Navy Awards Computer Services Contract Worth Up to $9 Billion

[William Knowles <wk () C4I ORG>]

http://ap.tbo.com/ap/breaking/MGA0MOHE0EC.html

Oct 6, 2000 - 05:54 PM

WASHINGTON (AP) - The Navy led the military into a new era of the
Information Age on Friday by awarding a contract potentially worth $9
billion to link hundreds of separate Navy and Marine Corps computer
networks into a single, seamless system designed to be less vulnerable
to cyberattacks ashore and at sea.

The contract was awarded to Electronic Data Systems Corp. of Plano,
Texas.

Navy Secretary Richard Danzig called it the largest such contract ever
awarded by the government.

This marks the first time in the computer age that a branch of the
military has turned over to a private company the responsibility and
risk of operating and maintaining its entire network of computer
systems.

The new information system, known as an intranet, is seen by the
Defense Department - whose thousands of computer networks are the
largest and most far-flung in the world - as a model for the military
as a whole. Achieving greater integration of its computer systems is
one of the Pentagon's top priorities.

The new system is expected to be fully operational by June 2003.

The contract is for a guaranteed minimum of $4.1 billion over five
years, although Danzig said that probably will be about $6 billion.
The Navy can extend the contract for another three years for a minimum
of $2.8 billion. The winning bid was announced after the closing of
regular trading on the New York Stock Exchange, where shares of EDS
finished the day down $1.44 at $40.63.

EDS was chosen over three other finalists for the contract: General
Dynamics Corp., IBM Corp. and Computer Sciences Corp.

Electronic Data Systems' major subcontractors on the project are
Raytheon, MCI WorldCom, Cisco, WAM!NET, Dell and Microsoft.

The contractors will be responsible for providing, operating and
maintaining all the computers, network servers and other elements of
the system. Danzig likened the arrangement to contracting for
electricity; instead of owning the generators, the Navy will simply
buy the service - in this case "connectivity."

Having one contractor provide all the services will mean enormous
economies of scale, he said. It also will make it easier and less
costly to incorporate new technologies as they emerge in the private
sector.

"If we tried to do this ourselves, we would wind up losing pace with
technology," Gen. James Jones, the Marine Corps commandant, told a
Pentagon news conference before the contract award announcement. The
Marine Corps is included in the system because it is part of the
Department of the Navy.

The Navy and Marine Corps intranet would allow, for example, an
aircraft maintenance worker in Japan to pinpoint the availability of a
plane part anywhere in the Navy or Marine Corps system or contact the
part manufacturer with the click of a button. The movement of
intelligence information critical in wartime would be more efficient,
officials said, and defenses against cyberattack would be stronger.

"This is a banner event for us," Adm. Vernon Clark, the chief of naval
operations, told reporters. "It will revolutionize the way the Navy
does things."

Rudy de Leon, the deputy secretary of defense, called it a bold step
forward for privatization.

"It gets the government out of the business of owning and operating
information technology systems, and instead transfers that function to
a fee-for-service contract with private industry," de Leon said.

Danzig said his department is the first federal entity to create an
organization-wide intranet, and he said the billions invested over the
coming decade will pay off in increased efficiencies and information
security for computer operations affecting everything from personnel
management to war fighting.

Danzig said that although the contract will cost $1.2 billion a year
for five years - plus $1 billion a year in each of three additional
option years - the Navy will actually be saving money by having the
work done by a private company. He estimated that maintaining the
existing Navy and Marine Corps computer networks is now costing $1.6
billion a year, or $400 million a year more than the contract will
cost.

Some of the savings will be used to buy more sophisticated encryption
systems to improve the security of the computer system, Danzig said,
and the means of monitoring activity on the computers will be
improved.

Danzig said some Navy civilian workers who are information system
specialists will have to take new jobs. He said they number in the
hundreds; a Navy report to Congress in June said 1,938 people would be
affected and that 329 of them would face "involuntary separation,"
which is military lingo for layoffs.

Some in Congress have questioned whether the change will cost too many
jobs among the Navy Department civilians who maintain the existing
computer networks, but Danzig said Friday that he believes he has
allayed these concerns.


*==============================================================*
"Communications without intelligence is noise;  Intelligence
without communications is irrelevant." Gen Alfred. M. Gray, USMC
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