General Dynamics files protest after losing deal

Northrop Grumman wins Navy ship-design contract

May 10, 2002|By BLOOMBERG NEWS

WASHINGTON - General Dynamics Corp. sought yesterday to overturn the Navy's award to Northrop Grumman Corp. of a $2.9 billion three-year contract to design a new class of destroyers that is less visible to radar.

General Dynamics' attorneys filed a protest with the U.S. General Accounting Office, alleging problems with the Navy's process for determining a winner in the design contest.

Raytheon Co. is the prime subcontractor on Northrop Grumman's team. Lockheed Martin Corp. teamed with General Dynamics.

"After careful review of the facts provided during the Navy's debriefing, it is obvious to us that the selection process was not consistent with established evaluation criteria and thereby gave unfair advantage" to the Northrop Grumman team, said Allan Cameron, president of Bath Iron Works, a General Dynamics unit.

The process "was clearly flawed," Cameron said.

The protest means the Navy can't sign the contract with Northrop for at least 100 days while GAO attorneys evaluate the charges. The agency is the government's primary forum for challenging government contracting decisions.

"That's part of the process and we will deal with it," Navy Secretary Gordon R. England said.

"We run our programs right and correctly and we did this one correctly but a protest is a check and balance to the system," England told Bloomberg News.

The Northrop Grumman-Raytheon proposal "met or exceeded" Navy requirements "and was judged as providing the customer best value for the innovative solutions recommended by the team," Northrop Grumman spokesman Randy Belote said in a statement.

The companies are "fully ready to begin implementing the initiatives of our proposal, with roles for a number of major defense contractors, including General Dynamics and Lockheed Martin," Belote said.

Analysts have highlighted Raytheon's win as a significant victory over Lockheed Martin because it gives the Lexington, Mass., contractor an entry into the naval electronic warfare integration business - an area dominated by Lockheed's work on the Aegis combat system.

The GAO must render a formal decision by Aug. 19, he said.

The agency will likely receive about 1,000 protests this year, of which about 80 percent are resolved without an agency decision when the protest is withdrawn, the agency takes corrective action, or the GAO dismisses the case for procedural reasons, said Daniel Gordon, head of the GAO's Bid Protest Office.

In the remaining cases, the GAO rules in favor of the protester about 20 percent of the time, Gordon said.

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