Navy's strategy for the $50B NGEN program is too risky, auditors say

A new report calls for the Navy to stop funding its next-generation networking program until it reviews alternative acquisition strategies.

The Government Accountability Office wants the Navy to drop anchor on its massive follow-on to the Navy Marine Corps Intranet contract.

GAO said the Navy needs to review and consider all alternative acquisition approaches to the massive Next Generation Enterprise Network program, which by some estimates will be worth $50 billion through 2025.

In its new report, GAO found that the Navy did not sufficiently analyze alternate acquisition strategies because the options contained weaknesses and did not match the program’s current acquisition approach. The report notes that the cost estimates for the alternatives were not accurate and were “neither comprehensive nor credible.”

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GAO also indicated that the Navy’s NGEN acquisition strategy is not one of the alternatives assessed in the analysis and is riskier and potentially more expensive because it contains a large number of contractual relationships.

Other weaknesses cited in the report include a lack of a reliable schedule for the program. According to GAO, those weaknesses have already contributed to delays in program milestones. GAO noted that during the review, the Navy took steps to address some but not all of those weaknesses.

“Collectively, these weaknesses mean that [the Navy] does not have a sufficient basis for knowing that it is pursuing the best approach for acquiring NGEN capabilities and that the program’s cost and schedule performance is unlikely to track to estimates,” the report states.

GAO has recommended that the Defense Department limit additional funding for NGEN until it conducts a review to reconsider the program’s acquisition strategy. In commenting on the report, DOD officials said they did not agree with the recommendations.

NGEN is meant to replace the Navy Marine Corps Intranet, a program that had its own history of cost and technology issues. The Navy had already spent $432 million on NGEN as of September 2010, reports InformationWeek. The program, which is intended to provide increased and scalable capabilities such as secure transport for voice and data, information storage, and e-mail, is expected to cost $50 billion through 2025.

Hewlett-Packard Co. is the incumbent contractor on NMCI, thanks to its acquisition of EDS Corp.