EDS gets US department's £410m contract despite complaints

For the second time in a year, the US Department of Housing and Urban Development has awarded a disputed IT services contract...

For the second time in a year, the US Department of Housing and Urban Development has awarded a disputed IT services contract worth more than £410m to Electronic Data Systems instead of to the supplier that previously provided the services. 

HUD awarded the contract again to EDS last Friday after a seven-month review that began after the current IT services supplier, Lockheed Martin Simulation, Training and Support (LMSTS), filed a protest last year against the contract award. In its complaint, LMSTS alleged that HUD misevaluated the business proposals from the two companies and "made an irrational source-selection decision." LMSTS held the previous HUD IT services contract. 

In response to the complaint, an audit by the Government Accountability Office agreed and determined that HUD's decision to award the contract to EDS was unreasonable and should be rebid. The contract was originally valued at about £470m. 

After a new review, however, HUD again awarded the contract to EDS on Friday. Under the deal, EDS will provide the staff, hardware and software, telecommunications, facilities and services needed to deliver HUD's basic IT functions to about 18,000 workers in more than 80 offices nationwide. 

The contract has a base period of four months plus nine option years, with a total potential value of £410m. 

Nettie R Johnson, a spokeswoman for LMSTS, said in a statement that the latest HUD decision is "even more surprising than its first award" of the contract. "Although we are disappointed with this outcome, we have requested a debrief and look forward to learning how HUD made its selection of EDS. We will not have any further comment on this matter until we receive our debriefing from HUD." 

Jereon Brown, a HUD spokesman, said on Tuesday he had no further comment. "I can't go into specifics," Brown said. 

Jim Duffey, vice-president of global sales for EDS, said in a statement that despite the delays, the company is eager to get back to work on the HUD IT project. "It has been a long and arduous process, but the new award by HUD reaffirms that EDS offered the superior solution - twice," he said. 

The IT services will include enterprise-wide data processing and management from mainframe to the desktop, information security, technology refresh services, helpdesk, user support, disaster recovery, printing and distribution, networking services, wireless, TV/videoconferencing and web administration.

Todd R Weiss writes for Computerworld

Read more on IT supplier relationship management