Leidos: Lawsuit over NGEN contract will delay full transition to 2021

(Editor's Note: This has been updated to include a statement from a Navy spokesman.)

A top Leidos executive said today an ongoing federal lawsuit concerning the Navy's Next Generation Enterprise Network services contract will delay the scheduled changeover from the incumbent contractor to Leidos.

"As the NGEN protest has moved from the [Government Accountability Office], where it was fully decided to the Court of Federal Claims, we remain confident that this protest will be resolved in our favor," James Reagan, Leidos' chief financial officer, said during a call with investors. "However, this does delay the full transition until late in the fourth quarter, continuing into 2021."

Leidos won a $7.7 billion contract in February to provide services for the NGEN program. Perspecta, the incumbent contractor, filed a lawsuit against the Navy in early July. Court documents for the case are sealed.

Navy spokesman Ed Austin confirmed to Inside Defense the program will face delays due to the lawsuit. He added the service does not expect the litigation to be resolved until “late in the calendar year.”

"To account for these delays, on 22 July 2020, we released the synopsis outlining our intent to extend the NGEN contract to ensure the continued operations and delivery of Navy Marine Corps Intranet (NMCI) and Marine Corps Enterprise Network (MCEN) services," he said in an Aug. 5 statement.

Perspecta also filed a bid protest with the Government Accountability Office earlier this year alleging numerous errors in the Navy's evaluation process.

GAO denied that bid protest as well as a separate claim by General Dynamics Information Technology.

"To the extent that there were errors in the [the Navy's] evaluation, these errors did not result in competitive prejudice because Perspecta's proposal remains higher-priced and lower-rated when viewed in the most favorable light to Perspecta," GAO concluded.