Navy extends NMCI pact with EDS

The Navy has signed off on a three-year option extension to EDS Corp. for the service's $8.8 billion Navy-Marine Corps Intranet program, several sources say.

The three year extension brings an additional $3 billion to the program's overall contract value.

The original seven-year NMCI contract EDS has with the Navy officially ends in October 2007, and for more than a year the Navy had been mulling its options. Last June, the Navy announced it was conducting a business case analysis to determine whether to extend the three option years to EDS or to recompete the contract, opening it up for other companies to submit bids.

Sources say the Navy granted EDS the extension after it was approved by members of the House Armed Services Committee. The Navy is expected to make an official announcement later today, sources say.

"We received a notification letter from the Department of Defense of their intent to make some obligation adjustments in order to settle contract claims that EDS had filed with the Navy on the existing contract," said Josh Holly, a House Armed Services Committee spokesman.

Holly said those contract claims have been settled, and that "the committee is glad the Navy and EDS have come to an agreement and we do not intend to object."

Rear Adm. James B. Godwin III, the Navy's program executive officer for enterprise information systems, said "affordability, performance, schedule and security are the reasons this is the right choice to make."

"Today's agreement allows both the Department of the Navy and EDS to continue to move forward with positive momentum. We have worked very hard to ensure affordability of the NMCI seat price, as well as include new provisions in the contract on performance and schedule integrity," Godwin added.

Sources say the Navy signed what's known as a "Mega-Mod" contract with EDS, which changes portions of the original contract signed in October 2000. It was unclear what modifications were made to the extension.

NMCI is a consolidated voice, video and data network that will link more than 400,000 sailors and Marines at roughly 300 sites to the integrated portal.

EDS of Plano, Texas, has more than 117,000 employees and annual sales of $20.7 billion in fiscal 2005. The company ranks No. 6 on Washington Technology's 2005 Top 100 list of federal prime contractors.

Dawn S. Onley is a staff writer for Washington Technology's sister publication, Government Computer News.