Contentious HUD tech contract under fire again

The award of a lucrative and hotly contested information technology contract by the Housing and Urban Development Department has been delayed amid protests from one of the bidders that the agency is unfairly biased toward its competitor.

Lockheed Martin Corp. of Bethesda, Md., filed a protest Wednesday with the General Accounting Office, taking issue with numerous amendments that have been made to a request for proposals for HUD's multimillion-dollar Information Technology Services contract, known as HITS. Bids were supposed to be submitted by Friday , but Lockheed preemptively protested because "the basis of the solicitation still really favors [Electronics Data Systems Corp.]," the Plano, Texas, company vying with Lockheed for the job, said Nettie Johnson, a Lockheed spokeswoman.

Lockheed was the incumbent on HITS predecessor contract, and lost the new contract in a competition with EDS last year. Lockheed protested that award on the grounds that the department improperly evaluated its proposal and didn't justify the decision to award the work to EDS. The contract was valued at more than $860 million.

In December 2003, GAO instructed HUD to compete the contract again, but Lockheed was concerned because the department amended its request for proposals at least a dozen times in ways that gave EDS a competitive advantage, Johnson said. She declined to cite which amendments were challenged, saying they're still the subject "of negotiations."

Last month, EDS agreed to stop work on the HITS contract, following a court-ordered negotiation with Lockheed, which had filed an injunction in the U.S. Court of Federal Claims in Washington to stop EDS from performing transition work on the contract.

In the face of Lockheed's latest claims, an EDS spokesman said that HUD is unfairly biased against his company. Lockheed, in post-award briefings with the department last year, was allowed to see details of EDS' winning bid, and thus gained a leg up in the new competition, said Kevin Clarke, an EDS spokesman. Also, unlike Lockheed, EDS has spent money shifting parts of the department's offices onto the contract, which has affected pricing on EDS' proposal, Clarke said.

EDS planned to file a protest of its own Thursday, Clarke said. He declined to say whether the company might change its proposal again in preparation for a revised deadline of March 31. The company would wait "to see how all of this new activity pans out," Clarke said.

Neither company's spokesperson specified which amendments to HITS made them feel the competition was biased toward the other side.

With both companies accusing HUD of unfair treatment, it was unclear Thursday what action the agency would take. Officials with the agency couldn't be reached for comment.

Lockheed likely knew its protest would delay the HITS award. It is standard practice for an agency to extend a proposal deadline if a company protests a solicitation before submitting its bid. That in itself is a rare move.

A source familiar with the contentious fight over the HITS contract said it is a widely held assessment in government and the industry that Lockheed performed poorly under the contract's predecessor. The company was "not highly regarded," said the source, who asked not to be identified. "They made sure they came out all right," the source added, saying the company passed on extraneous costs to HUD.

HITS' predecessor, known as the Information Integration Program, or HIIPS, was a first of its kind in government, because it packaged one agency's IT services into a single agreement.

HITS was to follow in its forebear's footsteps, but also be a performance-based contract; the winning company would be rewarded based on meeting specific goals and benchmarks. The performance-based element was removed from HITS, however, prompting some acquisition experts to chastise HUD for not meeting the Bush administration's goals of managing government work on the basis of results, instead of paying flat costs.