"And the winner is ... DynCorp!"

Chapter 1
With those fateful words (paraphrased), $500 million worth of fiscal 2007 revenue anticipated by defense contractor L-3 Communications (NYSE:LLL) went "poof!" earlier this month, as rival contractor DynCorp (NYSE:DCP) ran away with a multiyear contract to provide translation services to the U.S. military.

The contract, as we know, had been inherited by L-3, along with its recently acquired Titan subsidiary. Unfortunately, also coming home to roost with Titan were the firm's involvement in the Abu Ghraib scandal in 2004, and its receipt of a "cure notice" from the U.S. Army in 2005, indicating that the latter was unhappy with Titan's performance on the contract. It seems likely that one or both of these pieces of Titan-ic baggage played a role in L-3 losing its renewal bid.

Still, as the incumbent-by-acquisition bidder, L-3 had been presumed the likely recipient of the award when the multi-year, $4.65-billion contract came up for renewal this year. So sure was L-3 that it would win the renewed contract, that CEO Michael Strianese directly attributed L-3's recent earnings warning to the contract's loss, saying that previous "guidance for 2007 assumed that the company would win the recompetition of the linguist contract."

For those who missed it, by the way, L-3 cut its 2007 forecast by $500 million in sales and $0.15 per share in profits, and now predicts about $13 billion in revenues and $5.50 per share in profits for the year.

Chapter 2
It's entirely possible that L-3 will best those numbers, however, thanks to news out yesterday that the firm has officially protested the awarding of the contract to DynCorp. The Government Accountability Office, which received L-3's protest last week, has until Apr. 2 to decide whether the awards process was fair. Although the consensus among analysts seems to be that L-3 will not succeed in overturning the award, the company may still manage to delay the handover of the contract to DynCorp by a month or three (it's due to expire in March 2007). Then L-3 could continue billing for as much as an entire quarter longer than it would have had it elected not to protest the decision.

In other words, even if L-3 loses again, it still might win.

Learn more about the erstwhile Titan, and its former suitor Lockheed Martin (NYSE:LMT), in:

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Fool contributor Rich Smith does not own shares of any company named above.