GSA Ends HSPD-12 Contract with BearingPoint

Shares of BearingPoint Inc. fell Thursday after a government agency chose not to extend a contract that could have been worth up to $104 million for the management and technology consultancy company to supply new ID for all federal employees and contractors.

The General Services Administration said Wednesday that its decision was not related to BearingPoint's performance. But the agency said it would allow government agencies to choose from a list of 13 approved vendors when BearingPoint's contract expires in January.

Shares of BearingPoint fell 6 cents to $8.24 in early trading on the New York Stock Exchange.

BearingPoint's contract, originally awarded in August, could have run for five years and was part of a multi-billion dollar governmentwide program to issue ID cards that use biometric information and other technology to all federal employees and contractors in two years.

Lockheed Martin Corp., Xtec Inc. of Miami, and Electronic Data Systems Corp. all filed separate protests after BearingPoint won the original contract, but a GSA release did not mention those actions as a factor in this week's decision.

An agency spokeswoman said the GSA action was based on business decisions, evolving customer needs and the ability to open the contracts to state and local government agencies.

The protests may have played a role in GSA's decision, but the addition of compliant contractors indicates that requirements also are evolving, says Ray Bjorklund, chief knowledge officer at Federal Sources Inc., a research and consulting firm in McLean, Va. He agreed that GSA's action was unusual.

BearingPoint doesn't plan to appeal the decision and looks forward to competing in the future, said Steve Lunceford, a spokesman for the McLean, Va.-based company.

Analysts and government insiders have questioned whether issuing new IDs that are supposed to include a person's photo and fingerprints to more than 10 million federal workers and contractors can be accomplished within two years as required by Homeland Security directive.

Financial services firm Stanford Group Co.'s Washington Research Group predicts the effort will cost $1.3 billion, but other analysts expect the costs will be closer to double that.

Other approved service providers include General Dynamics Corp., L-1 Identity Solutions Inc., SI International Inc., and EDS.

The Interior Department also has awarded a contract to IBM Corp. and Lockheed Martin Corp. that is available governmentwide for the ID program.

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