American Management Systems officials looked hard at NASA's Integrated Financial Management Program contract but ultimately decided it was too risky.
AMS announced May 1 that it was withdrawing its bid, even though two months earlier NASA had picked the Fairfax, Va., firm and two other integrators as finalists for a contract expected to be worth $50 million to $100 million. An award is expected by October.
AMS officials said they didn't like the structure of the NASA project and were having difficulties discussing those problems with the agency.
Still in the running for the contract that will unify the financial systems of NASA's 10 centers are KPMG Peat Marwick, New York, and Lockheed Martin Corp., Bethesda, Md. Lockheed spokeswoman Wendy Owen said the AMS move would not affect their bid. Peat Marwick did not respond to calls for comment.
AMS had qualms about the contract since the request for proposal was released in June 1996, said Harry Barschdorf, a vice president of the financial management and administration group of AMS.
The company tried to work with NASA after the RFP was issued to reshape the contract, he said. But they were met with no response from NASA on the issue.
"NASA has refused to meet with us," said Zipora Brown, another vice president with the financial management and administration group. Officials with NASA did not return Washington Technology's phone calls for comment.
One problem AMS had with the contract was that NASA structured it as a fixed-price vehicle but was not giving the information AMS felt it needed to make a realistic bid, Barschdorf said. "When a fixed-price contract is used, you are in a situation where you have to have well-defined specifications on what is expected," he said.
The NASA project will entail "10 different business models, 10 different systems that need to be replaced," Brown said. The project "does not have cookie-cutter solutions," she noted.
NASA also had a 14-month delivery schedule. "The contract has a very short window for implementation," Barschdorf said.
With the amount of information AMS had in hand, the company did not feel it could make a profitable bid for the project, Brown said. "We are very disappointed we had to withdraw," she said. "We feel our product and our approach was the best one for NASA."
In the past year, AMS has been keeping a closer eye on its operating margins, which generally are around 10 percent, said Mark D'Annolfo, an analyst with Adams, Harkness & Hill, Boston. "AMS is not going to bring on business just for the sake of bringing on business," he said. "There is plenty of other work out there."
D'Annolfo said it is difficult to compare AMS' margins to the companies he considers its peers. For the most part, those companies are the Big Six accounting firms, whose profit margins are not released to the public, so direct comparisons are difficult, he said.
But public companies such as Cambridge Technology Partners, Cambridge, Mass., and Technology Solution Co., Chicago, pursue similar business to AMS and have profit margins in the teens, he said.
The decision to withdraw from the NASA project might represent lessons learned from problems AMS had with an unidentified European telecommunications company, D'Annolfo said. AMS wrote off that project in March as a loss because it could not renegotiate what AMS officials described as an overly ambitious delivery schedule. "They might be using a little more caution because of that," D'Annolfo said.
Barschdorf said the problems with the telecommunications project did not influence the decision to withdraw from the NASA contract.