Bush signs $1.96 billion NMCI extension

Bush signs $1.96 billion NMCI extension

The Navy can pay Electronic Data Systems Corp. an additional $1.96 billion to extend the basic Navy-Marine Corps Intranet contract period from five to seven years. Navy officials cited delays caused by complex legacy systems as reasons for the extension.

They said the extension would benefit both the Navy and EDS. It brings the value to $8.82 billion and extends the contract to October 2010.

'Neither the Navy or EDS envisioned the sheer number of legacy applications we would have to deal with, said Capt. Chris Christopher, director of plans, policy and operations for the NMCI office. 'Nor had we any idea of the amount of testing that would be required' by the Office of the Secretary of Defense and Congress after the award.

The Navy and EDS had to get congressional permission to extend the contract longer than five years because of caps in federal acquisition law. The president signed HR 5647 on Wednesday.

The request initially was in the fiscal 2003 Defense appropriations bill but was taken out and passed separately because Navy officials anticipated delays in getting final approval for the spending plan.

For several months, Wall Street analysts have suggested that part of EDS' cash flow problems stem from not getting paid for its NMCI work.

Christopher acknowledged that both EDS and the Navy have suffered.

'From the Navy's perspective, this request was made to allow us ample time to make an informed decision regarding the option years of this contract, while at the same time allowing EDS to recoup their investment,' Christopher said. 'We both expected to be further along at this point.'

'We're not rescuing EDS,' said Richard Williamson, press officer for the Space and Naval Warfare Systems Command. 'That's not our job. We laid out a strategy, a rollover, a timetable to industry, and said this is what we anticipated, and that has not occurred.'

So far, 35,279 computer seats have been cut over to EDS at 46 sites, although the contractor has assumed responsibility for more than 100,000 seats. Eventually, more than 366,000 Navy and Marine Corps users are supposed to use the intranet for voice, video and data.

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