Paradyne Corporation Ethical Case
Paradyne Corporation managers and engineers used deception to win a bid to supply SSA with an off-the-shelf P8400 system between 1980 and 1981. During pre-award demonstration, Paradyne deceitfully placed its labels over those of Digital Equipment Corporation (DEC) manufactured computer, while disguising it to be its own off-the-shelf product. In reality, Paradyne had no such a system in existence. The system that they eventually developed and supplied SSA failed its initial testing, but Paradyne’s employee who formerly worked for SSA influenced the SSA boss to relax the standards so that Paradyne machine could qualify. When Paradyne eventually delivered the computers, their performance was below expectation, resulting in 21 months of headaches and waste of time and money in improving them to finally work as initially planned.
Paradyne Corporation’s ethical case can be analyzed best using the engineering code of ethics that requires engineers to maintain and promote the integrity, honor, and dignity required of the engineering profession by being honest and impartial, and serving the public, their employers, and the clients with fidelity. The engineers and managers of Paradyne were not operating ethically in accordance to this principle as they provided false information about their ability to provide the Social Security Administration (SSA) with an off-the-shelf system that was already in its product line. Instead, Paradyne engineers and managers proposed to sell SSA their P8400 system with the PIOS operating system, while clearly knew that the system was not in existence, and had not been developed, prototyped or manufactured. Secondly, when Paradyne’s managers and engineers were required to demonstrate to SSA the working of system, they deceitfully did so through modifying a PDP 11/23 computer manufactured by Digital Equipment Corporation (DEC) by placing it in a cabinet that was clearly labeled P8400. Their actions of pasting Paradyne labels over DEC labels on the equipments that Paradyne demonstrated to SSA is a clear indication of their lack of integrity. Their failure to serve their client SSA with fidelity resulted in adverse outcomes that affected the SSA and the public as it took approximately 21 months of headaches and wasted time and money to make the system work as initially planned, thus failed to uphold and advance the integrity of the engineering profession.
Paradyne’s decision to write the bid in the present tense was clearly an act of deception as SSA had clearly indicated their need of an off-the-shelf system that was already in the vendor’s product line. At the time, Paradyne had no any P8400 system in its product line that was being sold to clients. If Paradyne had indicated the availability date of the product, SSA would not have awarded it the contract because they required a system whose functionality has already been tested and proven in the field or market. There is a clear distinction between a response to a bid and company advertising. A response to a bid is meant to demonstrate a company’s ability to provide goods and services to a client at a competitive price after the client announces the interest for such products and services and the terms and conditions under which they would be acquired. Conversely, a company’s advertisement is rarely solicited by a potential client. It is rather an effort by the company to willingly attract as many clients as possible to its products and services. Therefore, it is unacceptable to respond to a bid with a planned system if there lacks any indication when that system is expected to be available.
Paradyne’s claim that it was an integrator, and was thus allowed to use the off-the-shelf components in integrating the system does not meet SSA requirement for an existing system. The reason is that SSA strictly required an off-the-shelf system whose performance has been tested and proven because of its existence as a product line. Contrary to the requirement, Paradyne used more of the existing off-the-shelf components (not system) to build a new integrated system that never existed before. This was against the bid requirements stipulated by SSA.
SSA was not supposed to relax the bid requirements to help the Paradyne machine qualify once it failed the initial test. Instead, it ought to have reopened the bidding process to other bidders that were capable of delivering the initially specified system at a competitive price. Such an action could have been essential in upholding fairness in the bidding process and the eventual awarding of the contract. Even though reopening the bid could have caused a delay in delivery and increased work for SSA, it could have been essential in ensuring SSA receives high quality systems that it initially required. The long-term benefits of reopening the bidding process would have been greater than the short-term gains of relaxing the requirements to enable a substandard machine pass the requirement threshold.
It was unacceptable for Paradyne to represent a proposed system as existing because this could have enabled Paradyne meet almost all requirements put forward by SSA. This could have helped provide Paradyne some competitive advantage over other companies that had placed their bids containing honest information about their respective existing capacities to meet the requirements. Furthermore, the functioning of a proposed system cannot be predetermined because they have not been tested and proven as those off-the-shelf.
It is unethical for a former SSA employee to take a job negotiating contracts with SSA for a private company. The reason for this is that their previous connection with SSA would likely introduce impartiality in the negotiation due to conflict of interest. It is such a relationship that gave Paradyne an unfair advantage over its competitor as he/she was the one who helped setup the SSA team that evaluated the bids. Furthermore, his/her personal relationship with his former boss at SSA influenced the relaxation of the standards to help Paradyne’s machine qualify, instead of letting the SSA boss reopen the bidding process.
A talk with a registered professional engineer indicated that bidding process is a highly challenging situation that only engineers with high moral standards can withstand. The reason for this is that winning contracts is critical to the sustainability of most engineering companies, thus each has to seek adequate information regarding the bid in order to win the contract. However, such unethical practice can have more devastating outcomes as it can lead to deregistration of the professional engineer involved, with possible prosecution for any resulting negative impacts. Therefore, all the Paradyne engineers that were involved in the malpractices, violating the engineering code of ethics, were ought to be punished and/or deregistered for deception that caused 21 months of headaches, and lost time and money in making the system work as initially planned.