Navy defends $16 billion for intranet

To fend off rising congressional opposition to a contract that could cost

the Navy as much as $16 billion, the Navy on Wednesday delivered to Congress

a memorandum of understanding that promises full disclosure of its business

approach to the Navy/Marine Corps Intranet program.

In a calculated move designed to allay congressional concerns that the

Navy is moving full steam ahead on a program for which it has budgeted no

money, Navy officials delivered the memorandum moments before a hearing

of the House Armed Services Committee's Military Readiness Subcommittee and Research and Development Subcommittee

was called to order.

Rep. Herbert Bateman (R-Va.), chairman of the Military Readiness Subcommittee and one of

the most vocal detractors of the Navy's approach to contracting out all

of its information technology infrastructure under the intranet deal, said

he is "very concerned about the emergence of what may be a $16 billion program

over a short period of years."

A spokesperson from the N/MCI program office said office officials have no evidence that the program cost has increased and that Congress must have been including option years in its calculation.

The Navy memorandum, Bateman said, "does much to satisfy my concerns."

According to the memorandum, signed by Paul Brubaker, the Defense Department's acting deputy chief information officer, and Ron Turner, the Navy's deputy CIO for infrastructure, systems and technology, the Navy will provide Congress with certification of N/MCI's compliance with the Clinger-Cohen Act before a contract is awarded.

The memo also states that integrated product teams will be created to handle interoperability, information assurance and C4I support, and it promises evidence of the approach taken to conduct the following activities:

* Requirements definition.

* Business-case analysis, including analysis of alternatives and return on investment.

* Performance measurement.

* Testing and evaluation.

* C4I support planning.

* Baselining the initiative.

* Information assurance.

* Incremental fielding.

* Risk mitigation.

The Navy plans to award the N/MCI contract in June. Originally estimated

to cost $10 billion, the contract will cover computer and communications

services at 300 bases. Industry will provide hardware, software and services

to the local- and wide-area networks required to connect 350,000 users from

Iceland to Hawaii.

Congress is concerned about N/MCI because the Navy has not requested

any new money for the program in its fiscal 2001 budget request. The Navy

has argued that the program will be funded through the IT budgets of local

commands and that there is no need to identify new money. The House Armed

Services Committee disagreed with this approach in a March 7 memo, stating

that a "contract of this magnitude constitutes a major acquisition, [and]

all budgeting guidelines must be followed."

At Wednesday's hearing, Bateman asked, "Where does the Department of

the Navy contemplate obtaining the money if it goes forward [with N/MCI]?"

He added that he wants the Navy to assure Congress that at a time when military

readiness is being strained, the N/MCI program will not siphon funds from

other programs. N/MCI program officials could not be reached for comment.

However, Rear Adm. Richard Mayo, director for space, information warfare,

command and control, characterized N/MCI as one of the Navy's two "entry

keys" to modernization and security during testimony before the committee.

N/MCI, Mayo said, "will keep us current with industry" and will help

the Navy develop a "tight enclave" that reduces the number of security gaps

in Navy networks.


Copy of the March 8 letter from Navy Secretary RichardDanzig to Rep. Herbert Bateman (PDF)

Copy of the Navy's March 8 Memorandum of Agreement about the N/MCI (PDF)

BY Dan Verton
Mar. 9, 2000

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