The Government Accountability Office determines the Navy did not err in its decision to pick Leidos over Perspecta for the $7.7 billion Navy NGEN contract.
The Government Accountability Office has denied Perspecta’s challenge of the $7.7 billion Navy NGEN award that went to Leidos.
Perspecta was the incumbent on the contract and has held the work since 2000, thanks to a series of acquisitions and mergers that culminated in the creation of Perspecta two years ago.
NGEN, or the Next Generation Enterprise Network, is the Navy’s primary IT backbone and provides services to hundreds of thousands of users. It also is by far the largest contract in Perspecta’s portfolio, representing 15 percent-to-20 percent of annual revenue.
In its protest, Perspecta criticized how the Navy evaluated its technical proposal, past performance, pricing and discussions the branch conducted with bidders. Very similar allegations that General Dynamics made its protest that was denied by GAO last week.
But Perspecta also raised a claim of Leidos having an organizational conflict of interest, apparently claiming that Leidos had access to non-public information.
In a statement announcing the decision, GAO said the Navy "reasonably determined that Leidos did not have an unfair competitive advantage."
GAO also said the Navy's evaluation was reasonable and while there were errors in the evaluation, the errors didn't result in "competitive prejudice."
Details of the Perspecta’s protest and GAO’s decision are not available beyond that statement of the result. GAO's written decision will go through a vetting process before a public version is released. That will likely take several weeks.
GDIT’s decision has not be released yet either, though GAO announced the result.
A Perspecta spokeswoman said the company is reviewing the decision to determine what its next steps should be, if any.
Their path to retaining the contract is not entirely closed, though it has narrowed. The company could decide to take its case the U.S. Court of Federal Claims.
GAO’s announcement came after markets closed on Wednesday with Perspecta’s stock closing at $24.05, down from Friday’s close of $25.00. Perspecta was trading at its 52-week high of $29.88 on Feb. 5, when the Navy announced Leidos as the NGEN winner after the closing bell.
The next day, Perspecta's stock closed at $24.40 and continued to fall, finally bottoming out at about $23.00.
Leidos released a statement following GAO's announcement.
"We're pleased the protest was dismissed and are hitting the ground running, having used this time to expand our preparations for immediate program execution and success," a spokesman said in the statement. "Through this contract Leidos will support the important mission of the U.S. Navy and U.S. Marine Corps by unifying and fortifying existing networks with the best technologies. We look forward to providing the superior tools they need to gain a warfighting edge in the modern digital landscape.”
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