WASHINGTON — The Navy jumped on the online bandwagon by awarding a $6.9 billion contract to Electronic Data Systems Corp. to create a digital information network linking ships, bases and service members around the globe.
"We can change the culture of the organization (and) create a united Department of the Navy that will be better able to carry out its missions throughout the world," Navy Secretary Richard Danzig said Friday.
Known as the Navy-Marine Corps Intranet, or NMCI, the project is the largest information technology contract the Pentagon has ever awarded, Danzig said. It consists of a five-year contract worth at least $4.1 billion and a three-year option worth at least $2.8 billion.
The program, which is to be fully implemented by June 2003, will take the place of 200 separate computer networks and link some 350,000 desktop computers throughout both services. Currently, some Navy installations can't send e-mails with attachments to one another because their systems are incompatible, officials said.
The NMCI also will be closely watched as a first step toward a potential militarywide information system.
Members of Congress have been skeptical about the NMCI, and the contract award was postponed several times as the Navy defended its plans. A major issue has been where the Navy will get the funds to cover the cost of the new system, which had been estimated at up to $1.2 billion a year.
Danzig said the service identified $1.6 billion it now spends on information technology that could be shifted over to the program.
House and Senate budget authorizers agreed to the plan last week, with several caveats. The Navy agreed, for example, to "pause" and assess the system after one year and to require that EDS of Plano, Texas, hand at least 35 percent of the work to small subcontractors who otherwise might be elbowed aside by the giant umbrella contract.
"This is a landmark contract award," said Harris N. Miller, president of the Information Technology Association of America, a trade group. "This is a giant leap for e-government, and we trust that others in the Department of Defense and civilian agencies will follow the Navy's lead."
"This contract signals a major shift in the way the Navy and Marine Corps use technology to become more efficient, and we expect other federal agencies to follow suit," said Dick Brown, EDS chairman and chief executive. "This is a great triumph for EDS, the Navy and Marine Corps and the American taxpayer."
Three other companies were competing for the award: International Business Machines Corp., Computer Sciences Corp. and — in a venture outside its traditional business areas — General Dynamics Corp.
General Dynamics, builder of submarines, tanks and business jets, has spent the past two years building a $2.3 billion information technology division from scratch. Chasing the Navy contract was intended as an aggressive announcement that General Dynamics intends to be a player in the field, spokesman Kendall Pease said, adding that the company has seen benefits simply from competing.
The new system is touted as allowing the Navy and Marines to achieve the same kinds of efficiencies that the Internet has promised for private business, such as conducting purchasing and personnel functions online. In addition, the system is supposed to put huge resources at the fingertips of sailors and Marines in the field.
If a Marine sergeant stumbles onto biological weapons, for instance, he could log onto the system and be in instant contact with the Centers for Disease Control and Prevention. Where shipboard mechanics now may have to wait until reaching shore to repair certain equipment, the new intranet would let them call up plans and manuals on the spot.
The program "is going to revolutionize the way we do things in the United States Navy," said Adm. Vern Clark, chief of naval operations.