Controversy surrounds Navy intranet deal

By Kellie Lunney

April 6, 2000

Despite heavy criticism from Congress and the General Accounting Office, the Navy is moving full speed ahead with plans to create a new Navy/Marine Corps intranet.

The five-year Navy/Marine Corps Intranet (N/MCI) initiative, with a potential value of $10 billion, will provide service members and employees-both in the United States and abroad-access to voice, video, and data communication through a sole service provider.

The Navy expects to award a contract in June-bumped up from the original March 2001 date-to one of four industry bidders: Computer Sciences Corp., Electronic Data Systems Corp., General Dynamics Corp., and IBM Corp.

Critics of the initiative cite the Navy's lack of a preliminary business case plan, sketchy funding proposals, and no formal analysis of the risks involved in the undertaking as causes for concern. The Navy has said it will fund the intranet project with money already allocated for existing IT contracts and services.

In a Feb. 4 letter to Navy Secretary Richard Danzig, Rep. Herbert H. Bateman, R-Va., chairman of the House Military Readiness Subcommittee, asked the Navy to suspend the project until a full analysis of key issues is completed. "I request that you delay the acquisition and implementation of this initiative until it is fully developed, is included in the future budget request, and receives the proper level of congressional oversight," Bateman wrote.

In his response, Danzig pledged to work with the committee and Congress on the initiative and to "provide the oversight-related information that the professional staff members have requested." A "memorandum of agreement" submitted with Danzig's letter and signed by the Navy's acting deputy chief information office and chief information officer promised to keep Congress fully apprised of project developments.

In his letter, Danzig argued that the one-contract intranet deal would ultimately save the Navy money, eliminating the inefficiency that is often a by-product of dealing with numerous information technology contracts and systems.

Danzig noted that DoD policy-makers had agreed from the beginning that a business plan could not be completed without input from private industry. "The contract will not be awarded until the business case is completed and results are understood by both the department and DoD. Our market research shows that in the commercial sector an approach similar to the one we are pursuing has produced consistent savings and performance improvements," he wrote.

GAO expressed concerns about the intranet deal in a report released in early March ("Defense Acquistions: Observations on the Procurement of the Navy/Marine Corps Intranet," NSIAD/AIMD-00-116). "The Navy's acquisition approach and implementation plan for developing a Navy/Marine Corps Intranet have a number of weaknesses that make the effort unnecessarily risky," the report concluded.

The Navy hopes to have the intranet up and running by December 2001. The Marine Corps will not offer the service until 2002.

By Kellie Lunney

April 6, 2000