HP To Build Navy's $3.45 Billion Next Gen Network

HP wins long-awaited deal to replace Navy Marine Corps Intranet.
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The Navy finally hoisted its NGEN signal flags Thursday with the announcement that it had awarded the contract for its Next Generation Enterprise Network to HP Enterprise Services in deal valued at $3.45 billion over five years. The announcement marked a major turning point in the Navy's arduous journey to upgrade and replace one of the largest intranets in the world, the Navy Marine Corps Intranet (NMCI).

The contract award calls for HP -- and a group of leading technology service providers -- to manage both the network transport services and the combined enterprise computing services for 400,000 seats and 800,000 users.

But in a move that is expected to save the Navy more than $1 billion over five years, the Navy will own the network and the hardware, including mobile devices, and it will re-compete as many as 35 specific service management segments on an annual basis, said Sean J. Stackley, assistant secretary of the Navy for research, development and acquisition. In that regard, NGEN is as much a way of procuring network services as it is an enterprise network in itself, he said.

[ It's been a good week for HP's government sector. See HP Wins $67 Million Spain Government Cloud Contract. ]

The service management segments are based on ITIL standards, according Victor S. Gavin, program executive officer for enterprise information systems, during a briefing with reporters.

"One of the things we achieved," in having companies bid on various segments of the NGEN request for proposal, said Stackley, "was extraordinary competition." A year ago, the Navy estimated the five-year NGEN contract was likely to cost between $4.5 billion and $5.4 billion. While the Navy could have chosen to award the two parts of NGEN -- transport services and enterprise services -- to different contractors, it elected to award both to HP, which beat out Computer Sciences Corp. The first year of the indefinite-delivery/indefinite-quantity, fixed-price award is worth $321.7 million.

The contract with HP Enterprise Services includes services provided by AT&T Government Solutions, IBM Global Business Services Federal, Lockheed Martin Services and Northrop Grumman Systems. But as much as 35% of the contract's services will go to small business, "which we think will help to bring innovation," said Stackley.

The U.S. Fleet Cyber Command will operate the Navy portion of the network. Radm. Diane Webber said NGEN will provide better command and control of the network by Navy personnel than NMCI. The Marine Corps has already taken over the management of its portion of the NMCI network and expects to work side-by-side with NGEN contractors at the Marine Corps Network Operations and Security Center, said USMC Brig. Gen. Kevin J. Nally, Director, C4/CIO.

The announcement came as an important victory for HP, which inherited the contract for managing NMCI when it acquired Electronic Data Systems in 2008. When that contract expired in 2010, HP continued to operate the ashore network under a continuity of service contract.

"HP and its team of world-class partners recognize the importance of keeping the Navy's backbone IT network secure, operational and moving forward for sailors and Marines to support their operations,." said Meg Whitman, HP president and chief executive officer, in a statement provided to InformationWeek.

Under the new contract, work will be performed at nearly 2,500 Navy and Marine Corps locations worldwide, from major bases to single-user sites. That work is expected to be completed in June 2014.

Navy officials said $140 million from Navy and Marine Corps operations and maintenance and other procurement funds from fiscal 2013 are being obligated at the time of award and that contract funds will not expire at the end of the current fiscal year.

Earlier in the week, the Navy relieved the program manager responsible for the NGEN program, Capt. Shawn Hendricks, after an investigation found he had an inappropriate relation with a subordinate contractor. Stackley confirmed that no one from any of the contractors bidding for the NGEN award had been involved.

Marilyn Crouther, senior VP and general manager, U.S. Public Sector, HP Enterprise Services, also noted, "We know the technology, we know what it takes to operate this massive and highly complex IT environment, and we now embrace the opportunity to help build a better enterprise network."