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PRESS RELEASE
For additional information, contact July 22, 2003
SPHERIX CHALLENGES OMB ATTEMPT TO SOLE-SOURCE PARK SERVICE FOR IMMEDIATE RELEASE: BELTSVILLE, MD, Spherix Incorporated (NASDAQ/SPEX), today revealed progress in its "David versus Goliath" battle against the Government's plan to make a sole-source award of the Firm's Park Service reservations contract to ReserveAmerica, the Canadian arm of TicketMaster, Inc. However, the Company said much remains to be done to overcome the threat to the Firm's showcase National Park Service (NPS) contract and the 125 Spherix employees at its Cumberland, Maryland facility. Claiming the Government's proposed actions are unlawful, Spherix is pursuing legal and political avenues of redress. Last October, Spherix bid to renew its 5-year contract with NPS. Spherix expected head-to-head competition from TicketMaster, which had last year approached the Firm (unsuccessfully) to buy its reservation business, including the NPS contract. On December 17, 2002, just before an award of the contract by NPS was expected, the procurement was abruptly cancelled. The Office of Management and Budget (OMB) had intervened to direct NPS to make a sole source award of the contract to TicketMaster's ReserveAmerica. This was to be done by bundling the NPS sites into that company's National Recreation Reservation System (NRRS) contract, under which it makes reservations for the U.S. Forest Service and other agencies. On December 23, Thomas M. McConnell, Chief, Division of Contracting, NPS, wrote Spherix that the evaluation of its technical proposal was completed, "ranking the Spherix proposal first ... the proposal demonstrated an in-depth understanding of the overall reservations program. The panel noted the consistent delivery of first-rate customer service to the public and the National Park Service. No significant weaknesses were identified." Spherix appealed to the Small Business Administration, U.S. Senators Paul Sarbanes and Barbara Mikulski, and U.S. Representatives Roscoe Bartlett and Steny Hoyer. All wrote to OMB, questioning the proposed award's compliance with the Federal Competition in Contracting Act. Maryland Governor Robert Ehrlich also wrote to OMB supporting Spherix's position in an attempt to preserve the Maryland jobs. Spherix then filed suit in the Court of Federal Claims to prevent the non-competitive award. Grounds were the violation of the Federal Competition in Contracting Act and violation of the Administration policy on contract bundling. Spherix also contended that, coupled with TicketMaster's NRRS contract and vast reservation resources, the award would grant the giant company's Canadian facility a virtual monopoly over all reservation services for the United States' parks, forests, and other recreational facilities. In the hearing, Judge John P. Wiese stayed the proceedings for 30 days, asking the Government to explain its action. At the end of the stay, the Government stated it had decided not to transfer the contract to TicketMaster. Instead, a new RFP combining the Parks and Forest Service reservation systems into a single NRRS contract would be issued. Simultaneously, however, the Government announced that it would make a sole-source award of the reservation inventories of 12 National Parks to TicketMaster's NRRS contract. Spherix questions whether this NRRS contract contains, as some do, a requirement that all work be performed in the U.S., which, if so, would present a barrier. If made, the award would unfairly give TicketMasters' ReserveAmerica the time and public resources it needs to get ready to bid on the joint procurement. Spherix has now protested to the Departments of Agriculture (NRRS) and Interior (NPS) against the plan to sole-source the 12 National Parks to ReserveAmerica. After Spherix originally won its contract, it had to "sell" its services to each of the Parks it wanted to add to the program. The unearned award would provide TicketMaster more than two-thirds of the amount of reservation inventory that Spherix has painstakingly won over the last 5 years. A decision by the Government is due July 31. Spherix CEO, Dr. Gilbert V. Levin, said, "OMB's move is inexplicable. Spherix offers superior technology, has a better performance record, and is less expensive. All Spherix seeks is that the cancelled procurement process be re-instated, or that, if the two programs are to be combined, we be given a fair opportunity to compete. Looking at the past, we doubt we will find a level playing field and, therefore, we would request third-party oversight of the procurement process. We think this is very important, because we have now been led to believe that TicketMaster never even bid on the Park Service contract, somehow divining that it would get the work anyway." This week, Levin sent a letter to President Bush to protest OMB's action. Spherix's NPS contract currently provides revenues somewhat in excess of $4 million per year. Certain statements contained herein are "forward looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied. Factors that could cause actual results to differ materially from those expressed or implied include, but are not limited to, those discussed in filings by the Company with the Securities and Exchange Commission, including the filing on Form 8-K made on March 3, 1999. Under its motto, "A World of Solutions," Spherix's mission is to create value and increase shareholder wealth through innovations that benefit our clients and the human condition. Spherix offers innovations in information technology, knowledge management, and biotechnology.
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