DHS cancels ACE solicitation

IBM Corp. has been in a year-plus battle to keep part of the large Automated Customs Environment contract it has held for over a decade.

The company won the original $5 billion contract in 2001, but when the Homeland Security Department began recompeting the contract, it broke it up into a group of smaller contracts.

Last year, IBM’s subcontractor on ACE, Lockheed Martin Corp., won a nearly $70 million contract for software development and operations and maintenance of ACE. The contract was for five years.

But IBM filed a protest, as did Avaya. The Government Accountability Office dismissed those protests after DHS said it would take a corrective action and reevaluate bids. Lockheed won the contract again, which sparked more protests from IBM and Avaya.

Those protests were filed in August.

And the protests have again been dismissed, though Avaya’s is still officially listed as active. GAO apparently hasn’t updated its system.

But this time, DHS isn’t taking a corrective action. Instead, it has told GAO that it has cancelled the solicitation.

So, where does that leave us?

Presumably, the need is still there, so most likely IBM is continuing to provide that support under the current contract.

And DHS is back at square one. Though an agency spokesman hasn’t returned my call, it’s reasonable to assume that Customs and Border Protection will need to develop another procurement.

CBP was using the General Services Administration Schedule 70 for the contract because Eagle II wouldn’t be ready in time. But with this cancellation, Eagle II is probably a possibility again.

Whatever contract vehicle CBP uses, they’ll have to correct the problems that contributed to the protests.

I’m sure IBM is happy to still be in the running, as is Avaya. For Lockheed, it’s got to be a disappointment. How many times do you need to win a contract?

None of the companies had returned requests for comment Friday afternoon.

But the question I have is how much money are these companies spending to chase this contract? It seems there has to be a point where the right business decision is to just walk away.

I don’t know where that point is, but I’d be interested in hearing what others think.