Payment due despite NMCI delays

John Stenbit's answers to the Senate Armed Services Committee

The lingering dispute over how the Navy Marine Corps Intranet will be certified could have severe financial penalties for the Navy—potentially costing as much as $728 million.

NMCI officials insist that they are working to resolve the testing and certification issue and do not expect that the matter will reach such a dire situation. The ongoing dispute, however, has the potential to be a significant roadblock in the massive effort to modernize the Navy's information technology infrastructure.

Officials at the Defense Department, the Navy and the NMCI contractor, Electronic Data Systems Corp., have held semiweekly meetings in an effort to resolve the conundrum about how NMCI will be tested and certified.

As detailed by a June 29 memo by acting DOD chief information officer Linton Wells II, DOD leaders have argued that NMCI must prove itself before moving forward.

Navy officials have argued that they should use a commercial approach to testing that would let EDS and the Navy conduct tests.

However, more extensive testing—such as using the same regimen that DOD uses for weapons systems—could prevent EDS from continuing its work. And the Navy would have to continue to pay the contractor even while NMCI work would be on hold pending results of the tests, NMCI officials said.

"We're working toward a solution," said Capt. Chris Christopher, a Navy deputy program executive officer for information technology.

In response to written questions posed by the Senate Armed Services Committee, John Stenbit, the DOD CIO nominee, said systems such as NMCI "must demonstrate that the capabilities satisfy user requirements and that interoperability with military systems are fully demonstrated."

He did not hint whether he supports the full-blown tests. DOD staff members are working to "develop a final strategy that is consistent with a reasonable fielding rate for NMCI," he told lawmakers in his responses, which were posted Aug. 1.

Under the NMCI contract, EDS is scheduled to be paid $728 million in fiscal 2002. EDS has been paid $29.9 million so far, company officials said.

Chip Mather, senior vice president of Acquisition Solutions Inc. and a former senior Air Force procurement official, said that the government does not have experience dealing with performance-based contracts. Under those contracts, the government is supposed to get out of the role of conducting extensive tests. Instead, the impetus is on the vendor to demonstrate results.

"The only way this program will be success if they do adequate testing, not hyper-scrupulous testing," he said.