4 competitors protest award of $2.6 billion IT contract to Northrop Grumman

By Marjorie Censer
Monday, November 8, 2010

Northrop Grumman won a major victory when the General Services Administration announced in September that the contractor had been picked to provide the information technology infrastructure for the new Department of Homeland Security headquarters, a contract worth up to $2.63 billion over 10 years.

But Northrop is now facing a battle as four competitors filed protests to block the award. Contracting powerhouses Lockheed Martin, General Dynamics, Serco and L-3 Communications are all crying foul to the Government Accountability Office, which is set to decide the case by early next year.

The new DHS headquarters, being built on the former St. Elizabeths Hospital site in Southeast Washington, is the largest federal construction job since the Pentagon in the 1940s. It will consolidate 22 of the agency's organizations into a single campus over the next decade.

Northrop's award calls for the contractor to design, install, test and maintain the campus's overarching data and building networks. Additionally, GSA said DHS requested that the winning contractor be able to update technologies as newer ones become available and support varying security levels.

In a statement, Lockheed Martin said it rarely contests contract awards and does so "only when we believe that the evaluation process precluded the consideration of the best value solution for the customer."

General Dynamics, L-3 and Serco declined to comment.

In its own statement, the GSA said that it takes seriously its responsibility in the procurement process.

"To allow for fairness to all offerors, GSA does not comment on active protests," the agency said.

Northrop said in a statement that it stands by its bid and looks forward to supporting DHS on the program. The contracting giant, which is relocating its headquarters to Falls Church, has built up sizable information technology capabilities over the years.

It won a contract to maintain computer operations for the state of Virginia, only to be criticized for missing deadlines and providing poor service. A failure at a data storage unit serving the state earlier this year caused outages at many of the state's agencies, including halting online operations of the state's Department of Motor Vehicle locations for a week.

Industry specialists said protests are not unusual, particularly in contracts of this size. Though companies risk irritating their customers, the potential payoff of regaining the contract is often worth the risk to many, said Ray Bjorklund, senior vice president and chief knowledge officer at the research firm FedSources, which analyzes the government market.

"Because the amount of dollars available for contracts has been declining the last couple of years, these companies that are remaining in this market space are considering the opportunities more high-stakes," he said. Protests are "just happening more and more."

According to the GAO, its decisions on the General Dynamics and Lockheed protests are due Jan. 26, while the Serco and L-3 decisions are due by Feb. 2.

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