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Sunday, May 19, 2024
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Protest Puts Contract In ‘Holding Pattern’

A $638 million U.S. Navy electronics contract is now in a “holding pattern” after a second government contractor filed a protest over the award, according to a Navy spokesman.

The Navy recently awarded the deal to Northrop Grumman. A spokeswoman for Lockheed Martin Corp., which had also bid on the electronics contract, confirmed that her company filed the protest.

Up for grabs is a next-generation computer system for ships dubbed CANES, short for Consolidated Afloat Networks and Enterprise Services. Northrop was to work on the contract in San Diego.

The award — a delivery order initially valued at $36.6 million, with options that would bring its value to $637.7 million — was to put the new electronics aboard Navy ships, including an unnamed destroyer and an unnamed amphibious assault ship.

The Navy said it plans to follow that award with another contract to outfit as many as 180 ships, submarines and operation centers with the new electronics by 2020. The Navy also plans to award an engineering support contract. Those awards would amount to billions of dollars.

Northrop would probably be in the best position to receive such follow-on work, said Cai von Rumohr, a Massachusetts-based analyst with Cowen & Co.

Ripple Effect on Businesses

The new wrinkle will affect Northrop partners and subcontractors on the deal, including the shipbuilding and repair firm Huntington Ingalls Industries (formerly a unit of Northrop) as well as small businesses Atlas Technologies, Beatty and Co. Computing, Juno Technologies, Mikros Systems Corp., Syzygy Technologies and CenterBeam.

Protests have become common during the last 18 months, particularly on service contracts, said von Rumohr. He said protests are common when the government is awarding indefinite quantity/indefinite delivery contracts. Such arrangements have bidders compete for task orders under the contract.

There’s nothing to lose in filing a protest, the analyst added. The climate is quite different from 20 years ago, von Rumohr said, when the government penalized protesters by not giving them work on subsequent projects.

Several things could happen as a result of a protest, the analyst said, including the protesting company getting a spot on the work team.

Pursuing Fair Evaluation

Lockheed Martin would not comment on its protest beyond issuing a statement.

“Lockheed Martin is focused on providing our customers the most affordable and capable products and services to meet their mission requirements,” the statement read.

“We protest contract awards only when we believe flaws in the evaluation process preclude consideration of the best solution for the customer, as is the case with our proposal for the Navy’s Consolidated Afloat Networks and Enterprise Services program.

“We look forward to our protest being fairly evaluated and having an opportunity to provide the most affordable and capable solution to meet the critical ship computing needs of the Navy.”

Northrop declined a request for an interview, issuing a statement of its own:

“Northrop Grumman is confident that its CANES proposal provides the Navy a best-value CANES solution and we stand ready to help the Navy get this critical system quickly to the war fighters. We are disappointed a protest was filed and have no further comment at this time.”

The Space and Naval Warfare Systems Command, or Spawar, which is based in San Diego, awarded the contract. Spawar spokesman Steven Davis offered few details of the protest, saying only that the contract was “in a holding pattern.”

CANES will take the place of five shipboard computer networks, and will offer infrastructure for what the military calls C4I applications. C4I is a Spawar specialty. The acronym stands for command, control, communications, computers and intelligence.

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