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January 6, 2004

GAO criticizes awarding of contract to EDS

Electronic Data Systems faces re-bidding for its $860m services contract with the US government's Department of Housing and Urban Development after the General Accounting Office upheld Lockheed Martin Information Systems' protest against the deal.

By CBR Staff Writer

The decision could mean EDS’ contract is terminated, if it is not successful in the new bidding procedure. This is not a foregone conclusion, however.

The US General Accounting Office is responsible for ensuring competition in the awarding of Federal contacts. The GAO made its decision last month, but it only emerged yesterday. EDS was expected to hand over the new system next month.

The office’s report on the bid cited a number of errors on HUD’s part, and concluded that: There is no basis to find that the award determination in favor of EDS at a cost premium of [deleted] is supported by the record.

While the decision is not technically binding on HUD, in practice government agencies usually defer to the GAO, rather than face the prospect of being dragged into the courts by disgruntled unsuccessful bidders.

Dan Gordon, head of the GAO’s bid protest unit, said such decisions were not necessarily a reflection on the bidding companies.

What’s more common is it’s the agency that makes a mistake, he said. Which isn’t to suggest that HUD did anything wrong.

Bidders often raise complaints over the award of IT contracts. Gordon said this is because of the large number of such contracts and their high value. I don’t think they’re disproportionately common.

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The GAO does not have any other open investigations into EDS contracts.

EDS was unavailable for comment yesterday.

This article is based on material originally produced by ComputerWire.

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