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Archive for Saturday, October 7, 2000

Navy deal worth $9 billion

Military contracts for civilian computer oversight

October 7, 2000

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

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.

Electronic Data Systems, also known as EDS, said its major subcontractors on the project are Raytheon, MCI WorldCom, Cisco, WAM!NET, Dell and Microsoft. EDS was founded in 1962 by Ross Perot, the Texas billionaire and former presidential candidate who is a Naval Academy graduate and served in the Navy for four years. Perot sold EDS in 1984.

Richard H. Brown, the chairman and chief executive officer of EDS, said in a telephone interview that his company has the experience and global reach to assure the Navy reliable service and major savings.

"We said would save the government the equivalent of a battleship a year that's a billion dollars a year," Brown said.

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."

"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.

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