Navy, EDS avert NMCI divorce at least for now

Under new deal, contractor to manage the network until 2010

After studying the issue closely I agree with the NMCI program manager that the decision to exercise the option early was in the best interests of the Navy.'

'Navy's Delores M. Etter

The Navy and EDS Corp. have worked out their differences and will stay married for three more years.

The two sides recently resolved long-standing claims over the Navy-Marine Corps Intranet program, with the Navy agreeing to fork over $100 million to settle the contract dispute and move forward with the $3.1 billion program extension that keeps EDS at the helm of NMCI until 2010.

The company initially had sought more than $780 million from the Navy in unanticipated costs'largely what it lost on the Pentagon IT reconstitution after Sept. 11, 2001, and the expenses associated with reducing legacy applications and maintaining dual desktops, according to Lt. John Gay, a Navy spokesman.

But on March 24, ending widespread speculation, the two sides announced they had reached agreement on the future of the consolidated voice, video and data network, which is now valued at nearly $12 billion and will link more than 500,000 sailors and Marines at roughly 1,000 sites across the country and the Far East.

'After studying the issue closely, I agree with the NMCI program manager that the decision to exercise the option early was in the best interests of the Navy,' said Delores M. Etter, assistant secretary of the Navy for research, development and acquisition.

Michael Jordan, EDS' chairman and CEO, called the extension a 'significant achievement for EDS' that 'ensures the long-term success of the Navy and Marine Corps' mission while providing one of the most secure private network platforms in the world.'

EDS agreed to continue its 15 percent discount per computer workstation, making assurance enhancements and refreshing technology. Also included in the terms of the agreement are revised transition plans, which include buying back equipment and infrastructure at the end of the contract, Gay said.

The Navy had not released a public copy of the contract extension at press time.

The original seven-year NMCI contract ends in October 2007, and for more than a year the Navy had been mulling its options. Last June, the Navy announced it was conducting a business case analysis to determine whether to extend the three option years to EDS or to recompete the contract, opening it up for other companies to submit bids.

Lee Buchanan, a former assistant secretary of the Navy for research, development and acquisition, said he favored the re- compete. Buchanan was the first to conceptualize an enterprisewide portal combining voice, video and data for the Navy and Marine Corps, and he also developed the original contract for NMCI.
'I still have a certain paternal feeling for the program,' Buchanan said. 'I still absolutely feel it's the right approach.'

Buchanan, who now works as vice president of the electronic- warfare sector for EDO Corp. in Arlington, Va., said he would have advocated a recompete of the contract, 'if only to get the real value and cost on the table' and to ensure that innovation is consistently worked in.

A House Armed Services Committee spokesman said members were pleased that both sides were ready to move forward.

Some Hill objections

But at least one congressman is objecting. Rep. Mark Kirk (R-Ill.), a Navy Reserve officer, called NMCI 'a very customer unfriendly system' and said the Navy should never have awarded a contract extension to EDS.

'At first I thought my situation was unique to me. Then I realized nearly everyone has a problem with NMCI, and no one wants to talk about it,' Kirk said.

Rear Adm. James B. Godwin III, the Navy's program executive officer for enterprise information systems, has acknowledged in the past that NMCI has had its challenges. Still, in a recent news release, Godwin touted 'affordability, performance, schedule and security' as reasons that back up the Navy's move to extend the NMCI contract to EDS.

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