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Friday October 06 07:16 PM EDT
Navy awards huge outsourcing contract to EDS
By Paula Musich, eWEEK
After several false starts, the U.S. Navy late this afternoon finally awarded its much-vaunted $6.9 billion outsourcing contract to Electronic Data Systems Corp. (NYSE:EDS - news) to pull together all of its desktops, systems and networks across different Naval and Marine Corps commands.
The contract, the largest of its kind according to Navy officials, calls for EDS, of Plano, Texas, to create a single intranet that will facilitate data sharing across the two military units. It will tie in approximately 350,000 desktops and link some 200 separate networks into the intranet.
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The Navy/Marine Corps Intranet is intended to accomplish several goals, according to Secretary of the Navy Richard Danzig. They include achieving a cost savings of about $1.2 billion a year through economies of scale; improving security; keeping information technology in the Navy and Marine Corps on a par with the private sector; and improving reliability.
"We knew that by turning it over to a private contractor, we could refresh the technology readily and free up civil servants and sailors and let them do what they need to do," Danzig said.
At the same time, the Navy can change the culture of the organization by creating a common information system.
"So instead of different participants maintaining their own information supply and sending e-mails to request something from someone else -- instead of the culture of 'mother-may-I?' -- individuals can respond according to their own sense of priorities," Danzig said.
The five-year contract also has three-year renewal options that can bring the value up to $9 billion. The Navy also kept the option of calling on a runner-up to step in if EDS fails to meet its objectives, and that runner-up can be called on to monitor the effectiveness of EDS.
The Navy expects about 40,000 desktops will be linked in the first year, focusing initially on the Naval Air Systems Command, which had contracts up for renewal.
Although the Navy had expected to award the contract sooner, the date was postponed several times. Secretary Danzig attributed the delays to a reticence to move forward without Congressional approval.
"We needed to make sure we had genuine Congressional support," he said. "We didn't want to announce this until the authorization committee spoke in support of it."
Other reports suggested there were concerns about the loss of jobs in certain districts. In working with Congress, the Navy agreed "not to introduce ship maintenance activities until a year from now, and Congress asked that we not integrate the air depots for a year. We agreed to that," said Danzig.
EDS will work with several subcontractors, including Raytheon, MCI WorldCom, Cisco Systems Inc. (Nasdaq:CSCO - news), WAM!NET, Dell Computer Corp. (Nasdaq:DELL - news) and Microsoft Corp. (Nasdaq:MSFT - news) EDS will also subcontract 40 percent of the total award to smaller businesses.
Other bidders for the contract included Computer Sciences Corp. (NYSE:CSC - news), General Dynamics Corp. (NYSE:GD - news) and IBM.
The Navy/Marine Corps Intranet will cover the continental U.S., Hawaii, Alaska, Puerto Rico, Iceland and Guantanamo Bay, Cuba.
Note that DELL is the only PC manufacturer listed