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L-3 Communications files protest over $4.65B U.S. Army pact for linguistics services

L-3 Communications files protest over $4.65B U.S. Army pact for linguistics services

Military contractor L-3 Communications Holdings Inc. filed a protest with the Government Accountability Office over the loss of a $4.65 billion (euro3.53 billion) contract to provide translators to the Army, the watchdog agency said Thursday.
The New York-based company filed the protest on Friday with the GAO after announcing last week it had lost a five-year contract to provide linguistics services and translators to the U.S. military in Iraq, Afghanistan and Guantanamo Bay, Cuba. The pact went to Global Linguistics Solutions, a joint venture formed by DynCorp International Inc. and McNeil Technologies.
Six representatives from the company were debriefed by the Army's Intelligence and Security Command, INSCOM, last Wednesday, according to Mary Ann Hodges, a spokeswoman for the Army.
The company had five days after the briefing to file a protest, said Michael Golden, a GAO spokesman. An L-3 spokeswoman confirmed the company filed the protest, but declined further comment.
L-3 was widely expected to receive the multiyear deal as the incumbent contractor. The current pact runs through March, but analysts speculate a protest could extend its life to perhaps as late as June. L-3 inherited the contract when it bought Titan Corp. in 2005.
The department also awarded a contract worth up to $730 million (euro554 million) to Thomas Computer Solutions to provide translators and linguists in Afghanistan and a contract worth up to $66 million (euro50 million) to Calnet to provide similar services at Guantanamo Bay, Cuba.
Gregory Lagana, a spokesman for DynCorp, declined to comment.
Wall Street analysts expected L-3 to protest the surprise award, saying such action could delay DynCorp's start on the program or could lead to a short extension of the contract for L-3, said Robert Spingarn, research analyst at Credit Suisse Securities.
Goldman, Sachs & Co. research analyst Richard Safran predicts the contract could be delayed up to three months.
Analysts have suggested L-3's loss of the deal was not due to cost, but as a result of past performance by the Titan Group before it was acquired by L-3.
"It is possible that L-3 believes this notification in past performance was unfairly held against them during the re-compete," said Safran.
Linguistic services account for an estimated 4.1 percent, or $550 million (euro417.5 million), of L-3 sales. A renewal in the contract was expected to generate more than $600 million (euro455.5 million) in revenue for L-3 in 2007, said Joseph Nadol, III, research analyst at JPMorgan Securities Inc.
Last week, L-3 lowered its 2007 earnings-per-share guidance by 15 cents to a range of $5.45 to $5.55, from previous guidance of $5.60 to $5.70. Analysts expect a profit of $5.60 per share, according to a Thomson Financial poll.
The company now expects revenue between $12.9 billion (euro9.79 billion) and $13.1 billion (euro9.94 billion), compared with previous guidance of between $13.4 billion (euro10.17 billion) and $13.6 billion (euro10.32 billion).


Updated : 2021-06-22 00:34 GMT+08:00