HP Lands $5.6 Billion NASA Contract

It's all systems go at Hewlett-Packard as the PC and printer maker on Wednesday announced a new seven-year contract with NASA, to the tune of $5.6 billion.

The pact allows NASA's procurement department to select from HP desktops, workstations, blade PCs with Linux and Unix capabilities, servers, and printers, among other offerings.

The agreement is an indefinite delivery indefinite quantity (IDIQ) contract, meaning that the space agency has an open date on the purchases as well as the exact amount spent on individual products. The entire federal government and its authorized prime contractors also have the option to purchase HP technology through the contract, also known as a "Solutions for Enterprise-Wide Procurement (SEWP) IV Class 5."

The partnership agreement ends when the money runs out, but the government's procurement office has the option to renew or expand the contract if it sees fit. For example, the U.S. Department of Veterans Affairs said it also is making NASA's relationship with HP its mandatory contract for acquiring technology.

The deal is a boon for taxpayers as well since the contract specifies that HP's products must be guaranteed at or below U.S. General Services Administration schedule prices. That means the government is paying the lowest surcharge (0.6%) -- capped at $18,000 for orders more than $3 million, HP said in its announcement.

To date, HP said it has delivered more than $620 million worth of products and services to federal government agencies between 1992 and 2007 through previous NASA contracts.

But the company's relationship with the government IT contracts has not been without its controversies. The U.S. Department of Justice said in April 2007 that it will investigate claims suggesting HP and others made kickbacks to other companies involved in technology contracts with government agencies.