In early October, following protests from IBM (NYSE:IBM), the U.S. Government Accountability Office determined that the $543 million federal contract for wireless tracking that the Department of Veterans Affairs awarded to Hewlett-Packard (NYSE:HPQ) in June should be re-evaluated. However, after several months of deliberation, the department has decided to give the contract back to H-P, as Jo Schuda, a Veterans Affairs spokeswoman, told Bloomberg.
Why was H-P’s Proposal Re-evaluated?
“GAO sustained, or upheld, IBM’s protest, finding that the VA had made several prejudicial errors in its evaluation,” Ralph White, the agency’s managing associate general counsel for procurement law, told the publication in an October email. “Those errors led to a source selection decision that GAO found was unreasonable since it relied on the erroneous evaluation conclusions to support the award decision.”
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But after the company’s proposal was looked at a second time, the VA determined that H-P’s offer was “the best value for the government,” according to Schuda.
CHEAT SHEET Analysis: What does the contract mean to Hewlett-Packard’s Stock?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. For Hewlett-Packard, this five-year contract is a big deal; it allows the company to receive a substantial amount of the department’s annual technology spending, which the company sorely needs after its ill-fated acquisition of Autonomy contributed to a $8.8 billion writedown in the last quarter, pushed the company’s stock price to a 10-year low, and set H-P back further in its quest to expand beyond its stagnating computer business.
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