N/MCI backup contractor in question

Although Navy officials said Friday that they would name a backup contractor

for the Navy/Marine Corps Intranet, they apparently have not yet done so.

Electronic Data Systems Corp. on Friday won the highly contested contract — a nearly $7 billion project designed to replace a hodgepodge of systems

with a seamless network owned and operated by the commercial sector.

The plan, according to the Navy, is to have one of the other three competitors

act as a backup in case EDS cannot fulfill program requirements.

But at least one competitor — General Dynamics Corp. — chose not to compete

for the fill-in position, and neither EDS nor Computer Sciences Corp. has

been notified about who the backup is.

IBM Corp., the fourth competitor for the program, could not be reached for comment.

A Navy spokeswoman said today that the Navy "maintained the plan and the backup proposals,

but as yet [has] not named the backup contractor."

Some industry sources speculated that the Navy might have decided against

the backup strategy, despite Friday's announcement, and others question

whether it would be a workable strategy.

"Unless Congress or the N/MCI program office has some very stringent rules

they will use to measure [whether EDS falters], and unless they have the

processes in place to take the measurements, and they have the strength

of conviction to change out the winner for another prime, I believe the

backup strategy is not likely to be executed anytime soon. Time will tell,"

said one industry source.

EDS had the lowest bid — $6.9 billion — for a contract that had been estimated

to be worth as much as $16 billion.

Military officials and analysts say N/MCI is the largest government IT contract

ever awarded. The intranet will be used for sending and accessing information

of all kinds, including ordering supplies, informing commanders of battlefield

conditions, and enabling sailors to access individual medical records.

"This is a pivotal moment in the Department of Defense. This is the most

revolutionary idea so far in re-engineering how we do business," said Arthur

Money, the Pentagon's chief information officer.

Rudy de Leon, deputy secretary of Defense, also praised the Navy program.

"The Navy/Marine Corps Intranet will revolutionize the way that we look

at the process of sharing information," de Leon said. "It gets the government

out of the business of owning and operating information technology systems

and instead transfers that function to a fee-for-service contract with private

industry. The potential for increased efficiency, standardization, interoperability

and better business processes is tremendous."

Navy and Pentagon officials acknowledged in a press briefing Friday that

the program still faces many more challenges. One analyst said the program

already has "had more twists and turns than a [John] Grisham novel."

Many of those plot twists centered on Congress, where some members faulted

the Navy for lack of accurate cost information. In recent weeks, lawmakers

forced the service to delay announcing the contract winner while seeking

answers to questions about how Navy depots might be affected.

However, Navy Secretary Richard Danzig reported that the service has ironed

out all issues with Congress.

Danzig said the Navy's current IT budget is about $1.6 billion and that

the service will pay for N/MCI by no longer allowing organizations within

the two services to build their own disparate networks.

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