Leidos split doesn’t affect contract, GAO says

A federal watchdog has ruled that Reston-based government contractor Leidos’s split into two companies does not affect its selection to perform work on a contract.

The decision follows a ruling by the same agency that came to an opposite conclusion in a separate case involving Leidos’s spinoff earlier this year. The Government Accountability Office said the facts of the two cases differed.

McLean-based Science Applications International Corp. split in two last September, creating Leidos and a spinoff named SAIC.

Rival bidders IBM and Presidio Networked Solutions argued that Leidos’s restructuring made it unsuitable to receive a Department of Homeland Security blanket purchase agreement because it originally bid on the work as part of SAIC. But the GAO ruled that their complaint did not hold up. When IBM argued that the case was “nearly identical” to the one earlier this year that involved SAIC, GAO disagreed.

“Our protest decisions regarding matters of corporate status and restructuring are highly fact-specific, and turn largely on the individual circumstances of the proposed transactions and timing,” the agency said in its report.

In making it decision, GAO found that Leidos’s reorganization would not affect the costs it had determined for the government. This was unlike the SAIC case, where GAO said that the company’s proposed costs on a NASA contract could be altered as a result of of the split.

Contractors are increasingly battling it out for limited federal dollars, which has resulted in a higher number of bid protests. IBM and Presidio also protested against Chantilly-based contractor Agilex, which was also a recipient of the agreement. The companies claimed that Agilex made assumptions while stating its price that weren’t feasible. GAO agreed and sustained the protest against Agilex.

Following the decision, DHS has 60 days to respond and outline next steps.

Amrita Jayakumar covers federal government contracting for Capital Business, The Post's local business publication.
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