EDS to stop new work on HITS contract

EDS Corp. will suspend new transition work on the $860 million HUD Information Technology Services contract as a result of court-ordered negotiations last week with incumbent contractor Lockheed Martin Corp.

EDS had expected to start work at the end of this month.

However, the contractor will continue activities already under way. "EDS and its small business partners have already achieved transition milestones," EDS spokesman Kevin Clarke said today.

The Housing and Urban Development Department said in January it would recompete the lucrative IT services contract, as the General Accounting Office had recommended.

Lockheed Martin filed for an injunction in the U.S. Court of Federal Claims in Washington, D.C., to halt EDS transition activities during recompetition for the contract.

Lockheed Martin said continuing transition activities would put it at a disadvantage, allowing one company to build up activities while the other winds down. HUD said it expects to re-award the contract in April.

HUD had said it could not stop work on its IT systems but would take the effects of transition activities into consideration when it evaluates the revised contracts. However, agencies typically stop transition activities while awaiting the outcome of recompetition, the GAO said.

EDS has already migrated HUD's nationwide help desk and field support services for its 80 offices from Lockheed Martin. The contractor also has 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. "Per HUD's direction, EDS will continue to support these functions," Clarke said.

"Therein lies the crux of the situation," said Lockheed Martin spokeswoman Nettie Johnson. "There was such a consistent effort of transitioning, though no new contract had been awarded," she said. "We believe that negotiations are needed and we are hopeful that further negotiations just assure a fair competition," she said. The contractors and HUD will continue negotiations in March, she said.

Lockheed Martin in September protested the award to EDS for the up-to-nine-year HUD ITS contract. HUD did not justify its choice of the higher bid from EDS over Lockheed Martin Corp., GAO said in agreeing with the contractor.

Under the HITS contract, HUD will upgrade the desktop systems and servers for its 18,000 users in 80 locations, enterprise data processing and management, information security, LAN and WAN services, and Web administration. The new contract has a one-year base period worth about $15 million and nine one-year options.

Lockheed Martin had been the incumbent IT provider under the HUD Integrated Information Processing Service contract since 1990. That contract has now been extended to May 31 from Feb. 29.

Mary Mosquera writes for Government Computer News magazine.