Navy looks to lighten Intranet contractor’s load
Officials say they may renegotiate payments to computer services company because multibillion-dollar project is unexpectedly complex.
The Navy Marine Corps Intranet, a massive computer network for service personnel, will be less of a financial burden to its prime contractor once more users are connected, Navy Secretary Gordon England said Tuesday.
Navy officials also might renegotiate payments to EDS considering the unexpected complexity of the project, England said during the 2004 NMCI Industry Symposium in New Orleans. Currently, the NMCI contract is worth as much as $8 billion.
"EDS has gone through some hard times on this program with us," England said. The project represents the largest government information technology contract worldwide. EDS invested money in the program up front, but is only slated to reap financial gains in relation to the number of users.
Schedule delays have forced EDS to shoulder an unexpected financial burden until more people can connect to the network. "From the beginning of the program, we were struggling with schedules," England said.
He described the initial timelines as "far too optimistic" and said that EDS and Navy officials "did not fully understand" the complexity of the program.
"NMCI turned out to be a very complex program, but that's because the Department of the Navy is a very complex entity," he said.
England made a point, however, of supporting the program and its contractor.
"It is costly, but it is a real service," he said. "EDS has been doing a very good job for the Department of the Navy."
Navy Rear Adm. Charles Munns agreed with England that EDS is on the brink of greater financial returns. More than 360,000 users are now connected to NMCI and 340,000 more "seats" are in the process of being incorporated, according to Navy officials.
England would not speculate on what will happen to NMCI if EDS's financial fortunes do not improve. He also declined to discuss a potential restructuring of the NMCI arrangement to help EDS, saying, "I'd rather not comment on conjecture."
The services and EDS share responsibility for development of the network, England and Munns said. The Navy might increase its payments to EDS, England added, considering the work that was more difficult or costly than anticipated.
"We're always going to work with EDS on what's equitable to do," England said. "EDS has gone the extra mile ... we will negotiate in good faith. We do want to pay people for the work they have done."
An EDS spokesman said the company will refrain from public statements on fiscal matters pending the release of its quarterly financial report, scheduled for July 28.