The Navy awarded the long awaited Navy Marine Corps Intranet (NMCI) contract Friday to Electronic Data Systems Corp. The $4.1 billion, five year contract outsources the technology, maintenance and help desk support of 350,000 desktop computers and 200 networks.
NMCI will create a voice, video and data network that unifies each of the Navy and Marines Corps' commands. "NMCI takes us to a common system of information," Navy Secretary Richard Danzig said. "The two services will be intimately linked in ways they are now not."
The contract has a three year option period worth $2.8 billion, making the combined, eight year contract worth over $6.9 billion. The winning team includes Dell Computer Corp., Microsoft Corp., Raytheon Co., WAM!NET Inc. and WorldCom Inc.
Danzig noted that the Navy currently spends $1.6 billion on information technology per year and could save money if the service began to purchase IT as a utility. "We realized we could refresh technology more readily and insist on performance guarantees," Danzig said. "We also realized we could change our culture by creating a single information system."
The contract works by setting out performance levels that the contractor must either meet or beat. The Navy will pay EDS bonuses if the contractor exceeds performance levels. The contract is set to begin immediately.
Friday, the Navy ordered its first group of computers for the program, an order worth over $181 million. EDS will work with the Naval Air Systems Command (NAVAIR) to roll out 40,000 new computers over the next three to four months. The Naval Sea Systems Command will be the next naval entity phased in under NMCI.
To alleviate congressional concerns that the size of the contract alienated small business participation, the Navy required all bidders to subcontract 35 percent of the award. EDS's proposal went over this requirement, promising to subcontract 40 percent of the work to small businesses.
Danzig directly addressed another congressional concern, whether NMCI would cause naval personnel to lose their jobs. If NMCI outsources the functions of any Navy job, that employee can either follow that job to the private sector or they can be reassigned within the Navy, he said.
The three losing bidders were Computer Sciences Corp., General Dynamics Corp. and IBM Corp. However, the Navy left at least one of the contractors hope. The Navy wrote an option into the contract stipulating that if EDS's performance is less than satisfactory, any of the three losing bidders could take over part or all of the work.