No. 8: For EDS, steady as she goes

Persistence pays off for company as it builds on experience with NMCI

EDS Corp.

Prime IT contracting revenue: $1.7 billion

Location: Plano, Texas

Leaders: Michael Jordan, chairman and CEO; Jeffrey Heller, president

URL: www.eds.com

Employees: 117,000

2005 revenue: $19.8 billion

2005 net earnings: $150 million

2004 revenue: $9.9 billion

2004 net earnings: $158 million

James Duffey, general manager for EDS' public sector unit, said the company has a "definite advantage" in developing identity management technology.

Rick Steele

Persistence usually garners few headlines, positive or otherwise. For EDS Corp., dogged by disputes over compensation and performance six years into its largest federal contract, staying the course managed to generate favorable reaction as one year led into another. The Plano, Texas, company, which ranks No. 8 on the Top 100 list, appeared to resolve difficulties with its Navy-Marine Corps Intranet project, an award now worth $12 billion.

In late March, the Navy agreed to pay EDS $100 million in additional compensation for incurred costs beyond original projections; the company had sought $780 million. Another provision lets EDS recoup additional money from the sale of NMCI infrastructure and desktop assets when the contract ends.

Most important for EDS, the Navy agreed to a three-year, $3.1 billion extension that stretches the company's tenure through 2010.

EDS has said that NMCI is the world's largest, most secure global private network, with service to more than a half-million sailors and Marines at 1,000 networked sites in the United States and abroad.

"As far as the NMCI contract goes, EDS has been in damage control for the last five years," said Bob Kipps, an analyst with Houlihan Lokey Howard & Zukin, McLean, Va. "It was painful, but they learned and gained from the experience. The consensus on the street is that they've finally weathered the storm. ... We think 2006 will be a good year" for EDS.

EDS hopes that part of this year's prosperity will flow from the continuing maturation of the Agility Alliance, which the company founded in October 2004 with companies such as Cisco Systems Inc., Dell Inc., EMC Corp., Microsoft Corp., Sun Microsystems Inc. and Xerox Corp. The alliance early last year opened the first of several development centers intended to provide resources and space for multiple teams to collaborate on a single project.

"Their commercial experience is a positive differentiator. The government likes to see that," Kipps said. "Others don't have that kind of capability." EDS is positioning itself "to be more aggressive, more active," he said.

What sets the alliance apart from a partnership is the imperative that solutions matter more than company affiliation, EDS officials said. Focusing on and solving problems from several angles could lead to faster, longer-lasting, more robust outcomes, far superior to typical "integrate-it-yourself" approaches.

The company concedes that coordinating efforts of a disparate, and often competitive, group of vendors is a challenge. But EDS officials said the alliance fills gaps in the company's technology portfolio. Alliance partners garner experience in long-term project development and systems integration.

So far, the alliance has brought in $7.3 billion in partner-influenced sales, including $290 million of new business for EDS, as well as 178 alliance-influenced wins, including 51 new clients, according to EDS.

"We're looking for a competitive differentiator, a common solution that's the best in class," said James Duffey, general manager for EDS' public sector unit. "The age of one big guy against another big guy is probably ending. You're going to have one big competitor bring the best of commercial experience to the federal government."

Along with several of its Agility Alliance compatriots and others, such as IBM Corp. and Novell Inc., the company also is championing open-source coding for federal and state governments. The OpenDocument Format Alliance worries that documents created by public sector agencies using multiple, stovepiped legacy applications will lead to difficulty retrieving, accessing and modifying critical records.

The alliance supports using an open Extensible Markup Language-based collection of document formats, including text, presentation and spreadsheet, that make files usable regardless of originating application.

"It doesn't make a lot of sense to have 12 different personnel or payroll systems," Duffey said. "Common systems reduce expense and increase efficiency."

EDS is among a group of companies that in February signed an agreement with the Defense Department to connect identity systems and establish an interoperable authentication network. The agreement formalizes the relationship between the Federation for Identity and Cross-Credentialing Systems Inc., called FiXs, and the Defense Manpower Data Center, which have worked together since 2003 to develop a secure means of authenticating employees while protecting their personal information.

"Identity management is clearly an emerging area of opportunity," Duffey said. "That's where I think we have a definite advantage."

EDS remains the prime integrator for the Defense Department's smart-card program, working with the Defense Manpower Data Center to deliver roughly 10 million common-access cards. EDS also helped develop and deploy the Defense Biometric Identification System, the Defense Department's physical access system, in which more than 1.2 million U.S. military personnel, family members and contractors are registered.

For its new enterprise data centers, the Centers for Medicare and Medicaid Services in March awarded contracts worth $1.9 billion over 10 years to EDS, IBM and Companion Data Services LLC, a subsidiary of BlueCross/BlueShield of South Carolina. The centers are the hub of the CMS IT infrastructure modernization for the next decade. The three contractors will compete for data center task orders through the indefinite-delivery, indefinite-quantity vehicle. The contract is for three years and has seven one-year options.

Additional 2006 Top 100 Profiles
  • No. 1: 12 times the fun for Lockheed

  • No. 2: Northrop takes aim on health IT

  • No. 3: SAIC prepares for public debut

  • No. 4: Revving the acquisition engine

  • No. 5: CSC holds a lure for a buyer

  • No. 6: Raytheon works the system

  • No. 7: L-3 cuts bigger slice of govt pie

  • No. 8: For EDS, steady as she goes

  • No. 9: Booz Allen adapts to stay on top

  • No. 10: Dell solutions get superpowered

  • No. 11: BAE keeps acquisition fires burning

  • No. 12: Despite sale, Anteon's vision lives on

  • No. 13: Intelligence work fuels CACI's growth

  • No. 14: Verizon-MCI combination packs a punch

  • No. 15: Restructured IDS lets Boeing help clients

  • No. 16: ITT Industries aims for the sweet spot

  • No. 17: IBM Corp. steps up as a subcontractor

  • No. 18: Sprint Nextel goes for convergence

  • No. 19: For SRA, the profit is in its people

  • No. 20: It's always mission possible for Unisys

  • Overview: The Billion-Dollar Club

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