GAO: HUD should re-open HITS contract again

GAO: HUD should re-open HITS contract again

The Government Accountability Office today recommended that the Housing and Urban Development Department once again re-open and re-award a lucrative IT contract. If HUD follows the recommendation, it will be the third time the agency has solicited for the Information Technology Systems contract, now worth $750 million

GAO faulted HUD for discussions it conducted with EDS Corp. but not Lockheed Martin Corp.

Earlier in the day, GAO approved Lockheed Martin's protest of the second contract award of the HUD HITS contract to EDS. Originally, the companies did not expect to know the particular findings and recommendations until Monday.

GAO this afternoon decided to share a digest of its findings and recommendations with EDS and Lockheed Martin.

'The basis for sustaining in the broadest terms are improprieties relating to the conduct of discussions in that the agency had post-final proposal revision discussions with EDS and, second, that they failed to have meaningful discussions with Lockheed,' said Daniel Gordon, GAO associate general counsel and head of bid protest unit.

'GAO recommends that the agency re-open the acquisition and engage in meaningful discussions with other offerers, obtain and evaluate revised proposals and make a new source selection decision,' Gordon said.

Incumbent contractor Lockheed Martin filed a protest with GAO in August after HUD re-awarded its Information Technology Systems contract, now worth $750 million, to EDS. That contract was the result of a recompetition prompted by Lockheed's protest of the original award, which GAO ruled had not been adequately justified by HUD.

"We're anxious to find out what GAO's specific recommnedations are," said Lockheed Martin spokeswoman Nettie Johnson. "We are very happy that they upheld our position regarding the contract and we look forward to working with HUD and GAO."

Lockheed Martin said in August it appealed HUD's second award to EDS based on the agency's 'unreasonable evaluation findings, the agency's failure to provide meaningful pre-award discussions and its failure to negate improper advantages EDS gained during transition activities conducted under the first, improperly-awarded contract.'

Under the contract, EDS was to furnish personnel, hardware and software, telecommunications, facilities and services needed to deliver HUD's basic IT functions at more than 80 offices nationwide.

"Today's decision by the GAO does not mean that Lockheed Martin has won the contract or has a better solution," said EDS spokesman Kevin Clarke. "We continue to believe that ours is the best solution for HUD."

HUD officials said they were reviewing the decision.

During the past year, EDS had assumed responsibility for HUD's nationwide help desk and field support services for 80 offices. The contractor also transferred HUD's application development platform programs and processes, and the agency's disaster recovery facility, to the EDS data center in Charleston, W.Va.

The contract has a base period of four months, followed by nine option years with a total potential contract value of $750 million.

"We have not seen the GAO decision, but we anticipate that GAO will recommend that HUD take corrective action," Clarke said. "If HUD follows such a recommendation, EDS will vigorously work to secure this business. Our solution was deemed the best on two previous occasions and we are confident that we will prevail."

Lockheed Martin had been the incumbent IT provider since 1990 under the HUD Integrated Information Processing Service contract.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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