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A losing bidder in a long-running Army Corps of Engineers public-private competition has agreed to settle its appeal, clearing the way for the agency to immediately begin shifting its information technology services to the winning team, Corps officials announced Wednesday.

Last July, Northrop Grumman Corp. filed an appeal with the Court of Federal Claims over the Army Corps' decision to award a contract for information management and technology services to the in-house bidder in a competition for the work of about 1,300 federal employees and 1,400 to 2,000 contractors working for about 500 companies.

Officials said the parties had agreed to settle the appeal, filed following a competition process that started nearly three years ago under the Office of Management and Budget's Circular A-76 rule book. Representatives from both the Army Corps and Northrop Grumman declined to provide details on the agreement, including the amount of any monetary payment, until the settlement was finalized.

"It's fair to say that the parties expect the case to be settled and the lawsuit to be dismissed in the very near future," said Juli Ballesteros, a spokeswoman for Northrop Grumman.

Corps officials initially circulated a press release saying that a letter of obligation would be signed with the successful bidder on Wednesday, but spokesman George Halford said this had been postponed a day due to a scheduling conflict.

Corps employees affected by the competition will be notified officially on Thursday, according to several sources, with a three-hour video teleconference scheduled for all information management employees.

Once the agreements are complete, the group that won the competition, named Army Corps of Engineers Information Technology, or ACE-IT, will immediately begin a one-year transition period to be followed by one base year and four option years, officials said. The group's proposal entailed collaboration between federal employees and contractors from Lockheed Martin Corp.

The ACE-IT group will be headquartered in Vicksburg, Miss., and will work through 55 local Corps offices nationwide.

Halford said more details of the new arrangements would be available later this week, and details of Lockheed's involvement -- including how much work the company will do and the dollar value -- will unfold during the transition year. A Lockheed spokesman referred all questions to the agency.

Halford did not respond to questions regarding a process for affected employees to apply for jobs in the new organization, and the number of positions that will be available. Other public-private competitions across government have resulted in significant staff cuts even when the in-house team won. In some cases, seniority or a competitive application process has been used to assign those affected to new jobs.

Gordon Taxer, president of an International Federation of Professional and Technical Engineers local, said the extended competition process has taken a toll. "Morale stinks," he said. "I'm glad to see that the [in-house bid] prevailed, because that's going to retain the maximum number of federal employees, rather than have it go all contractor. I wish I knew what the numbers really were so that we could plan ahead a little more."

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