The U.S. Court of Federal Claims last Thursday denied a protest by losing bidder Perspecta [PRSP] over the Navy’s decision in February to award a $7.7 billion network management contract to Leidos [LDOS], freeing the Navy and its new industry partner to move forward with the work.
Perspecta, which was the incumbent on the Navy’s Next Generation Enterprise Network (NGEN), can still appeal the court’s decision. Given delays in implementing the NGEN-Recompete (NGEN-R) Service Management, Integration, & Transport (SMIT) work won by Leidos and the time it will take to transition the company into the program, the Navy last Thursday evening awarded Perspecta a $797.3 million contract extension through Sept. 30, 2021 to continue work on NGEN.
Perspecta filed the protest with the court after the Government Accountability Office in June denied its protest, and one by General Dynamics [GD], which had also bid on NGEN-R, forcing the Navy to issue a stop work order. Despite the long lag between the February award decision and the court’s denial of the protest on Dec. 17, Leidos was allowed to do some work on the program under a partial stay.
“We’re pleased the Court of Federal Claims ruled in our and the government’s favor,” Gerry Fasano, president of Leidos’ Defense Group, said in a statement last Thursday. “During this partial stay, and the previous protests which were also denied, Leidos has not been sitting still. We are ready for immediate program execution and success. Through this contract Leidos will support the important mission work of the U.S. Navy and U.S. Marine Corps by unifying and fortifying existing networks with the test technologies.”
The court’s decision is under seal until Jan. 4 to give the parties time to submit redactions.
The NGEN-R SMIT contract has a five-year base period and three one-year options.
Sheila Kahyaoglu, an aerospace and defense analyst with the financial services firm Jefferies, estimated in a note to clients on Friday that she expects the SMIT work to generate $350 million in sales for Leidos in 2021 before growing to $700 million annually beginning in 2022.
Following rejections by the GAO and the court, she doesn’t expect Perspecta to protest again.
Under the NGEN-R SMIT contract, Leidos will provide sustain existing network services while transforming and modernizing ashore Navy networks for future digital needs.
“The Department of the Navy (DON) is pleased to be able to move forward with this critical program in support of our Navy and Marine Corps warfighters,” Ruth Youngs Lew, program executive officer for Digital and Enterprise Information Systems, said in a statement on Friday. The Service Management, Integration and Transport contract will provide secure end-to-end information technology services to more than 400,000 hardware devices used by more than 650,000 users at nearly 1,700 Continental United States and Outside of the Continental United States (OCONUS) sites worldwide via the Navy Marine Corps Intranet, OCONUS Navy Enterprise Network, Marine Corps Enterprise Network and other legacy networks. This contract will enable the DON to accelerate digital modernization of our enterprise networks, which are the foundation for the Department of Navy business.”
The SMIT contract won by Leidos followed a $1.4 billion award in October 2019 to Hewlett Packard [HPQ] for the end-user hardware portion of the NGEN-R program.