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Lockheed Loses Appeal for HUD Contract

By Raymund Flandez
Washington Post Staff Writer
Tuesday, August 10, 2004; Page E03

Lockheed Martin Corp. of Bethesda has lost a bid for the second time to win a contract from the Department of Housing and Urban Development expected to be worth up to $750 million.

The decision, announced late Friday, to award the contract to Electronic Data Systems Corp. of Plano, Tex., ultimately could result in the loss of 149 jobs at Lockheed's Lanham facility by Sept. 7.

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"While we are disappointed at this outcome, we have requested a debrief and look forward to learning how HUD made its selection of EDS," said Lockheed spokesman Stuart Doyle. The largest U.S. defense company hasn't made a decision on whether to appeal the award.

EDS had won the original competition for the HUD Information Technology Services contract, or HITS, which calls for providing information security, network services, help-desk support and other services to 18,000 HUD employees. The contract is for an initial four months and could be extended to nine years for a maximum value of $750 million.

EDS was awarded the contract -- originally set for up to $860 million for a 10-year period -- in August 2003, but Lockheed protested and the contract was rebid in January. Lockheed had held the information technology contract at the housing agency for more than a decade.

Lockheed said there were about 300 employees who worked on the contract before EDS won it last year. About half of those employees already have left the program. As of June 30, the company had placed most of those employees in other positions within the company while others found jobs outside Lockheed, Doyle said. Of the 149 employees who had remained in the program, the company plans to retain some of them, but the others will have to find jobs elsewhere.

EDS has hired a number of Lockheed employees and has approached others with offers to work on the contract, but some have declined because they were offered other jobs within Lockheed, said Bill Ritz, EDS spokesman.

EDS said about 150 jobs will be created based on the contract. The company is dividing portions of the work among 13 subcontractors, including nine small and disadvantaged businesses based or operating in Maryland, the District, Northern Virginia and West Virginia.

"We're excited about the opportunity to serve HUD and looking forward to working with them," Ritz said.

Shares of EDS, the world's second-largest seller of computer services behind IBM, rose 12 cents to close at $16.84 in New York Stock Exchange trading. Lockheed shares dropped 6 cents to close at $52.70.


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