As NMCI wraps, question of what is next looms

Navy’s 10-year network outsourcing deal nears its end; officials seek more control over future net operations

The Navy Marine Corps Intranet outsourcing contract comes to an end next year, and its pending expiration brings both relief and a looming unanswered question for the Navy.

The relief comes because managing the critical and expensive system at arm’s length has been difficult, and the system's contractor has had a number of difficulties in meeting demand over the years. But while the Navy has sent clear signals that it will take a more active role in the ownership and hands-on management of NMCI’s successor, its not at all clear just how the Navy will accomplish that after the contract expires in September 2010.

Industry will still play a role in building and supporting the Next-Generation Enterprise Network (NGEN), though perhaps not using the sole provider model. The Navy is exploring the idea of breaking down network operations into different functional parts.

Navy leaders expect that retaking control will give them enterprise network services that are more responsive to their evolving administrative and warfighter needs than was possible with NMCI. As beneficial as it is, doing so will test the Navy’s ability to manage multiple but interconnected technologies and contracts, observers say.

When the Navy awarded the $9.9 billion NMCI contract to EDS in 2000, it gave the company a mandate to supply IT services to 700,000 onshore users, mostly in the United States. The Navy governed the contract by measuring the company’s performance in delivering those services.

It was a hands-off approach, and EDS — now a division of Hewlett-Packard — shouldered the burden of consolidating a continent’s worth of disparate networks and unequal technology maturity levels into a centralized whole.

But as information assurance and the threat of cyber warfare become more prevalent concerns, the Navy’s NGEN program office is examining ways to improve the service’s control over its network. The Navy estimates it will have an acquisition strategy for NGEN no later than the early summer, and the service is still far from issuing implementation details.

Learning experience
Despite the ambiguity enshrouding NGEN, one sentiment is clear: NGEN won’t be an NMCI clone.

At the time of NMCI’s creation, the Navy thought it could separate command-and-control functions from administrative IT, said Patricia Tracey, an EDS vice president and retired Navy admiral who works on the company’s NGEN strategy.

That turned out to be a bad asumption, because command-and-control messages increasingly depend on IT networks. The emergence of cybersecurity as a warfare domain also disproved that idea. Navy commanders also encountered problems relying on program managers to serve as agency-vendor middlemen on important operational issues.

“That doesn’t provide the direct support and supporting relationships that commanders in the naval operations environment expect and deserve,” said Rear Adm. David Simpson, director of Navy networks and deputy chief of Naval operations for communications networks.

As a result, the Navy is constructing a new acquisition approach that promises to give the government more operational control over the network.

Even EDS officials say NMCI went too far in contracting out vital parts of the project. Oversight, in particular, is a function the government should perform, Tracey said. “We believe that NMCI put some of that responsibility on the contractor that should have been retained on the Navy/Marine side,” she said.

NMCI’s results have been mixed, with user satisfaction levels rising in the last couple of years.

Blogs and forums detailing user unhappiness with NMCI are quieter. At least, no one has recently repeated one blogger’s Nov. 30, 2006, assertion that NMCI is an al Qaeda plot to cripple the Navy.

Anonymous authors of the blog, “NMCIstinks.com,” grudgingly admit NMCI has improved. In an e-mail message, they wrote that the contract is now tolerable but added that “we are succeeding in spite of NMCI, not because of it.” In December 2006, the Government Accountability Office lambasted NMCI for having “yet to produce expected results,” and the contract has recently showed signs of aging awkwardly in an era of network-centric operations.

Pieces of the action
During a Sept. 8, 2008, industry briefing, the Navy gave details about what it called a segmented approach to NGEN. The service identified eight self-contained functional areas of network management. The Navy won’t award a separate contract for each of the eight functions, but there’s no inherent reason why the hardware and software vendor must also provide help-desk services, Simpson said.

“We are working through a process of determining if there is a smart grouping that would suggest a number of segments or a single segment covering all those functions,” he added.

To date, the largest proposed division of functional areas into segments amounts to five separate contracts, Simpson said.

“Their segmentation strategy is pretty much aligned to the way in which industry is aligned,” Tracey said. It’s a way for the Navy to regain control over its networks and vendors, analysts said.

The Navy also wants to limit the length of those contracts and compete them among a larger number of contractors for possible savings, said Alex Rossini, a senior analyst of federal operations at market analysis firm Input.

Congressional dissatisfaction with private-sector companies taking a lead systems integration role in military projects would have caused the Navy to change its procurement approach anyway, said Alan Chvotkin, executive vice president of the Professional Services Council, a contractor association.

