News Column

Lockheed Might Seek Appeal of Rich Navy Contract Award

Feb. 7, 2013

Richard Burnett, Orlando Sentinel


Nearly two weeks after losing its bid for a Navy crew-training contract worth nearly $100 million, Lockheed Martin Corp. may be considering protesting the award of the deal to a rival company's Orlando unit.

Lockheed, whose training-simulation business is also located in Orlando, said this week it received a briefing from the Navy on Tuesday that detailed the agency's rationale for awarding the contract to Cubic Corp.

San Diego-based Cubic won three contracts on Jan. 25 -- each worth nearly $100 million -- to develop virtual-training systems for both versions of the Navy's advanced Littoral Combat Ship. Its Orlando division, Cubic Simulation Systems, beat Lockheed, among other rivals, to provide training systems for the LCS Freedom, the version of the ship made by Lockheed's shipbuilding operations.

"With our experience in game-based simulation and surface-Navy training programs, we believe we offered a compelling, cost-effective technical approach," Bethesda, Md.-based Lockheed said in a prepared statement. "We requested an evaluation debrief, which occurred on Feb. 4, and we are now reviewing the data."

Industry experts say such a review indicates the company is likely mulling an appeal of the award.

If the company files a timely protest of the award -- generally within 10 days of a debriefing -- it could lead to a suspension of Cubic's work on the warship-training program until the protest is resolved, according to a spokesman for the Government Accountability Office, which handles contract appeals.

Lockheed, the country's largest military contractor, may be the only one willing to undertake the often expensive appeal process, which industry experts say rarely leads to the reversal of an award.

Northrop Grumman Corp. confirmed this week that it has decided not to protest the contract. It had submitted a bid to develop the training systems for the LCS Independence, which is being built by General Dynamics Corp.

Other competitors for the training contracts would not comment on an appeal.

According to the GAO, fewer than one in every five appeals resulted in a contract being rebid last year. And it is not known how often the competitor that protested an award eventually won the contract.

Defense expert Loren Thompson said he expects Lockheed to challenge the Navy's decision to go with Cubic, which he said probably submitted a very low bid to win the work.

"It is obvious that Lockheed and General Dynamics understand these ships better than anyone else," said Thompson, chief operating officer of the Lexington Institute, a Washington think tank. "And it is hard to imagine they lost these training contracts on any other basis than price and Cubic's underbidding."

Cubic officials could not be reached Wednesday for comment. Last month, the parent company said the new contracts would mean an additional 150 to 700 jobs at its Orlando training-simulation unit, depending on how many orders it eventually receives from the Navy.

The Littoral Combat Ship training award was viewed as a big vote of confidence in Central Florida's training-simulation industry, which comprises the country's largest collection of training contractors and related military agencies.

The contracts were awarded by the Navy's Orlando training-contract agency after they survived a high-level Pentagon deficit-reduction budget review that determined the work was "essential to military readiness."

Source: (c)2013 The Orlando Sentinel (Orlando, Fla.) Distributed by MCT Information Services

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