EDS sticking with NMCI work

NEW ORLEANS — EDS, the lead contractor for the Navy Marine Corps Intranet, today reaffirmed its dedication to the $8.8 billion project.

During the past several weeks, rumors have persisted that EDS would perhaps try to end its government business. Last month, EDS announced a $334 million loss from the NMCI contract in the first quarter of the year and a $126 million loss overall.

"This job is not for the faint of heart," said retired Air Force Lt. Gen. Al Edmonds, president of EDS' U.S. Government Solutions. "It is not for those without sustaining power; it is not for those who can't take a joke; it is not for those who can't take a loss; and it is not for those who can't hang in there."

Edmonds, speaking today at the National Defense Industrial Association's NMCI conference in New Orleans, said the financial hit EDS took in the first quarter doesn't faze those in control at the company because it doesn't adequately reflect the health of the contract.

Under new Securities and Exchange Commission guidelines, he said, a company must report all losses for a contract in a given quarter, even if gains will balance those losses when the contract concludes.

"This program is healthy and the program is in good shape — very good shape," he said. "The Navy and Marine Corps are presenting to their warriors a system they can be proud of. I'd not change this program for anything."

Bill Richard, EDS' enterprise client executive for NMCI, said NMCI is strong and will remain so for the foreseeable future.

"We started off slow from the outset; of that there can be no doubt," he said. "But that is because this is the largest contract for the Navy and for EDS. It's all about change and new processes."

EDS has assumed responsibility for more than 200,000 of the 310,000 NMCI seats and has cut over more than 80,000 to date. Richard said the program will reach a point this year at which as many as 1,000 seats per day could be transitioned simultaneously. The Navy has the goal of cutting over all seats by year's end.

The program will undergo a seat review next month, a much larger review in September, which is also the project's last milestone, and a final review in November. Richard cautioned the conference attendees that NMCI is continually evolving.

Edmonds said the Navy has adopted the correct tactic of deploying an entire network rather than releasing it piecemeal, which would create cumbersome systems that don't communicate. "The Navy is in a key position for the future," Edmonds said. "The Navy is doing it right and is light-years ahead of the other services, and I'm an Air Force guy."


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