NMCI contract modified
The minimum that EDS will be paid in fiscal 2002 will be about $128 million less than stipulated in the original contract
The minimum amount the Navy will pay Electronic Data Systems Corp. in fiscal 2002 under the Navy Marine Corps Intranet contract will be about $128 million less than stipulated in the original contract.
Under a contract modification signed Sept. 25 by EDS, the company will be paid $600 million in fiscal 2002. The Navy was scheduled to pay EDS $728 million in fiscal 2002 under the original terms of the contract.
The overall size of the contract, however, remains at $6.9 billion because the payments rise to nearly $1.2 billion for fiscal 2003 through 2005. The modification also includes minimums for the three-year option years: $939 million in fiscal 2006 through 2008.
The contract notes that the Navy guarantees only $85 million in fiscal 2002. The rest of that amount, $515 million, will be paid only after NMCI gets past initial tests.
Furthermore, the minimum in fiscal 2003 depends on NMCI passing an overall test of the network.
The modified contract comes in the wake of a recent agreement between Navy and Pentagon officials over the NMCI testing schedule. The testing schedule means that EDS will not be able to roll out as many seats as originally expected when the NMCI contract was signed.
That slowdown also led to EDS officials' acknowledgement last week that the NMCI Information Strike Force—the group of companies working on NMCI —laid off about 10 percent of its staff.
EDS currently controls about 42,000 seats of the Navy's approximately 360,000 seats.
The contract modification also includes the details of the Navy and the Defense Department's agreement on NMCI testing procedures.
"It is recognized by the parties that the need for successful testing and acceptance is a keen importance to the Department of Navy," the contract says.
Last year's law that gave the Navy the go-ahead for NMCI also included a Sept. 30 deadline for the Pentagon to assess the program and determine its future. Under the new agreement, that determination will not take place until some time this winter.
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