Homeland Security Picks 25 Firms to Compete for IT Work

By Griff Witte
Washington Post Staff Writer
Friday, June 30, 2006

Homeland Security officials yesterday announced 25 winners of the largest technology contract in the department's short history, a deal that could be worth up to $45 billion over the next seven years.

The winners list includes some of the nation's largest information technology contractors, including Lockheed Martin Corp. of Bethesda, General Dynamics Corp. of Falls Church, BearingPoint Inc. of McLean, Booz Allen Hamilton Inc. of McLean and CACI International Inc. of Arlington. The federal government's six largest IT contractors were among the contract recipients, as were eight of the top 10, according to a list compiled by Washington Technology magazine.

But winning a place on the contract is only the beginning for companies that now must compete against one another to earn actual assignments.

"They've won a license to hunt. The work has to come later," said Ray Bjorklund, senior vice president at Federal Sources Inc., a McLean-based market research firm that specializes in government contracting.

Soraya Correa, Homeland Security's director of procurement operations, said yesterday that the contract was intentionally divided among a large number of recipients to preserve "the element of competition throughout the program."

The list of winners on the contract will grow next month when the department announces the results of a competition for small businesses that was conducted separately.

Companies large and small have been jockeying hard to gain the upper hand in the Homeland Security market, which has grown rapidly but is still considered up for grabs as the three-year-old department continues to hash out its priorities.

This latest contract is officially known as the Enterprise Acquisition Gateway for Leading Edge Solutions, or Eagle. It is intended to consolidate about 80 percent of the information technology work at the department under a single contract.

Prior to Eagle's creation, Homeland Security's IT contracts were dispersed widely. Many have been managed outside the department, as they were before more than 20 agencies joined together under DHS in 2003.

"We wanted to try to bring those in-house to some degree," said Charles Armstrong, Homeland Security's deputy chief information officer.

The contract, which has been in the works for the past 18 months, will cover a wide array of information technology work, including developing infrastructure, designing software, and operating and maintaining equipment. A separate contract for hardware, which is limited to small businesses, is scheduled to be awarded later this summer.

The department has been widely criticized -- by both good-government organizations and industry executives -- for its handling of major purchases. While contractors bemoaned Homeland Security's slow pace, watchdog groups accused the department of squandering money -- especially after Hurricane Katrina and in connection with the war on terrorism.

Rep. Bennie Thompson (D-Miss.), ranking member on the Homeland Security Committee, said in a statement that he is concerned that the department does not have the resources to manage a massive contract such as Eagle.

"The extremely large amount of money involved with these contracts, partnered with lack of oversight and quality control, is a prescription for more waste, fraud and abuse," he said.

Bjorklund said contracts such as Eagle, with large numbers of winners but no guarantees of work, have proliferated as the government has sought ways to promote competition. But the contracts often tend to produce similar lists of winners, prompting some in industry to wonder about the point. "They're kind of a necessary evil," Bjorklund said. "You have to go through tens of thousands of dollars, or in some cases millions, in bid and proposal money just to have a license to hunt, but no work necessarily."

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