A Business article last Thursday incorrectly reported the headquarters location of CDI/CompData Services Corp., a subcontractor in a large computer contract awarded by the Department of Housing and Urban Development. The headquarters is in Philadelphia, but the firm took part in the bidding through its Arlington office. (Published 12/5/ 90)

Martin Marietta Corp. yesterday won a $526 million contract to modernize computer systems at the Department of Housing and Urban Development, a program officials promise will help correct management shortcomings exposed by recent financial scandals at the agency.

The company will operate a large mainframe computer center in Lanham, oversee desktop machines and tie together HUD's more than 80 offices nationwide by merging two now-incompatible data communications networks.

The award is more than welcome news at the Bethesda-based contractor, which has been trying to diversify away from its traditional core business of military contracting. A victory party was underway last night at the Maryland home of a company team member, following a midmorning phone call from HUD that conveyed the news of the 12 1/2-year contract.

"We expect this HUD contract to have a positive effect on our 1991 operating earnings and a significant impact into the next century," Martin Marietta Chairman Norman Augustine said in a prepared statement.

About 300 new jobs in the Washington area will result from the contract, said Pete Bracken, manager for the Martin Marietta program.

HUD's current data systems handle thousands of transactions per day, moving electronically such things as applications for Federal Housing Administration insurance and grants and reports on mortgage payment collections.

After allegations of widespread misuse of HUD funds came to light last year, officials attempting to sort out the department's financial dealings complained there was no central management or collection of information and that much key information simply couldn't be found. The new system, said Donald Demitros, HUD's information policies and systems director, "provides for better internal controls." Planning for the system began before the scandals, he said, but was accelerated afterward.

Martin Marietta has been working to win the contract for 2 1/2 years. Demitros said its proposal scored highest among the bidders on technical merit and also carried the lowest price.

Losing bids were those of Electronic Data Systems Corp. of Dallas and Boeing Computer Services of Bellevue, Wash. "Certainly we're disappointed," said an EDS spokesman.

Martin Marietta will have 30 months to put the system in place and then will operate it for 10 years. Major subcontractors will include Hitachi Data Systems, Unisys Corp., Netrix Corp. of Herndon, Cincinnati Bell Information Systems and CDI Compdata of New York.

It was not known if the losers would protest the award, but contracts of this size are frequently contested.

Martin Marietta recently won large contracts from the U.S. Postal Service for mail-processing machines and from Pratt & Whitney Group and General Electric Co. for jet engine parts.