Navy official defends multi-billion dollar intranet

The Navy's deputy chief information officer defended the department's multibillion dollar intranet deal Tuesday, addressing criticisms aimed at the project's funding, the fate of small businesses and potential employee layoffs.

Deputy CIO Ron Turner said the Navy will not dip into non-technology funds to help pay for the $16 billion, eight-year contract. Turner said that all of the money for the project would come out of the Navy's IT budget and whatever base operating fund the agency receives for it in the future.

Turner said the Navy/Marine Corps Intranet (NMCI) has evolved over the last five years and can be a model for other government agencies seeking to develop advanced information technology systems that are efficient and cost-effective. Turner said a closed-door meeting last week with contract bidders regarding contract negotiations was "probably the tenth modification to the contract we've been through."

Three years ago, the project was known as the Navy Virtual Intranet (NVI), expanding in June 1999 to include the Marine Corps.

NMCI will provide voice, video, and data communications for all civilian and military personnel within the Navy-on land or at sea-over a single network. The Navy currently operates on 100 different systems, which can make even the simplest communication-opening an attachment to an e-mail from a colleague, for example-difficult and time-consuming.

Many critics have characterized the project as ill-conceived, taking issue with the Navy's lack of a business case plan and inadequate risk assessment.

The Small Business Administration has expressed concern that a single provider would cut out small business participation in the project. However, small businesses will account for 35 percent of the deal under a clause in the contract, Turner said. Ten percent of the chosen prime vendor's top-level team must be small businesses.

The Navy is also offering an incentive for the prime vendor to beat the 35 percent small business goal: a monetary award of $625,000 per six months for exceeding the 35 percent requirement. Small businesses can register for consideration on the Navy Web site at: www.contracts.hq.navsea.navy.mil/nmci.

Asked about potential employee layoffs, Turner said that there "are not any that we [the CIO's office] know of." He acknowledged that the intranet will replace certain functions performed by employees. But affected employees would be assigned to different functions. Turner said an analysis is underway at Navy sites to determine how many employees' jobs would be affected by NMCI.

According to a spokeswoman for the Navy, a clause in the contract stipulates that if employees do not want to change functions, the prime vendor must offer them positions on the intranet project if they are qualified.

Some critics have cited national security risks in using a commerical vendor for such a vast communication network. Turner said that only authorized DoD personnel will perform critical security roles.

Four bidders are vying for the initial five-year contract, to be awarded in June. After five years, the Navy can extend the contract for three more years. Initial cost estimates ring in at roughly $2 billion a year. A five-year contract would cost approximately $10 billion, while 8 years would bring the bill to $16 billion.

The Navy continues to assert that a thorough business case plan would have been impossible to develop without industry's input. The initial bids were based on the assumption that the contractor would have to provide all of the Navy's infrastructure for the plan.

However, according to a Navy spokeswoman, the "due diligence" bids-cost analyses done through inspection of existing Navy infrastructure at individual sites throughout the department-will obviously have an impact on the initial bid figures. Final bids will be submitted in mid-May.

In response to the claim that an outside vendor is being brought in to do a job that federal employees specializing in information technology could do if given the opportunity, Turner said, "There is no organization or entity [within the Navy] that does this type of work end-to-end across the department. . . . Laying cables is not the Navy's business; it is a function to doing our business. We are asking them [industry] to come in and do those types of functions."

Turner said that the Navy has been working extensively with members of Congress and congressional staffers, visiting the Hill frequently for briefings on NMCI. Turner noted that overall, "absolutely nobody [on the Hill] has questioned what we are doing" in the sense of establishing an extensive intranet throughout the department, but that concerns revolve primarily around small business, personnel, and cost issues.

"Is it without risk? No. Is the risk manageable? Yes," Turner said.