Paradyne Case

8/10/2019 Paradyne Case

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Case Study: The Paradyne Case

Competitive Bidding Competitive Biddingpossible ethical issues:

Vendor deception, under-biddingetc!

Buyer unfairness, leak of infoetc!

Mar. 1981, Paradyne won a contract for $115 M toreplace the computer systems used by offices of theSocial Security Administration (SSA).

Should access central database

Should be off-the-shelf Should work 98% of the time.

Pre-award demo of the system not a prototype

Pass on site visit by an inspector from SSA to determine

capability.


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The Paradyne Case - II

Problems occurred immediately: Computersfailed acceptance testing

After delivery: Field offices reported repeatedmalfunctions

After 21 months of operation, headaches, wastedtime and money, system worked to 98%!


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The Paradyne Case - III

Investigation results:1. Paradyne never had the proposed system in stock or

developed yet.

2. The operating system was still under development.

3. The computer demonstrated was not Paradyne but basedon a similar processor and re-labeled.

4. Paradyne was the only bidder assessed for capabilitieswith no site visit.

5. Paradyne main business was building modems notcomputers.

6. Paradyne hired a former SSA employee who (whileworking for SSA) helped making the proposal and setupthe team evaluating the bids. SSA were informed of the

hiring but approved it.


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The Paradyne Case Discussion1. Was this a clear-cut unethical case by Paradyne?

2. Point out the unethical actions by Paradyne.

3. The initial requirements to qualify the machines were

relaxed to let Paradyne machines pass. Was this

ethical at the SSA part?

4. Was it ethical for a former SSA employee to take a

job with Paradyne negotiating contracts with the

SSA? Even if the SSA said it is OK? Is it ethical forParadyne to hire this employee? (Ethical theories??)


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Application to a case

Paradyne Computers case. Factual issues:

Request for proposals (RFP) stated clearly that only

existing systems would be considered. Paradyne never had any such product and did not even

test the Operating System on it.

Employment of a former SSA employee was a clear

attempt by Paradyne to help lobby SSA for the

contract.

So, there is no controversy on the factual issues.


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Paradyne case II

Conceptual issues: RFP stated clearly that only existing systems would be

considered.

Is bidding to provide the required product, when the

actual product is still in the planning stage

Is placing Paradyne label over a real manufacturerlabel

Does lobbying your former employer on behalf ofyour new employer constitute a

So, Conceptual issues are more controversial.

lying, or an acceptable business practice?

deceptive?

conflict of interest?


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Paradyne case III

Paradyne said they have done nothing wrong andwere conducting common business practices.

The conflict of interest issue is sohard to decide!

Actually, laws are now enacted preventing former

government employees from lobbying their

former employee for a specific period of time.


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Paradyne case IV

The moral / application issues: Is lying an acceptable business practice?

Is it right to be deceptive so your company can get acontract?

Answer is obvious: Lying and deceit are no more acceptable in your

business life than in your personal life!

The Key is: If we can conceptually decide that Paradyne practices

were deceptive;

Then our analysis indicates that their actions were

unethical!


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Assignment # 3

Read the caseThe disaster at Bhopal

and submit theanswers to the following questions:

Use the ethical theories previously covered to analyze theBhopal case. Topics to be considered should be: The placingof a hazardous plant in a populated area, decisions to defermaintenance on essential safety systems, etc.

Use your previously selected organization code of ethics toanalyze what a process engineer working in this plant shouldhave done. What are the responsibilities of the engineers whodesigned the plant and the engineers responsible for makingmaintenance decisions?

Submitted by next class. This is an academic exercise, not abusiness activity. Therefore the written report does not have tobe in memo or letter format. It must be professional, andshould refer to concepts covered in class. You must provide acover memo with this summary document.


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Documents

Paradyne Case