Settlement on much-protested deal frees HUD to modernize IT

In the end, department splits the contract between EDS and Lockheed Martin

With its hands now untied, the Housing and Urban Development Department can implement its IT modernization.

The department has settled the procurement dispute over its $800 million HUD IT Services contract. The dispute involved two rounds of protests at the Government Accountability Office and dragged on for nearly 18 months. But last month, the department reached an agreement to split the deal between EDS Corp., the original winner of the HITS contract, and Lockheed Martin Corp., the protester.

Each company will perform work worth about $400 million under the settlement. The contract now has a base period of four months, followed by nine one-year options.

'The awarding of multiple contracts is the most prudent, cost-effective and efficient manner to transform HUD's IT systems,' HUD deputy secretary Roy Ber-nardi said.

Under terms of the contracts, EDS will operate a data center and provide disaster recovery, and Lockheed Martin will provide direct IT services for HUD headquarters and field offices.

The delay brought on by the GAO protests resulted in HUD holding up plans to update its hardware and software. The de- partment also had to maintain older systems while paying both vendors for work allowed under GAO's decisions. HUD wants to upgrade servers and desktop systems that support 18,000 users.

Department officials had extended Lockheed Martin's existing Integrated Information Processing Services contract, awarded in 1990, until the new contract was in place. Over the next few months, Lockheed Martin will provide LAN, WAN, and desktop and notebook computer services.

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.

Now, EDS said it would complete work on the data center during the next few months and then focus on disaster recovery.

HUD had put off upgrades, such as implementing a Java 2 Enterprise Edition platform with an Oracle Corp. relational database, a HUD official said. The department also has delayed moving some systems, such as its Computerized Homes Underwriting Management System, from its 20-year-old Unisys Corp. mainframe environment to a new host.

The department had twice awarded the HUD Information Technology Systems contract to EDS. But following each HITS award, GAO upheld protests from incumbent Lockheed Martin, citing missteps HUD made.

Settlements are not unusual in bid protests, as in any litigation, said Dan Gordon, GAO associate general counsel and head of its bid protest unit. 'What is somewhat unusual is that this went through two full rounds of protests, with GAO sustaining the protests.'

After the first ruling in August, HUD reopened the buy. In No- vember, GAO ruled that HUD conducted improper discussions in the late stages of the procurement before re-awarding the contract to EDS. GAO again recommended that HUD reopen the procurement from the point of the contested discussions, seeking revised proposals.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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