The Navy has awarded Hewlett-Packard [HP] the contract for its next-generation intranet known as NGEN, sticking with the incumbent that has been providing the service for more than a decade.
Hewlett-Packard, which operates the Navy Marine Corps Intranet (NMCI), beat out a challenge by an industry team of Harris Corp. [HRS] and Computer Sciences Corporation [CSC], in what at times was a thorny battle between the rivals for the lucrative contract.
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| Image by U.S Navy |
The much delayed award for the Next Generation Enterprise Network, or NGEN, initially exceeds $320 million and could reach $3.5 billion if all annual options are exercised through June 2018, according to Thursday’s award announcement.
Navy Assistant Secretary Sean Stackley said the award sustains competition while putting the services’ intranet closer to the Pentagon’s Joint Information Environment (JIE), which is designed to more rapidly provide information to military and civilian users.
“The NGEN contract represents the next phase of Navy Marine Corps Intranet services, providing continued IT operational support to our sailors and Marines, and creates a path toward aligning with the DoD’s JIE”, Stackley said. “The NGEN acquisition approach will allow sustained competition and significant savings for the department.”
The Navy said the segmented contract structure allows it to compete subsets such as hardware, software or transport services, “when it makes sense to lower cost or provide improved system performance.”
“The NGEN acquisition approach will allow NMCI to transition from a monolithic model to a segmented business model that allows for periodic competition of segmented services,” the service said. “Under the current contract, all network services were competed as a single package.”
NGEN is intended to provide secure, net-centric data and services to 800,000 Navy and Marine Corps personnel and connects to 400,000 workstations. NMCI is largest intranet in the U.S. government and began in 2000 under a contract with Electronic Data Systems, which HP acquired in 2008.
The transition to NGEN is expected to take 13 months, about half a year later than the expected April 2014 timeframe. The Navy experienced several delays throughout the acquisition process and in releasing the final request for proposals, which came two years later than planned. The Navy has said the postponements were necessary to refine the requirements and ensure an effective industry competition.
The Navy on Monday issued a continuity of services contract to HP valued at $680 million to keep NMCI operating through the transition and into June 2014, lifting the cost ceiling to $5.6 billion. The Government Accountability Office had previously warned that the delays on NGEN would cause costs increases to keep NMCI running.
The Navy employed the lowest-price, technically-acceptable (LPTA) acquisition model to the NGEN program, a rigid approach that awards the contract to the industry team that offered the lowest price and met the minimum technical requirements.
HP at one time was critical of that approach, saying it wasn’t sufficiently flexible to adapt to a changing environment such as the need to insert new technology to counter emerging or unforeseen cyber threats (Defense Daily, Oct. 6, 2011). Company executives said at the time the Navy should have used the “best value” model that allows the service to trade-off between cost and technical capability.
The contract award came several days after the program manager for NGEN, Capt. Shawn Hendricks, was relieved from his position, the Navy said, “due to a loss of confidence in his ability to lead.” Removing Hendricks from his post came after a SPAWAR investigation concluded he had engaged in “an improper relationship and unprofessional behavior,” the Navy said.
Hendrick’s deputy is overseeing the program until a replacement has been identified.
The HP team includes Northrop Grumman [NOC], IBM [IBM], AT&T [T] and Lockheed Martin [LMT]. The Harris-CSC team also consisted of General Dynamics [GD] and Verizon Communications [VZ]. Harris is currently a subcontractor on NMCI.
The intensity of the competition between the two teams occasionally grew pointed. When Harris and CSC advertised their effort last year on the Washington Metro system, Hewlett-Packard shot back by suggesting its opponents were wasting money.
“Rather than spending money on radio and print marketing campaigns aimed at the casual beltway commuter, HP prefers to invest in capability that improves the quality of service for our Navy and Marine Corps customers,” Bill Toti, HP’s vice president for Navy and Marine Corps programs, said at the time.