Navy to privatize its far-flung computer network

Associated Press

WASHINGTON — Leading the military into a new era of the Information Age, the Navy on Friday awarded a contract potentially worth $9 billion to link hundreds of separate Navy and Marine Corps computer networks into a single, seamless system designed to be less vulnerable to cyber attacks ashore and at sea.

The contract, which Navy Secretary Richard Danzig called the largest such contract ever awarded by the government, was awarded to Electronic Data Systems Corp. of Plano, Texas. It could cost some Navy civilian information technology specialists their jobs, officials said.

This marks the first time in the computer age that a branch of the military has turned over to a private company the responsibility and risk of operating and maintaining its entire network of computer systems.

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The new information system, known as an intranet, is seen by the Defense Department — whose thousands of computer networks are the largest and most far-flung in the world — as a model for the military as a whole. The Navy-Marine intranet, for example, would enable an aircraft maintenance worker in Japan to pinpoint the availability of a plane part anywhere in the Navy or Marine Corps system or contact the part manufacturer with the click of a button.

The new system is expected to be fully operational by June 2003.

The contract is for a guaranteed minimum of $4.1 billion over five years, although Danzig said that probably will be about $6 billion. The Navy can extend the contract for another three years for a minimum of $2.8 billion.

EDS was chosen over three other finalists for the contract: General Dynamics Corp., IBM Corp. and Computer Sciences Corp.

EDS officials said major subcontractors on the project are Raytheon, MCI WorldCom, Cisco, WAM!NET, Dell and Microsoft. EDS was founded in 1962 by Ross Perot, the Texas billionaire and former presidential candidate who is a Naval Academy graduate and served in the Navy for four years. Perot sold EDS in 1984.

The contractors will be responsible for providing, operating and maintaining all the computers, network servers and other elements of the system.

Danzig said some Navy civilian workers who are information system specialists will have to take new jobs. He said they number in the hundreds; a Navy report to Congress in June said 1,938 people would be affected and that 329 of them would face "involuntary separation," which is military lingo for layoffs.

Some in Congress have questioned whether the change will cost too many jobs among the Navy Department civilians who maintain the existing computer networks, but Danzig said Friday that he believes he has allayed these concerns.

Danzig said the Navy will actually be saving money by having the work done by a private company. He estimated that maintaining the existing Navy and Marine Corps computer networks is now costing $1.6 billion a year, or $400 million a year more than the contract will cost.