Navy says new technology contract yields rewards

The top official at the Navy Marine Corps Intranet project praised a contract overhaul that will pay EDS more money for reaching lower thresholds.

Navy technology officials announced this week that they have received good results since they revised the Navy Marine Corps Intranet contract at the end of September.

On Sept. 30, the Navy restructured the $8 billion NMCI development with Texas-based contractor EDS. The revision was designed to consolidate NMCI contract performance measurements and focus on measuring end results instead of the numerous steps that lead to those results.

"These first evaluations of improved performance are indicative of the increasing confidence in the teaming relationship between the Navy and EDS," said Rear Adm. James Godwin, the top NMCI official.

NMCI, which is designed to implement a secure network connecting all Navy and Marine Corps personnel, could end up costing the Pentagon more than $8 billion. According to Navy officials, the network soon will have more than 350,000 connected users, which would make it the world's largest intranet. Navy personnel have complained, however, about slow service, poor connections and missed delivery dates. Service officials and EDS representatives have said that some problems are to be expected as the massive program is being developed and rolled out. Program officials have insisted that most Navy users are happy with their NMCI service.

As part of the modification, EDS is eligible for a increased payment when a site is at least 50 percent converted to NMCI and more than 90 percent of the service level agreements' performance categories have been met. When these milestones are reached, EDS is eligible to receive a 5 percent increase in payment for each seat, bringing the Navy's bill up to 90 percent of the full seat price.

Before the contract modification, EDS could not pass 85 percent of the seat charge until all of the performance categories had been met. When a facility reaches 90 percent and officials determine that all performance categories have been met, EDS will be allowed to charge the full seat price.

After reviewing NMCI rollout data, Navy officials determined that EDS was eligible for the additional 5 percent payment at 491 sites by July.

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