Changes Afoot For Navy's Intranet Deal

WASHINGTON (04/13/2000) - The U.S. Navy held a closed-door meeting Wednesday with officials from the four potential prime contractors vying for ownership of the $16 billion Navy/Marine Corps Intranet contract to map out what sources on Capitol Hill say could be a "major change" to the contract.

A source on the House Appropriations Committee said the Navy called the meeting because of "political considerations" because the committee does not approve of the procurement in its current form. The committee has "concerns that the Navy has not done the homework it needed to do and patently rejects the Navy's view of the rules as they apply to a procurement of this size," the source said.

Scheduled for award in June, the N/MCI deal has come under fire from members of Congress who are concerned that the Navy is pushing ahead with what would amount to the largest networking contract in government without requesting any new money in its fiscal 2001 budget request.

Lawmakers have also questioned the Navy's overall contracting process, lambasting the service for dragging its feet on a business case analysis and not producing proof that the contract will comply with federal regulations, such as the Clinger-Cohen Act.

Although the Navy would not comment on the results of the meeting at press time, an industry source said Congress is concerned that some of the money earmarked for N/MCI is not coming out of operations and maintenance accounts, as the Navy contends, but out of base acquisition accounts, potentially drawing money from nontechnology-related projects. The source also said an amendment may be drafted to allay Congress' concerns.

Another source on the Hill said the Navy has a good chance of being able to move forward on time with N/MCI if it opts to conduct a smaller pilot project first. "The appropriations committee is not likely to stand in the wings if the Navy doesn't make an appropriate choice here," the source said.

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