IBM Protesting FBI Contract to Lockheed

IBM is protesting the $1 billion contract the FBI awarded to Lockheed Martin for a biometrics database, a federal watchdog agency said Friday.

The FBI earlier this month selected Lockheed Martin Corp., which built and maintains the bureau's current 10-fingerprint database, for the Next Generation Identification system contract. The one-year deal is valued at about $40 million, but if all nine one-year options are exercised, the contract's value will approach $1 billion.

Bethesda, Md.-based Lockheed Martin, the nation's largest defense contractor, beat out teams led by International Business Machines Corp. and Northrop Grumman Corp. IBM filed the protest on Monday to the Government Accountability Office, which has 100 days to resolve it, an agency spokesman said Friday.

Spokeswomen for IBM and Northrop Grumman declined to comment. Lockheed Martin referred all questions to the FBI, which also declined to comment.

The biometrics database is a major upgrade to the FBI's current fingerprint system because it makes it easier for the agency to share anti-terrorism information with domestic and international partners. It may capture other identifiers, including palm prints, iris scans and facial recognition.

It also will include data on known criminals and terrorists, as well as information on foreign visitors to the U.S. whose fingerprints and digital photographs were collected under a separate Department of Homeland Security program.

Stanford Group Co. analyst Jeremy Grant, who issued a research note Friday morning on IBM's action, said the FBI may have to suspend work on the new system until June 4 when the protest is scheduled to be resolved.

The FBI could ask for an exemption from halting work, citing national security concerns, but Grant put its chances of winning one at 25 percent since there's a system in place.

A delay could be a blow to biometric providers, including Cogent Inc., L-1 Identity Solutions Inc., Motorola Inc. and others planning to showcase their systems for possible inclusion in the database, as well as to the FBI.

"NGI will give us bigger, better, faster capabilities and lead us into the future," FBI Assistant Director Thomas E. Bush III said on Feb. 12 when the deal was announced.

Privacy advocates say Congress must ensure that the FBI system will not infringe on citizens' rights before the government spends more than a billion dollars on it.

Shares of Lockheed Martin dipped $1.96 to $103.20 Friday, while Los Angeles-based Northrop Grumman fell $1.36 to $78.61 and Armonk, N.Y.-based IBM slid $1.38 to $113.86.