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                         February 1, 2002

Contractor files for Chapter 11

By Irene Brown
Editor

The IT Group, a Pittsburgh-based company that recently won outsourcing contracts at two Army installations, has filed for Chapter 11 bankruptcy protection.

The announcement of IT Group’s filing came days before the company is scheduled to take over certain public works and logistics services at Fort Rucker in Alabama.

The Army awarded IT the contract after it successfully demonstrated it could save the base $7 million over five years by doing the work now performed by 380 federal employees. Some Fort Rucker officials are now a little nervous about how long the company will be able to provide those services.

"The announcement came as a complete shock to us," said officials at Fort Rucker’s Department of Public Works. "But it is important for our customers to understand that we will allow no lapse in services to them."

Community members have been patient during the transition period, which officially ended Sunday night at 12:01 a.m.

"Because our employees had to conduct physical inventories and other turnover requirements, we have only been responding to emergency service orders," they explained. "We now expect the contractor to fulfill the contract requirements no matter what is happening to them financially."

That sentiment was echoed by Maj. Ross Scott, Fort Rucker’s Public Affairs Officer.

"The IT Corporation took over the contract for DPW and DOL at midnight Sunday night," Ross said. "The contractor has the mission and we’re working for a smooth
transition."

However the Jan. 16 bankruptcy filing by The IT Group has prompted some acquisition experts to question whether military services do enough to check on the financial health of potential contractors.

"The system that selects contractors to compete in these studies needs to be looked at carefully," acquisition experts said.