NASA pulls Hughes' $148 million contract

NASA's Ames Research Center has withdrawn a $148 million software support award from Hughes STX Corp. amid a protest that accused the agency of wrongly judging the past performance of the incumbent contractor.

The withdrawal comes a month after Sterling Software Inc. the incumbent since 1970 filed a protest with the General Accounting Office accusing NASA officials of unfairly judging the company's past performance at Ames. NASA withdrew the award before GAO could rule on the protest. Because the withdrawal eliminates the need for a protest GAO dismissed the protest early last week.

What prompted NASA officials to withdraw the award is unclear. NASA officials did not return repeated phone calls last week. However in a July 24 letter to GAO officials NASA attorney Bernard Roan wrote that as a result of a phone conversation with GAO officials the space agency had decided to take "corrective action" and was withdrawing the award. NASA officials will be formulating details of its corrective action plan during the next few weeks according to the letter.

Bob Valentine director of communications and quality at Hughes Technical Services Co. said the company would wait to see how NASA will proceed with the procurement before the company will refine its own strategy. "We're disappointed by the withdrawal of the contract " Valentine said. "However we're hopeful that after this delay the original selection will be reaffirmed."

Phil Kiviat vice president for business development at Sterling's federal sales office said he did not know why NASA withdrew the award. He speculated that procurement officials may have taken a second look at their evaluation of Sterling's and Hughes' past performance.

"We were an incumbent there for many years and we have been doing very well by NASA " Kiviat said. "It was a blow to have lost. We contended in our protest that the past-performance evaluation was flawed. How deeply did the evaluation team investigate the performance and how broadly did they look? We don't know the answer to that. It seems as though there was not justification for the [award] decision."

This is not the first time that the Ames software support contract has been the center of a heated protest. During the last competition for this contract in 1989 Computer Sciences Corp. was awarded the contract. Sterling protested and the protest was granted. NASA was ordered to reopen negotiations which it did.

NASA again awarded the contract to CSC and Sterling again protested to the General Services Administration's Board of Contract Appeals and the protest was granted. A GSBCA judge concluded that CSC understated salaries for some employees who were to work on the pact. CSC was disqualified and the contract was awarded to Sterling.

NASA officials had downselected three companies to continue into the final phase of the procurement. In addition to Hughes and Sterling Telos Corp. also was chosen to continue into the final round. Telos registered as an interested party to Sterling's protest. Bob Spearing Telos director of new business development said the company had "similar concerns" to those raised by Sterling in its protest. He could not provide any further details.

"There are many avenues that NASA can go down on this " Spearing said. "We don't understand exactly why they withdrew the award. Our assumption is that they are not going to cancel the procurement. Beyond that it is not clear whether they will reopen the thing."