GAO Backs L-3 military contract protest
WASHINGTON --Military contractor L-3 Communications Holdings Inc. on Thursday said the Government Accountability Office backed its protest over the loss of a $4.65 billion linguistics contract.
The New York-based company filed the complaint Dec. 22 after the five-year deal went to Global Linguistics Solutions LLC, a joint venture formed by DynCorp International Inc. and McNeil Technologies Inc.
The contract is for providing translators and linguistics services to the U.S. military in Iraq and Afghanistan and Guantanamo Bay.
The GAO said in a written statement that it sustained L-3's protest because the Army did not "reasonably apply" the evaluation factors stated in the bidding process. The GAO said it would release more detail about its decision once proprietary information is removed from the ruling.
L-3 declined further comment.
Army spokesman Paul Boyce said the department is currently reviewing the GAO's recommendations. It is unclear how much time the Army will take to review the government watchdog's recommendation, which it is not bound to follow.
L-3 was widely expected by analysts to receive the multiyear deal. It inherited the contract, which ends March 31, when it bought Titan Corp. in 2005.
Analysts have suggested L-3's loss of the deal was not due to cost, but as a result of the Titan Group's contract performance before L-3 owned the company.
Linguistics services account for an estimated 4.1 percent, or $550 million, of L-3 sales. Getting the new contract was expected to generate more than $600 million in revenue in 2007, according to Joseph Nadol III, research analyst at JP Morgan Securities Inc.
After L-3 lost the contract, the company lowered its 2007 revenue guidance to a range of between $12.9 billion and $13.1 billion. It previously expected to report between $13.4 billion and $13.6 billion revenue this year.
Shares of L-3 Communications gained $1.26 to close at $87.60 on the New York Stock Exchange. Shares of DynCorp dropped $1.08, or 7 percent, to $14.40 in aftermarket trading after gaining a penny to close at $15.48, also on the NYSE.
