mr. Julie are far from resolved, and are expected to form the basis for US Senate hearings sometime next month. But Mr. Julie's case raises, in general fashion, a far more troubling question for the US military. Simply put, the question is this: Are American tax dollars buying the best possible military equipment at the lowest possible cost?

It is a question that is likely to gain in import as the US undertakes the largest peacetime military buildup in its history. And the case of JRL illustrates just how confusing the military procurement process has become.

JRL, like its competitors the Hewlett-Packard Company of Palo Alto, Calif., and the John Fluke Mfg. Company Inc. of Everett, Wash., manufactures devices called calibrators. These are used to ensure the accuracy of test equipment for what Julie calls ''the whole gamut of electronic weaponry,'' including missile electronics, fire-control systems, inertial navigation computers, and aircraft avionics. Specifically, JRL has been trying to sell its LOCOST 106 automated calibrating system to the Army's missile command.

However, Mr. Julie says the entire effort has been an exercise in frustration - and claims that both he and the taxpayer are suffering.

The Army - and in particular its Materiel Development and Readiness Command, known by its acronym DARCOM and headquartered at Alexandria, Va., declines to comment on Mr. Julie's charges. Indeed, the Army's Inspector General already is probing the charges. To comment on their substance now, says DARCOM spokesman Justin Foley, would be ''inappropriate.''

According to Julie, when he sought a contract to supply Army missile command with calibration equipment in 1974 he was told by the contracting officer at the Army Metrology and Calibration Center at Redstone Arsenal in Huntsville, Ala., that his bid had arrived ''four hours and 57 minutes after the hour of closing.'' This assertion, says Julie, was ''completely off the wall.'' When Redstone Arsenal conceded that it had erred and accepted the bid, Julie recalls, it refused to believe that the LOCOST 106 could perform as described.

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''They said the system was too small, and that the software couldn't possibly work,'' he says. The contracting officer even refused to inspect a portable unit he had brought with him, he claims. Julie says he is particularly irked by the rejection, asserting that he was prepared to supply the calibration gear for $ 910,800 whereas Hewlett-Packard was asking $2,198,256 for it and the John Fluke Company, $1,490,000. In addition, he says, the JRL LOCOST 106 would allow the Army to make a $200 million saving over the 10-year life of the equipment period.

JRL calibration gear has been consistently rejected, says Julie, even though DARCOM successfully tested it at the Aberdeen Proving Grounds in Aberdeen, Md; at the Harry Diamond Laboratories in Adelphi, Md., and at Fort Monmouth, N.J. Moreover, he claims that the Army's Test and Evaluation Command observed the LOCOST 106 in action and declared that it represented ''a significant improvement'' over the Hewlett-Packard 9213C and the John Fluke 7505/7510 systems.

The Fluke Company is not eager to enter into debate with JRL. But the company's advertising director, Louis Washburn, describes Fluke as ''the market leader in calibration equipment'' and asks: ''Can the market leader be making inferior equipment?'' The Monitor's calls to Hewlett-Packard were not returned.

Mr. Julie also approached Gen. John Guthrie, then commander of DARCOM, only to be told, he says, that the Army had no money for calibration equipment. But at the same time, he insists, it was advertising for 95 manual calibrators at a cost of $12 million.

''The Fluke equipment that had been bought two years before had not worked, so the Army was going back to the old-fashioned manual sets,'' claims Julie. The purchase of outmoded calibration equipment, adds Julie, has meant that the level of calibration quality within the Army has slipped from 95 percent to a ''scandalous'' 64 percent. The Army, however, disputes this claim.At the prompting of Rep. Joseph P. Addabbo (D) of New York, chairman of the House Appropriations Defense Subcommittee, the General Accounting Office (GAO) began to investigate the Julie affair in 1980. It specifically examined Julie's charge that operations at the Army Metrology and Calibration Center are inefficient and wasteful and that the center's procurement practices are restrictive.The GAO concluded that the center's evaluations of JRL equipment appear to be based on ''some questionable conclusions and assumptions'' and ''largely ignore favorable impressions by Army representatives who saw the equipment in operation.''The GAO also concluded that DARCOM may have understated performance capabilities of the LOCOST system and overstated performance capabilities of competing systems. The GAO also questioned the Army's assertion that JRL's LOCOST system is not unique or new to the industry nor state of the art, calling that statement ''inconsistent with reports from LOCOST system owners.''Mr. Julie maintains that his position has not only been vindicated by the GAO but also by tests at White Sands Missile Range (WSMR) carried out earlier this year.WSMR found that the JRL LOCOST 106 calibrated three times faster than the manual method and twice as fast as the Hewlett-Packard 9213C and the John Fluke Laboratory Automated Calibration System. It also found that the LOCOST can be ''cost effective'' when operated in an environment similar to that at White Sands. Indeed, a summary of WSMR test results on calibration systems compiled by Julie shows the LOCOST besting the opposition in such areas as average programming time, reliability, productivity, and annual cost performance.Meanwhile, there is little love lost between the competing companies. John Fluke's government marketing manager, Richard Bullock, bristles at any suggestions that his company uses questionable means to secure government contracts. ''John Fluke Mfg. Company Inc. has not in the past, does not now, and will not in the future resort to kickbacks or bribery to sell products,'' he says. He further claims that JRL continually has tried to force equipment on Army metrology ''which has not been suitable for their mission.'' This, he says, ''is documented history since June 1968.''Mr. Bullock contends that the comic books have subjected his company to the ''innuendo of manufacturing obsolete and poor quality equipment.'' Claiming that the statements in the comic books, ''are inconsistent with and inimical to our position as a world leader in the calibration field,'' he exclaims, ''We are practically constrained from direct rebuttal . . . by the public's predilection to support the small, downtrodden inventor from 'big' business.''The feisty Mr. Julie gets mixed reviews in calibration circles. ''He's got a persecution complex,'' says one competitor. Early next month Mr. Julie and the Army will have an opportunity to air their grievances against each other when the Senate Committee on Governmental Affairs, under the chairmanship of Sen. William V. Roth Jr. (R) of Delaware, holds a hearing on the affair. And at least one US senator seems to believe there will be plenty of charges to investigate. After receiving his copy of ''Mugged'' last June, Sen. Bob Dole (R) of Kansas took to the Senate floor and complained bitterly that although the JRL calibration equipment ''would be seven times more efficient and save the United States as much as $600 million,'' the Army had rejected it. The Army, he charged, was ''apparently . . . trying to cover up this colossal blunder . . . by using every bureaucratic trick in the book, including drawn-out investigations, delayed responses to congressional enquiries, and misrepresentations.''As Senator Dole sees it, ''The question . . . is not whether or not the Army is fallible and could make an incorrect procurement decision. No, the issue is that once having been shown how egregiously and stupidly they erred, the Army still refused to acknowledge the mistake and rectify it, in the process saving millions of dollars.''Sen. Daniel Patrick Moynihan (D) of New York and Sen. Alfonse D'Amato (R) of New York have written to Secretary of Defense Caspar W. Weinberger urging ''your personal investigation of Mr. Julie's equipment and of his difficulties with the Army.''

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