Navy, EDS modify parts of NMCI contract

The Navy and EDS Corp. want to slash the number of service-level agreements on the Navy-Marine Corps Intranet contract that EDS has to meet to receive certain payments and bonuses.

The changes to the agreements are one of several modifications the Navy is making to the $8.8 billion contract. When the contract was signed in October 2000, the Navy established 240 performance criteria under about 30 categories that EDS had to meet, according to Rear Adm. Charles Munns, director of NMCI.

"Our lesson was 240 was too many," said Munns yesterday during the 2004 NMCI Industry Symposium. "We spent the last two and a half months with Navy and Marine Corps [leaders] ... and throughout it all, we've learned some pretty good principles."

The changes are in keeping with the way many Fortune 500 companies manage their outsourcing contracts, said Capt. Chris Christopher, deputy director for future operations, communications and business initiatives for NMCI.

Many of these businesses, he said, are only interested in service-level agreements that answer what the network is doing to enhance profitability. Christopher said he didn't know what the service-level agreements target would be for the NMCI office. He said the process is evolutionary.

Other changes include allowing EDS to accept orders for enterprise application hosting services. This will let the Navy cut thousands of local area networks and legacy servers that are individually managed and controlled and don't talk to each other.

The Navy also delayed opening a laboratory to test vendor software applications for compatibility with NMCI until at least the fall. It was to open this month at the Space and Naval Warfare IT Center in New Orleans. Legal and contractual obligations are delaying the opening, according to officials.

The extended time will let the Navy finish operational testing on a prototype and release a request for proposals for a vendor to operate the center. The Navy will use the share-in-savings technique for the process, which means the service will share savings with the vendor chosen to run the lab, Christopher said.