US: Gov't Accountability Office backs protest on $4.65B military translation deal

Harold F. Schiffman haroldfs at
Sun Apr 1 13:10:09 UTC 2007

U.S. office backs company's protest on $4.65B deal to translate for

WASHINGTON: Military contractor L-3 Communications Holdings Inc. said the
U.S. Government Accountability Office backed its protest over the loss of
a $4.65 billion (3.5 billion) linguistics contract. The contract is for
providing translators and linguistics services to the U.S. military in
Iraq and Afghanistan and Guantanamo Bay, Cuba. The 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 GAO said in a written statement 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.

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 (411.9 million), of L-3 sales. Getting the new contract was
expected to generate more than $600 million (449.4 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 (9.6 billion) and $13.1 billion (9.8
billion). It previously expected to report between $13.4 billion (10
billion) and $13.6 billion (10.2 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


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