Reflecting unhappiness caused by delays in the Army Future Combat Systems effort, the 2008 Defense Authorization bill put a halt to deals in which vendors oversee projects and decide what equipment the project needs — which is the way NCMI operates.

Segmentation is not without its challenges.

For one, the Navy lacks in-house staff to effectively be its own lead systems integrator, said Warren Suss, president of Suss Consulting. “It’s going to need to bring in some pretty sophisticated skill areas that will allow the government to do what it used to outsource,” he said.

Also, the more segments the Navy creates, the harder integration will become, Suss and others said.

However, some functions might benefit by working independently. For example, the Navy should keep cybersecurity as a separate contracted function, even though it touches multiple segments, because the service would gain an independent view on its network defense, Chvotkin said.

The Navy said it will apply a management framework called the Information Technology Infrastructure Library (ITIL) to keep the interfaces between functional areas well connected. ITIL was developed by the United Kingdom’s Office of Government Commerce and has roots in management theories percolating for decades throughout the business world. The Air Force and other government agencies use ITIL.

“We’ve spoken to chief information officers from several large corporations that have successfully balanced an insource/outsource segmentation,” Simpson said.

Does performance-based contracting really improve performance?
Simpson said the Navy’s approach to NGEN shouldn’t be construed as an indictment of NMCI. Because of the contract, the Navy now has a system for managing changes to the network environment. The service and EDS also worked to make problem tracking more dynamic, creating an Enterprise Performance Management Database to identify issues before they became major headaches.

“We are very pleased with the benefits that have accrued,” Simpson said.

When the Navy planned for NMCI during the late 1990s, there was a great deal of disparity in the age, configuration and type of equipment deployed.

“The Navy wanted everyone on the same basic baseline, and they’ve accomplished that,” said Kevin Durkin, EDS vice president for NMCI account management. EDS officials also point out that costs per seat have decreased, and the company refreshes 10,000 to 15,000 desktops per month.

Suss said new thinking for NGEN is mostly a result of IT’s growing role in warfare, though he added that NMCI’s history raises the question of whether a massive, performance-based outsourcing contract can be adequately responsive to changing technologies.

“To some degree, it’s a vote of no confidence in large performance-based outsourcing,” Suss said.

Input’s Rossini said the term “performance based” seems to have disappeared from the Navy’s lexicon.

“I have never heard the words ‘performance-based contracting’ from a Navy official in the last couple years,” he said. “All they keep saying is they want more, or far more, command and control over what’s happening.”

Simpson said it’s premature to speculate whether NGEN will include performance-based aspects.

One specific criticism of performance-based contracting is that acquiring new technology capabilities not specified in the contract — and there is plenty of technology now available not imagined a decade ago — can be an unwieldy process because it requires a contract modification. Critics also wonder how agile the network can be in real time when contractual parameters govern operations.

“The contracting office does not get in the middle of the operational side of it,” Tracey said. “There are some things that have to go to the contracting office because things do cost money, but that’s not been the case in the last couple of years from a network posture standpoint,” she added.

Durkin said the primary constraint on new technology is the need for security certification and accreditation, not the contract. He said that NMCI is modified routinely, and he disagreed that performance-based contracting is discredited.

“The issue of the contract wasn’t so much ‘does performance-based work or not,’ it was the cultural changes for the Navy, for EDS, to understand what the Navy wanted to accomplish and actually getting it in place,” he said.

Steady as she goes
Don’t expect major technology changes from NMCI in the first iteration of NGEN, Simpson said. Although a Navy Department strategy document titled “Naval Networking Environment (NNE)~2016” envisions a future network of constant connectivity ashore and afloat for the Navy and Marine Corps, the first NGEN implementation will mostly continue NMCI’s work, such as upgrading existing desktop assets and continuing to reduce the number of older networks through consolidation.

However, Navy officials said they’re not waiting for 2010 or 2016 to make improvements.

Steps toward a service-oriented architecture — in which standardized interfaces mediate data transactions — are already under way, as is greater compatibility among ashore and afloat networks, they said.

For example, a common directory lookup service that encompasses both ashore and afloat domains is now in the works, said Rob Wolborsky, head of the Navy tactical networks program office at the Program Executive Office for Command, Control, Communications, Computers and Intelligence in San Diego.

Navy officials realize that IT links to land-based operations centers and logistics bases are an important part of maritime power projection, Simpson said.

The service doesn’t look at IT the way it did in the late 1990s, which was mostly as a utility akin to electricity. “It’s just too important to warfighting now not to be able to recognize that cyberspace is a mission area and requires a military approach,” he said.

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