GAO ruling details improper HUD IT contract discussions

GAO ruling details improper HUD IT contract discussions

The Housing and Urban Development Department conducted improper discussions in the late stages of the procurement process before re-awarding a $750 million IT contract to EDS Corp.

Correspondence between EDS and the department, after HUD had received revised proposals from both bidders, led to material changes to the EDS proposal, the Government Accountability Office said in its ruling, a redacted version of which became available today. The ruling deletes extensive vendor information.

GAO, which sustained the protest of incumbent vendor Lockheed Martin Corp. last week, recommended that HUD reopen the procurement from the point of the contested discussions, seek revised proposals from the two contenders and once again award the contract.

'We sustain [Lockheed Martin's] protest on grounds that the agency improperly engaged in [post-final proposal revision] discussion with EDS, but not LMC, and otherwise failed to provide LMC with meaningful discussions,' the GAO said. As a result, Lockheed Martin said, HUD made an 'unreasonable source selection decision.'

HUD has 60 days in which to advise GAO if it will follow the recommendations.

The ruling centers on EDS' response to agency questions regarding the technical refresh aspect of the proposals of both vendors. Until that point, the agency concluded that the proposals were 'essentially equal' with respect to cost and price.

GAO agreed with Lockheed Martin that EDS made material changes to its contract proposal in the response. Under federal law, responses to questions late in the process are only to give added information, not change a proposal.

GAO also found that HUD failed to conduct meaningful discussions with Lockheed Martin about weaknesses the agency had identified earlier in the process.

The contract under the latest award has a base period of four months, followed by nine option years with a potential contract value of $750 million. The deal called for EDS to furnish personnel, hardware and software, telecommunications, facilities and services needed to deliver HUD's basic IT functions at more than 80 offices nationwide.

Lockheed Martin filed a protest with GAO in August, after HUD re-awarded its IT Systems contract to EDS. That contract was the result of a recompetition prompted by Lockheed's protest of the original award, which GAO ruled that HUD had not adequately justified.

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. Lockheed Martin continues to perform the other IT services provided under its original contract.

Lockheed Martin had been the 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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