Competitors Unite to Save $16 Billion Intranet Project

Competitors Unite to Save $16 Billion Intranet Project

By Nick Wakeman, Staff Writer

The Navy has battened down the hatches and is ready to sail with its $16 billion Intranet contract as soon as Congress gives its final OK.

"We already know who we want to award the contract to," said Navy spokeswoman Lt. Jane Alexander.

But the award awaits one final briefing with Congress Sept. 6 or 7 to cover some cost issues, she said. Congressional approval should come within a week after the briefing. The award will go to one of four bidders within days of the approval, she said.

The winning contract has not been informed of the choice, Alexander said.

Industry officials expressed confidence that Congress will remove any roadblocks to approval, some of which surfaced after Navy officials failed to keep the legislators informed about the progress of the project.

But lobbying efforts by the Navy and the information technology industry appear to have saved the contract.

The Navy wants to use the contract to consolidate its existing network, communications and desktop computer contracts into a single contract and to create a Navy-Marine Corps intranet.

Leading the teams bidding on the eight-year contract are: Computer Sciences Corp. of El Segundo, Calif.; Electronic Data Systems Corp. of Plano, Texas; General Dynamics Corp. of Falls Church, Va.; and IBM Corp. of Armonk, N.Y.

The winning contractor will be responsible for secure voice, video and data networking, desktop computers, hardware, software, services and training for more than 400,000 seats or computer users.

Lawmakers first began questioning the project in late 1999, saying that the Navy had not adequately informed them of the plan or justified spending such a large amount of money.

Although the Navy spent four years examining similar commercial projects as it developed its plan, the service made a tactical error in not keeping Congress in the loop, industry sources said.

"Since they were rolling up current contracts and not asking for new monies, they didn't think they needed to ask for permission," a source said.

Congressional staffers first got wind of the project through press reports, and language was added to 2001 defense appropriations and authorization bills that would stop the project until the Navy addressed Congress' concerns, the source said.

The contract award had been expected in June, though work would not have begun until Oct. 1.

Questions from Congress included how the Navy was going to pay for the project, what alternatives were evaluated, how military and civilian personnel would be affected and how information security and information assurance were to be addressed.

The Navy responded with a massive package of information that is still being evaluated, but appears to have satisfied lawmakers, sources said.

As a result, Congress is expected to remove the roadblocks in the defense appropriations and authorization conference reports for fiscal 2001.

Congress was persuaded in large measure by the united lobbying effort of the four companies bidding on the project.

"It was pleasant to see such intense competitors work together," said Olga Grkavac, executive vice president of the Information Technology Association of America, which spearheaded the lobbying effort. ITAA is a trade association with more than 26,000 members representing a broad spectrum of the information technology industry.

"They compete tooth and nail, but they know everyone wins if this project is successful," she said.

The importance of the contract to government and industry as a whole was the reason ITAA got behind a lobbying effort, she said.

The ITAA generally does not get involved in specific projects, but the organization has made exceptions for the Navy-Marine Corps Intranet contract as well as the Customs Modernization Project, which has not yet been awarded, and the Army Wholesale Logistics Modernization contract, which CSC won in December, because these projects have broad implications, Grkavac said.

"It has to be a landmark program that has a benefit to industry, no matter who wins," she said, noting that if even one of the bidding companies had objected to a joint lobbying effort, ITAA would have withdrawn.

If the Navy's implementation of the intranet project is successful, it will spur more agencies to look at large-scale seat management deployments, said Stephen Ward, director of EDS Global Government.

"A lot of people in government are looking for a signal or a model to go forward, and this should really serve as that model," he said.

The intranet project also will bring a lot of commercial practices to the government, which the IT industry strongly supports, Grkavac said.

A successful implementation will "push the envelope to true government infrastructure outsourcing," said David Kelly, director of consulting at the market research firm Federal Sources Inc. of McLean, Va. "This isn't just the local network infrastructure we are talking about, but the whole backbone IT architecture and communications architecture," he said.

But if it fails, it could "break the Navy's credibility with Congress and the administration on future large-scale IT projects," said Kevin Plexico, an analyst with the market research firm Input Inc. of Chantilly, Va.

The project will be a powerful enabler for future Navy initiatives, said Joe Dougherty, senior account executive for CSC's NMCI Flagship Alliance.

The Navy is planning initiatives in areas such as knowledge management and enterprise resource planning. "You have to have the network in place first to do those things," he said.

By outsourcing the network and desktop services, the Navy can concentrate on its core mission and leave the information technology concerns to the winning contractor, Dougherty said.

The approach has been widely used and proven in the commercial world, both Dougherty and Ward said. "This isn't rocket science; this is highly sophisticated plumbing," Ward said.

Executives with IBM and General Dynamics declined to comment for this story.

The congressional scrutiny only changed small details in the request for proposals, Dougherty said. "We've had 15 amendments, but those have only made the RFP better," he said.

The initial roll out will be about 43,000 seats or users, which will establish a proof of concept for the rest of the project, he said.

One of the biggest challenges will not be technological but cultural, Dougherty said.

If CSC wins the contract, "we'll immediately engage in a full marketing and communications plan," he said.

Communications is a key element because "most of the problems happen when folks do not fully understand what the changes will be," he said.

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