Army Hopes to Resolve Contract Dispute by Oct. 17

By Nick Wakeman, Senior Editor

SEPT. 22 - The protest of an Army contract award to GTSI Corp. of Chantilly, Va., and IBM Corp. of Armonk, N.Y., should be resolved by Oct. 17, Army officials said.


Federal Data Corp. of Bethesda, Md., and Litton-PRC Inc. of McLean, Va., filed protests after GTSI and IBM were awarded the contract on Aug. 29. The contract is worth a potential $857 million to GTSI and $618 million to IBM.


Under the Army's Maxi-Minis and Database-1 contract, GTSI and IBM would compete with each other for task orders to provide the service with commercial, high-end 64-bit servers, workstations, operating systems, software, networking, engineering, training and support services. The Navy and the Internal Revenue Service also are expected to be heavy users of the contract.


Vera Meza, branch leader of the Army Material Command's protest program, which is overseeing the dispute, declined to detail the grounds FDC and PRC are citing in their protest.


"They are disappointed they were not chosen," Meza said.


Officials with the two protesting companies declined to comment, as did officials with GTSI and IBM.


In a statement, GTSI officials said that the company has petitioned the Army to allow GTSI to contest the protests.


Meza said that there are several options for resolving the protest, and one of those is adding contractors to the contract since the MMAD-1 program is a multiple award contract.


When GTSI won the contract, company Chairman and Chief Executive Dendy Young touted the win as the largest contract in the company's history.


With the win, the company's stock surged from $3.38 to $5.06 the day after the award was announced. Since then, however, the company's stock has fallen again, closing at $3.50 on Sept. 21.

The company's stock fell as investors read more details of the contract, said Thomas Meagher, vice president of equity research for BB&T Capital Markets of Richmond, Va.


While the contract has a ceiling of $857 million for GTSI, only $75,000 is guaranteed, according to Army documents.