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Spherix May Get Another Shot at Contract

GAO Says Agriculture Department Competition for Reservations Had Flaws

By Griff Witte
Washington Post Staff Writer
Wednesday, December 8, 2004; Page E03

The Government Accountability Office recommended that a federal contract competition that went against Spherix Inc. be reopened because of flaws in the process, Spherix said yesterday.

The Department of Agriculture in August awarded the contract to provide one-stop reservation services for federal parks and recreation areas -- worth up to $128 million -- to ReserveAmerica, a subsidiary of Ticketmaster. Spherix of Beltsville contested the decision, arguing its competing proposal would cost the government considerably less.

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The GAO would not comment on the case other than to confirm it had sided with Spherix. Its conclusion that the process should be reopened isn't binding, but GAO spokesman John M. Melody said the agency's recommendations are followed in "the vast majority of cases." The Agriculture Department and ReserveAmerica have the option to appeal.

Spherix, which is involved in information services and biotechnology, derives nearly a fifth of its revenue from a National Park Service contract that is scheduled to be merged with a U.S. Forest Service contract by year-end.

The Forest Service contract is held by ReserveAmerica, which has been battling Spherix for control of the consolidated contract for two years. If the Agriculture Department's decision stands, Spherix would be frozen out of the reservation business for federal campgrounds, cabins, parks and tours for at least 3 1/2 years.

Spherix president and chief executive Richard C. Levin said he hopes the GAO's determination results in a process that is "free and open and fair."

"We were $32.6 million cheaper, and our system is at least as good," Levin said. "So I still don't understand how [the Agriculture Department] can justify that kind of decision. And obviously, neither could GAO."

ReserveAmerica President Brock Weatherup said in a statement that the company expects "that our technically superior and highest value proposal will remain the selection of the government."

U.S. Forest Service spokeswoman Heidi Valetkevitch said the agency was "looking into the [GAO] recommendations and determining the best way to proceed."

Spherix stock rose 22 cents yesterday to close at $3.27.

ReserveAmerica of Ballston Spa, N.Y., is part of IAC/InterActiveCorp, whose chairman and chief executive, Barry Diller, sits on the board of The Washington Post Co.

© 2004 The Washington Post Company