Bringing EDS Down

You may have seen a stock chart for EDS recently — the one apparently with a rock attached to it. EDS recently reported quarterly numbers that were "disappointing," to use the Wall Street vernacular.

One of the rocks attached to EDS' stock price is the massive Navy Marine Corps Intranet contract, the Navy's initiative to create an enterprisewide network across some 300 shore-based sites across the nation. The network will be owned and operated by the Plano, Texas-based company.

NMCI boosted EDS' stock when the award was announced in October 2000, but nearly two years later, many Wall Street analysts are asking what the contract has actually done for EDS.

It is hardly news that NMCI's rollout has been slower then expected, largely because of the thousands of legacy Navy applications. That delay has been costly for EDS, because, under the contract, the company does not get paid until the seats are operational.

In addition, the cost of establishing the overall network infrastructure has been more expensive than anyone had expected, EDS officials have acknowledged.

Analysts — and EDS' competitors — have been quietly wondering how the firm would make money on the contract. While huge at $6.9 billion, competitors have said that EDS undercut its proposed costs by about $3 billion.

That has led some to speculate that EDS was using NMCI as a "loss leader" — a contract that loses money for the potential of future payoffs at other agencies. Perhaps that is why Rick Rosenburg, who was EDS' NMCI front man, was recently promoted to lead the development and implementation of similar, enterprisewide efforts for other government clients, observers suggested.

However, EDS officials have stressed that the company will make money on NMCI. But with NMCI yet to fully prove itself, the losses have undoubtedly been larger than most people expected.

Tell Us What You Really Think

As if EDS didn't have enough to worry about, disgruntled Navy and Marine Corps personnel who take issue with NMCI will likely get the opportunity to speak out about the project — online, at least.

The NMCI Web sites are expected to be up and operational any day now at and

Web architects expect to include a section that will allow NMCI critics and others to post their concerns and allow the Navy to respond with the "facts," as one NMCI official said. As always, the Interceptor invites voluminous comments about NMCI.

A Broad Audience

A man with a thick accent recently called us over a choppy telephone connection. He said he had read a Federal Computer Week story about a homeland defense information-sharing system developed by Maj. Shawn Hollingsworth, chief of the integration and evaluation division at the Fort Gordon, Ga., Army Battle Laboratory, and wanted to know how he could get in touch with Hollingsworth because he had information that could improve the system.

Being conscientious journalists, we refused to share a source's phone number and explained that the best way to contact the major would be via e-mail or by tracking down a phone number online.

The caller seemed perturbed and explained that he did not have access to the Internet at the moment and was, in fact, in jail.

We e-mailed Hollingsworth to inform him about the call and ask for a comment. "What a world we live in," he replied.

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About the Authors

Christopher J. Dorobek is the co-anchor of Federal News Radio’s afternoon drive program, The Daily Debrief with Chris Dorobek and Amy Morris, and the founder, publisher and editor of the, a leading blog for the Federal IT community.

Dorobek joined Federal News Radio in 2008 with 16 years of experience covering government issues with an emphasis on government information technology. Prior to joining Federal News Radio, Dorobek was editor-in-chief of Federal Computer Week, the leading news magazine for government IT decision-makers and the flagship of the 1105 Government Information Group portfolio of publications. As editor-in-chief, Dorobek served as a member of the senior leadership team at 1105 Government Information Group, providing daily editorial direction and management for FCW magazine,, Government Health IT and its other editorial products.

Dorobek joined FCW in 2001 as a senior reporter and assumed increasing responsibilities, becoming managing editor and executive editor before being named editor-in-chief in 2006. Prior to joining FCW, Dorobek was a technology reporter at, one of the first online community centers for current and former government employees. He also spent five years at Government Computer News, another leading industry publication, covering a variety of federal IT-related issues.

Dorobek is a frequent speaker on issues involving the government IT industry, and has appeared as a frequent contributor to NewsChannel 8’s Federal News Today program. He began his career as a reporter at the Foster’s Daily Democrat, a daily newspaper in Dover, N.H. He is a graduate of the University of Southern California. He lives in Washington, DC.


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