Business Digest

BUSINESS DIGEST

December 08, 2004

In the Region

Beltsville's Spherix says GAO has upheld its contract protest

Spherix Inc. of Beltsville said yesterday that its protest of a contract award to a rival company for providing reservation services to the National Park Service has been sustained by the Government Accountability Office.

The U.S. Department of Agriculture had awarded the contract for a consolidated National Recreation Reservation System for a bid of $128 million over 10 years. The bid was more than $32 million higher than Spherix's.

In upholding Spherix's protest, the GAO identified "numerous flaws" in the manner in which the agency handled the bidding process, the company said. Although the GAO's recommendations included reopening the bidding, that does not mean that Spherix wins the contract, which the company had previously said was equal to nearly 20 percent of its revenue.

BreakAway to develop computer game for military

A Hunt Valley gaming company will develop a computer game to teach military personnel counter-terrorism efforts, representatives said yesterday.

BreakAway Ltd., known for its simulation games, was asked to develop the game for the Naval Education and Training Command in Pensacola, Fla., which will use it in training the Navy's Mobile Security Group Two. The game is likely to be multi-player and three dimensional, and will be designed to improve critical thinking skills.

BreakAway previously developed a war game for the Army, and is working on a game commissioned by the National Institute of Justice to help municipalities nationwide simulate and manage a variety of disasters.

Air Force gives Lockheed order for $112.2 million

Lockheed Martin Corp. said yesterday that it received a $112.2 million order from the U.S. Air Force to begin full-rate production of a stealthy cruise missile.

Terms of the contract call for the building of 288 Joint Air-to-Surface Standoff Missiles, the Bethesda-based defense contractor said. The 2,000-pound missile has an infrared seeker and anti-jam satellite navigation system.

The Air Force is buying the missiles to restock inventories of long-range weapons depleted by the conflicts in Iraq and Afghanistan. The Lockheed missile is launched by aircraft such as the B-1 bomber and F-16 fighter.

Elsewhere

Judge tells Scrushy to explain possible gag-order violations

A federal judge in Birmingham, Ala., ordered Richard M. Scrushy and his lawyers to appear in court today to explain why they shouldn't be sanctioned for violating a partial gag order in the criminal case against the fired HealthSouth chief executive.

In a brief document filed yesterday, U.S. District Judge Karon O. Bowdre said Scrushy, his attorneys and his spokesmen had to explain their actions in light of the order she issued this year.

The judge did not specify what comments might have violated the order. But she scheduled the hearing after Scrushy attorney Art Leach was quoted in newspaper articles yesterday as saying a new government pleading that implicated Scrushy in the extensive fraud at HealthSouth was "based on lies and inconsistencies."

On Sunday, Scrushy was quoted in The Birmingham News criticizing the performance of the current managers of the Birmingham-based HealthSouth rehabilitation chain. The article said Scrushy's comments came in an e-mail to the newspaper.

Merck appoints panel to conduct Vioxx review

Merck & Co. Inc. has appointed a committee of board members and a retired federal judge to review the pharmaceutical giant's actions before it pulled its blockbuster arthritis drug Vioxx from the market.

Merck, which announced formation of the committee late yesterday, will hold a conference call today to give the company's earnings forecast for next year.

The New Jersey company said the committee would act for the board of directors in handling shareholder litigation over the Vioxx withdrawal and would advise the board on any action to be taken after the review. The committee's purpose is "to ensure that the company acted appropriately and ethically," a spokeswoman said, adding that there is no suspicion company officials did anything wrong.

Concerns about Merck's legal liabilities, estimated at up to $18 billion, have knocked its shares down by more than one-third, wiping away more than $38 billion in market value since the recall announcement.

Chinese computer maker buys control of IBM PC line

China's biggest computer maker, Lenovo Group Ltd., said yesterday that it has acquired a majority stake in International Business Machines Corp.'s personal computer business for $1.25 billion, one of the biggest Chinese overseas acquisitions ever.

In the deal, which ends IBM's long transition from PC pioneer to peripheral player, IBM will keep an 18.5 percent stake in the company, said Lenovo Chairman Liu Chuanzhi.

Lenovo is taking over IBM's desktop PC business, including research and development and manufacturing, Liu said. The acquisition would make Lenovo the third-largest PC company in the world, he said.

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