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HP prevails in protest fight for $3.5B Navy NGEN contract

Hewlett-Packard got something a little extra in its Halloween goody bag Thursday as the Government Accountability Office denied a protest from Harris Corp. over HP’s winning of the $3.5 billion Navy Next Generational Enterprise Network contract.

The contract is the follow-on to the Navy-Marine Corps Intranet contract and converts the massive network to a government-owned and operated system with 400,000 seats and 800,000 users.

HP was the incumbent on NMCI and has been running the network since 2000 when EDS Corp. won the contract. EDS was later acquired by HP.

To win NGEN, HP faced off against a team led by Harris and Computer Sciences Corp.

Both of those companies filed protests, but CSC withdrew its protest in August after reading the Navy’s response to its protest.

CSC declined to comment on why they withdrew their protest, but generally, when companies withdraw after reading the agency’s response to their protest, it is because they realize their prospects of prevailing are slim.

Harris also declined to comment on the protest.

GAO made its ruling on Thursday, but the details of the ruling were not available. A redacted version should be available by Friday, so we’ll have a more detailed story tomorrow.

HP proudly put out a statement that it was pleased with the results.

“The Navy has selected the right team for the challenges ahead, bringing to Sailors and Marines new and innovative thinking coupled with more than a decade of experience building and operating the network,” the company said via email.

HP’s team consists of AT&T, IBM, Lockheed Martin and Northrop Grumman. Click here for an analysis of HP's team.

NMCI has a colorful and troubled history. EDS quickly ran into problems with the contract. The costs the company had to carry to deliver what the Navy wanted nearly bankrupted EDS.

In fact, it weakened the company to the point where it was an easy takeover target for HP.

But as the contract turnaround occurred, it became what is called a “referenceable account.” In other words, HP would use NMCI as an example of the good work it does as it bid on other projects.

Once NMCI expired, HP continued to support the network through the Continuity of Service contract, which became quite lucrative, pulling in $1 billion a year for HP. That contract will run for about another year as the Navy transitions from NMCI to NGEN. Ironically, Harris is a teammate of HP's on NMCI and the Continuity of Service contract.

Costs under NGEN are expected to be much lower, and the five-year contract is expected to be worth about $3.5 billion. It also was competed as a lowest price, technically acceptable contract.

The contract has one base year and four one-year options, and gives the Navy the option of recompeting portions of it as it sees fit.

That kind of competitive pressure will likely keep HP on its toes, which is what the Navy wants.

The contract was awarded in late June, but the protests have held up the start of the contract. With GAO’s ruling, work can now begin.

“Together with the Navy, the team at HP is excited to move the throttle forward on NGEN and take this network into the future,” the company said in its statement.

Posted by Nick Wakeman on Oct 31, 2013 at 2:07 PM


Reader Comments

Tue, Feb 11, 2014

Was a subcontractor (Field Services) for NMCI. Prior 8 years with Northrop Grumman as GSA contractor for the USAF at Los Angeles AFB. When HP acquired EDS, I was given the option of leaving or hiring on with HP at a $15, 000 pay decrease. For exactly the same amount of work. So I walked. Was recently contacted by an IT staffing firm looking to fill the same role at $16.89 per hour? Really? With certification and clearance requirements? Beware, HP, you get what you pay for...

Thu, Nov 7, 2013

When Ross Perot owned EDS it was a force to be reckoned with.What they don't tell you is the real reason the money ran out after award of the NMCI deal is because higher management took the money and ran, leaving EDS to initiate some questionable hiring practices. HP's take over was simple a strategic move to get a foot in the door and as owners of the network begin forcing its hardware on the users capitalizing on the opportunity. Lowest bidder HA ! they contructed that evolution so that it would be impossible for anyone outside of themselves to come in and take over the contract & NTWK. The new contractor would have to buy the network and do a complete refresh; they already own it so no additional cost to them. Also there were some strange bedfellows in and around the PMO community so shady? I say yes!!! The Navy hasn't learned a thing in over 10 yrs of this mess and the Marine Corps who had to take steps backwardsafter being the leader in technology within the services is still trying to recover. Good Luck is Right!

Sun, Nov 3, 2013

Wow! That represents a huge vote of confidence for HP and the EDS teams who started the NMCI contract years ago. There were immense challenges for both sides which had to be overcome, and as I understand, these challenges were overcome for the best outcome for NMCI and HP. Congratulations HP!

Fri, Nov 1, 2013

Good luck Navy. It will be interesting to watch this unfold with half the people at half the cost as HP can't protect your network now.

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