GAO denies Lockheed Martin's protest of Navy deal

Los Angeles-based Northrop Grumman Corp. beat out Lockheed Martin Corp. and Chicago-based Boeing Co. in April to develop a plane for the Navy's Broad Area Maritime Surveillance--or BAMS--program. The contract could ultimately be worth billions based on the Navy's plans to buy 68 planes.

The Australian government, which has invested in the BAMS development program through a $15 million agreement with the U.S. Navy, is also expected to become a major customer.

Bethesda, Md.-based Lockheed Martin filed a protest in May with the Government Accountability Office challenging the Navy's decision, saying its review of past performance was "inconsistent" with its request for bids and was "unreasonable in numerous aspects."

On its BAMS proposal, Lockheed partnered with General Atomics, maker of the Predator unmanned aerial vehicle currently being used in Iraq and Afghanistan by the Air Force. The Lockheed team offered the Mariner, a version of the Predator with longer wings, more fuel and capacity.

While all three competitors received similar ratings from the Navy, Lockheed's proposal had a "high-risk" based on past performance--a key evaluation criteria, according to the GAO.

The GAO also said the service found "systemic problems" and a lack of improvement on the General Atomics aircraft, and felt similar problems were likely to be repeated on the BAMS program.

The Navy also had raised concerns on the limited number of software engineers that could complete all the contracted work. Lockheed contends that it has hired engineering and trained staff to expand its work force, according to the GAO.

Lockheed Martin was disappointed with the GAO's decision, but said it was committed to working with the Navy on future programs.

The agency denied Lockheed Martin's protest last week, but did not provide additional details on its decision until Wednesday.