WASHINGTON — NASA is reconsidering its decision to award a five-year engineering support services contract to SGT Inc. of Greenbelt, Md. following a protest by the contract’s long-time incumbent, Swales Aerospace of Beltsville, Md, according to government and industry officials.

NASA announced Dec. 1 that it had selected SGT to provide engineering support for ongoing programs and projects at Goddard Space Flight Center, also in Greenbelt, under a $400 million cost-plus award fee contract.

For SGT, winning the Mechanical Systems Engineering Services contract was something of a coup. For Swales, it meant losing an important piece of NASA business the company has performed for two decades and one that provides work for about a third of its 900-person work force.

Swales filed a formal protest Dec. 12 to the U.S. Government Accountability Office (GAO), a congressional watchdog agency that mediates federal contracting disputes.

The following day, according to government and industry officials, NASA directed SGT to suspend its contract transition activities. NASA also temporarily extended Swales’ support contract to ensure Goddard was not left shorthanded during the protest adjudication.

Then about a week later, on Jan. 18, NASA went a step further and rescinded SGT’s contract, notifying both companies that it would be taking corrective action to address some of the points Swales raised in its protest.

NASA Goddard spokesman Ed Campion confirmed Jan. 24 that SGT’s contact had been rescinded and said the agency would be reconvening the source evaluation board to reevaluate SGT’s and Swales’ proposals. He said a new award would be made in four to six weeks.

“It was determined that additional analysis was needed,” Campion said. “It was also decided that since additional analysis may produce new evaluation scores, the best course of action was to rescind the contract rather than just to suspend.”

A Jan. 19 letter from NASA counsel Vincent Salgado to SGT and Swales attorneys said the agency would “conduct a review of NASA Mission Suitability and Past Performance finding for both offerors” and “re-evaluate cost proposals and perform an additional cost realism analysis for both offerors” and ultimately make a new selection.

Informed by NASA that it would be reevaluating proposals, Swales notified the GAO Jan. 19 that it was withdrawing its protest, Swales spokesman Mark Anderes confirmed in an e-mail.

“NASA agreed to vacate the award and re-evaluate all the elements of the proposal and the record,” Anderes wrote. “Swales is pleased about this action.”

Sharon Larkin, a senior attorney in the GAO’s procurement law division, told Space News that once Swales withdrew its protest, the matter was closed as far at the GAO was concerned. The GAO would only get involved again if another protest was filed once NASA re-awards the contract, she said.

Swales spokesman Mark Anderes, reached by telephone Jan. 25, had no immediate comment on the protest.

SGT spokesman Harry Solomon said in a Jan. 24 telephone interview that company officials were confident that NASA would again pick SGT for the Goddard contract after evaluating the proposals again.

“We feel confident that it’s going to go our way,” Solomon said. “It’s one of those decisions where NASA wants to make sure they’ve done the most thorough job they possibly can.”

According to Solomon, Swales’ protest took issue with NASA’s evaluation of SGT’s proposed costs and technical and management approaches.

“We understand that NASA has decided to review the mission suitability findings for both companies, with a focus on a thorough documentation of the cost realism analyses,” Solomon said.

“Regarding the cost realism point of NASA’s analysis, SGT is confident that upon completion of the review, SGT will again be selected as the contract awardee and best value for the government,” Solomon said.

Jim McAleese, a McLean, Va.-based attorney who specializes in government contracting law, said agencies confronted with an award protest generally “have broad discretion to either take such corrective action as they see fit — assuming [the] agency finds merit in protest allegations — or to defend the protest vigorously while generally keeping the incumbent in place” while the protest is adjudicated.

Once an agency decides to take corrective action, he said, they generally either cancel the entire solicitation and conduct a new competition or rescind the award and request the submission of new so-called best-and-final-offers.

“Usually, contract rescissions suggest that [the] agency is indeed taking corrective action,” he said. “This does not necessarily suggest that re-award will not be for the same awardee once again.”

Solomon, meanwhile, said SGT and its teammates have suspended for now all contract transition activities, including recruiting and interviewing engineers and technicians for the contract that currently work for Swales and its subcontractors.

SGT’s Mechanical Systems Engineering Services teammates include: Ball Aerospace, BoulderColo.; Northrop Grumman Technical Services’ Support Services Corp., Lanham, Md.; Edge Space Systems, GlenelgMd.; and Sigma Space Corp., LanhamMd.

Solomon said SGT is one of NASA’s 50 biggest contractors with 875 employees and $110 million in annual revenues in 2006. Its biggest customers, he said, are Goddard, Kennedy Space Center, the U.S. Geological Survey and the National Oceanic and Atmospheric Administration.

Brian Berger is editor in chief of SpaceNews.com and the SpaceNews magazine. He joined SpaceNews.com in 1998, spending his first decade with the publication covering NASA. His reporting on the 2003 Space Shuttle Columbia accident was...