Federal government and defense contractor Lockheed Martin Information Technology is attempting to block rival EDS Corp from performing any more work on its $860m contract for the Housing and Urban Development Department.
Bethesda, Maryland-based Lockheed filed a lawsuit with the US Court of Federal Claims to halt any further IT services work on the HUD project after a General Accounting Office ruling on December 18 pointed out that Lockheed had been unfairly ousted from the contract in favor of EDS.
According to the GAO, mistakes were made by the HUD in evaluating the two bids for the project, which had seen Lockheed put in a more competitive bid than EDS, while the HUD had unreasonably assumed that EDS would subcontract out work to smaller businesses.
The GAO ruling advised that both EDS and Lockheed should submit new bids for the HUD contract and recompete to win it outright, while in the meantime splitting the project between them. However, Lockheed hopes to block this course of action, and put a halt to the project while both companies recompete to win the deal, which is expected to be reviewed by April.
EDS was awarded the new 132-month contract with the HUD in August 2003, to develop a nationwide IT infrastructure and telecommunications service called HUD Information Technology Services.
The contract includes a one-year base period and as many as 10 additional option years that could place the total value of the contract at as much as $860m if all of the options are exercised. The project covers 18,000 HUD users in more than 80 locations throughout the US and its territories.
This is the latest in a long line of problem contracts for EDS. Its biggest weakness is its costly intranet project for the US Navy and Marine Corp.
Last week the company took a charge totaling $559m to cover the latest problems within the deal, forcing EDS into a fourth-quarter loss of $354m. This brings its total charges on the $6.9bn seven-year deal to $678.7m in the first three years. The company has just brought in former Delta Airlines IT executive Mike Koehler to help salvage the deal.
This article is based on material originally published by ComputerWire