Disputed $103 Million DHS Employee Smartcard Project Falls Behind

Protests by rivals HP and XTec have put on hold for more than eight months a Department of Homeland Security employee badge project intended to provide futuristic biometric identification features, such as iris recognition. Since an initial contract award in September 2013, the $103 million job has gone back and forth between the two companies, landing Friday in incumbent XTec's hands.

Now, the project will restart, DHS officials told Nextgov on Wednesday. But there is yet no timetable for completion. 

According to last year's work order, DHS should by now have finished testing and activating a new credential production and tracking system. The department had planned to replace about 161,924 cards in 2013 and 116,172 cards this year. 

The new system will upgrade existing, less sophisticated technology that distributes IDs used for accessing federal networks and facilities. Most DHS employees possess a badge, but 70 percent of them don't function on computers, according to a May White House report. That is, the digital components of the card have not been activated, so an employee -- or a hacker -- need only enter a password to access a DHS network.   

Last week, attorneys with Congress' watchdog arm dismissed the latest protest over the ID system contract, which had been filed by HP against XTec. 

"DHS paused development of the DHS Identity Management System until the protest was resolved," DHS officials said in an emailed statement. "The deliverable due dates will be modified since the contract has been on hold due to the protest." 



To continue providing new employees with ID cards and replace lost or stolen credentials, DHS had awarded temporary task orders to XTec and another incumbent contractor to service the existing system. 

Department officials said to make sure the project sticks to a schedule from now on, they "will communicate regularly with the vendor to ensure projects and milestones are on track.”

The new system is required to aid the "ongoing evolution and extension" of the department's ID smartcard program, including by supporting "future alternative biometric capabilities and standards, specifically such as facial recognition, iris capture, storage and matching,” the 2013 work order states.

DHS last fall initially gave the job to HP. Then in October 2013, XTec argued the department did not reasonably evaluate proposals, Government Accountability Office attorneys told Nextgov.

DHS decided to reevaluate the award. After the reassessment, Homeland Security on Feb. 28 awarded XTec the work.

Then came a second dispute. HP in March challenged Homeland Security's analysis of XTec's proposal, asserted DHS engaged in unequal discussions with XTec ahead of the award, argued the agency failed to see a conflict of interest, and alleged the award was unreasonable.

On Friday, Government Accountability Office lawyers released a ruling that rejected each count. GAO determined XTec's technology and price point met DHS' requirements, pre-award talks with DHS did not lead XTec to materially change its proposal, HP did not have hard facts showing a conflict of interest, and the agency’s choice was reasonable.

"The protest amounts to no more than disagreement with the agency’s judgments," GAO General Counsel Susan A. Poling wrote in the decision, dated June 16. 

HP officials did not respond to multiple requests for comment.

XTec officials said they will have no comment until meeting with DHS.