IBM fighting for lost Customs contract

IBM Corp. has filed a bid protest over a Customs and Border Protection contract that went to Lockheed Martin.

The value, according to Deltek, isn’t huge at $67.8 million over five years, but the contract is to provide software development and operations and maintenance for the Automated Commercial Environment System or ACE.

IBM won ACE, also known as Customs Modernization, in April 2001 and it had a $5 billion price tag. The contract was to streamline the processing of imports coming into the United States, but after the Sept. 11 terrorist attacks, the contract took on more of a homeland security focus.

The project had its troubles over the years with delays and cost overruns, but IBM has used it as a launching point for customs modernization and border management and protection projects around the globe.

So, the loss of the contract had to be a surprise. [Attempts to get comment from IBM have been unsuccessful so far.]

Another sting has to be that Lockheed Martin was a teammate of IBM’s when the contract was awarded in 2001.

At the time of the award, the contract was the largest IBM had won since selling its Federal Systems Division in 1993.

“We’re back,” Tom Burlin, vice president of the federal business, crowed at the time.

I’ve also reached out to Lockheed for comment, as well as DHS. Lockheed had no comment, and I'm still waiting to hear back from DHS.

The timeline of the old contract expiring and the new one being awarded isn’t quite clear to me.

It looks like DHS decided to end the contract with IBM early because the original ACE contract had a five-year base and two five-year options, which theoretically could take the contract through 2016.

But in October, DHS extended IBM’s contract for several months for $13 million. That extension was supposed to end April 29, 2013, according to a notice on FedBizOps.gov.  I haven’t found another extension beyond that point. Deltek says the award to Lockheed was on July 30. So, there is a bit of a gap.

The protest by IBM was filed Aug. 9, and a decision is due Nov. 18.

Another interesting aspect of this is that the Homeland Security Department wanted to use its own vehicle to make the award, but it decided not to use Eagle I because it expires in 2014, and Eagle II has had too many delays, so it wasn’t ready.

Instead, DHS used the General Services Administration’s Alliant contract to make the award to Lockheed.