EDS wins multibillion dollar navy contract

The US Navy announced last week that it has signed a contract worth a minimum of $US6.9 billion over eight years with Electronic Data Systems (EDS), which calls for EDS and its partners to build and maintain a department-wide intranet to serve the US Navy and US Marine Corps.

The contract, which could be extended to be worth as much as $9 billion, covers the replacement of numerous shore-based command data networks throughout the Navy and the Marines with what the department has dubbed the Navy-Marines Corps Intranet (NMCI), Navy secretary Richard Danzig said at a news conference.

The NMCI will provide data, video and voice communications services to link shore units, establishing one standard information system for the Department of the Navy, of which the Marine Corps is a part. The intranet will provide increased security, accessibility from anywhere in the world, and interoperability with the networks of other military services, Danzig said.

The Navy currently spends about $1.4 billion annually to maintain and operate its shore-based command data networks, but Danzig estimated that the Navy will be able to reduce that cost to about $1.2 billion annually under the contract.

Computer Sciences (CSC), IBM and General Dynamics led three other teams of companies that also bid on the contract. Milton Cooper, president of CSC's federal sector, said his group expected to meet with Navy officials as part of a routine procedure that occurs after all contracts are awarded.

"EDS has won the competition and we congratulate them on that," Cooper said in a telephone interview. "It was a very hard fought competition that went on for two years or more."

Under the terms of the contract, EDS will be responsible for meeting security and quality-of-service requirements, training personnel, and maintaining and operating the network infrastructure that will support about 360,000 users, the Navy said in a statement. There are incentives written into the contract that will be rewarded if EDS exceeds the requirements; the company will be penalised if it falls below the requirements, a Navy spokeswoman said.

The department plans to have NMCI fully implemented by June 2003.

EDS chairman and CEO Dick Brown called the contract a great triumph for his company. In a prepared statement, he said the deal signalled a major shift in the way the Navy and Marine Corps use technology to become more efficient. Beginning with this contract, the US Federal Government is well on its way toward employing the best practices from the commercial sector to improve defence readiness, while increasing savings for American taxpayers, Brown said.

EDS's principal partners on the contract are Raytheon, WorldCom and Wam!Net. The team also will subcontract 40 per cent of the work to small businesses, and minority and women-owned businesses, the company said.

Danzig said EDS's commitment to subcontract 40 per cent of the total contract was an "outstanding aspect" of the bid. It exceeded the NMCI contract requirement of 35 per cent.

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