Lockheed Protests $638 Million U.S. Navy Award to Northrop

Lockheed Martin Corp. (LMT) is protesting a $638 million contract awarded to Northrop Grumman Corp. (NOC) for upgrading Navy computer networks.

The contract was awarded on Feb. 1. It will modernize systems aboard ships, according to a Defense Department website.

Lockheed filed the protest yesterday with the Government Accountability Office, Ralph White, the agency’s managing associate general counsel for procurement law, said in a phone interview.

“We protest contract awards only when we believe flaws in the evaluation process preclude consideration of the best solution for the customer, as is the case with our proposal,” Keith Little, a Lockheed spokesman, said in an e-mailed statement.

He declined to comment on the reasons behind the protest because the Bethesda, Maryland-based company considers that information sensitive to the competition.

The Navy in March 2010 awarded contracts to both Lockheed and Northrop for the design and development of the Consolidated Afloat Networks and Enterprise Services program, also known as CANES, said Steven Davis, a Navy spokesman.

The Feb. 1 award, valued at $37 million and expected to grow to $638 million, is for the initial production phase. The Navy will hold another competition next year for full production of the system.

“Northrop Grumman is confident that its CANES proposal provides the Navy a best-value CANES solution and we stand ready to quickly help the Navy get this critical system to the warfighters,” said Randy Belote, a spokesman for the Falls Church, Virginia-based company. “We are disappointed that a protest was filed and have no further comment at this time.”

To contact the reporter on this story: Danielle Ivory in Washington at divory@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

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