Judge sides with Navy in latest challenge to $7.7 billion NGEN contract

The court decision likely paves the way for the Navy to transition to the new NGEN contract, though Perspecta may still take its case to an appellate court.

A federal court has ruled against Perspecta in a lawsuit that sought to overturn the Navy’s latest iteration of its Next Generation Enterprise Network contract, likely clearing the way for work to begin on one of the largest information technology contracts in government history.

The precise reasons behind Judge Loren Smith’s final judgement in the case aren’t yet known, because he filed his opinion under seal — a common practice at the Court of Federal Claims to protect sensitive acquisition information. A public version of the document is expected by early January.

The lawsuit was over the Navy’s award of the larger of two contracts that make up its latest recompetition of NGEN, known as Service Management, Integration and Transport. The Navy awarded SMIT, valued at up to $7.7 billion over eight years, to Leidos in February.

“The Department of the Navy is pleased to be able to move forward with this critical program in support of our Navy and Marine Corps warfighters,” Ruth Youngs-Lew, the Program Executive Officer for Digital and Enterprise Information Systems said in a statement. “This contract will enable the DON to accelerate digital modernization of our enterprise networks, which are the foundation for the Department of Navy business.”

Perspecta did not immediately respond to a request for comment about whether it would appeal the decision to the Court of Appeals for the Federal Circuit.

NGEN is a key part of Perspecta’s business. It is the incumbent for the current NGEN contract, and it and its predecessor companies have operated the Navy-Marine Corps Intranet since the Navy Department first outsourced its networks in the early 2000s.

Indeed, on Thursday, the Navy awarded Perspecta a nearly $800 million extension allowing it to continue providing services on the existing NGEN contract. That modification was mostly necessitated by the delay Perspecta’s bid protest lawsuit caused in transitioning the work to Leidos, Navy officials said.

The latest extension brings the total value of Perspecta’s NGEN contract to $6.7 billion. That existing contract was initially estimated to be worth $3.5 billion when it was first awarded as a five-year contract in 2013, but it has been extended numerous times, mostly because of delays on the Navy’s part in preparing the final solicitation and making the award.

This week’s court decision puts an end to the third bid protest the NGEN contract has faced. Perspecta had also protested the award before the Government Accountability Office earlier this year, as had GDIT, another losing bidder. GAO ruled for the Navy in both cases. A second, smaller piece of the NGEN recompetition, for end-user hardware, went to HP in October 2019. That portion of the contract never faced a protest.

The SMIT contract, meanwhile, is meant to deliver the core backbone of the Navy-Marine Corps Intranet, including cybersecurity services, network operations, service desk and data transport.

Under the new contract structure, the Navy also intends to consolidate its separate ONE-Net into NMCI. GDIT is the incumbent vendor for ONE-Net, which currently handles Navy IT services in ten countries outside the continental United States.

That firm was also granted a contract extension this week, valued at $28 million. Navy officials said that modification was also caused by bid protest-related delays.

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