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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.

COMMENTS

• Government Executive readers should not be misled by inaccurate and unattributed information published in a March 11 article by technology reporter Shane Harris entitled “Contentious HUD Tech Contract Under Fire Again.” The story discusses protests filed by Lockheed Martin and Electronic Data Systems, the competitors for the Department of Housing and Urban Development's Information Technology Services (HITS) contract. Citing only a source “who asked not to be identified,” the reporter wrote that Lockheed performed poorly under the predecessor HUD contract. Although Lockheed Martin told Harris that his information was incorrect prior to publication, and offered to provide award fee data to demonstrate that the obviously biased anonymous source was incorrect, Government Executive published the source's allegation with no response from either Lockheed Martin or HUD. It is interesting that other reporters who wrote articles on the same day included comment from HUD, while Government Executive’s story did not. We are equally disappointed that the executive editor, when contacted after the article appeared, did not deem it necessary to write another story to present factual data refuting the anonymous source's erroneous allegations. It is disappointing that deadline pressures and the claims of an unidentified source took precedence over truth. Government Executive’s anonymous source is dead wrong about the performance record, and unfortunately for readers, the story is built on a source who lacks credibility, knowledge of the facts, or both. Here are some facts: Lockheed Martin’s performance on the current HUD/HIIPS (Housing Integrated Information Processing Services)) contract -- as measured by HUD since 1991 -- reflects an overall high level of customer satisfaction. In fact, the average of performance award fees for that period exceeds 90 percent. Regrettably, Lockheed Martin has found it necessary to submit two protests to the GAO regarding the future HITS contract. The GAO in December determined that HUD misevaluated Lockheed Martin’s first proposal and recommended that the contract be recompeted. Harris’ March 11 article leads readers to believe that the second protest was filed to force a HIIPS contract extension. The truth, which we explained, is that the second protest addresses concerns over the fairness of the procurement process. We have important concerns about the HITS competition and have consistently used appropriate procedures to voice and document those concerns, including filing of two protests to GAO. Despite strains on all parties, Lockheed Martin and HUD program representatives continue to work well together, delivering services under HIIPS. Regrettably, Government Executive's reporting constitutes a gross disservice to Lockheed Martin and HUD employees who continue to work on the existing contract, demonstrating a strong commitment to the customers and citizens they serve. They do not deserve to be misrepresented. There are multiple sides to every story, and obviously HUD and EDS have their points of view about the ongoing HITS competition and which bidder is best qualified to serve HUD and its constituents. Government Executive did not fairly present our side of a story that it vitally important to taxpayers and citizens across the nation. Nettie R. Johnson Posted March 26, 2004 5:01 PM