U.S. Navy delays huge computer contract award

WASHINGTON (Reuters) -- The U.S. Navy, citing remaining questions from Congress, said Friday it was postponing the award of a precedent-setting computer services contract valued at up to $16 billion.

It would be the largest government computer services contract on record if the five-year contract and its three-year extension were fully exercised.

Last week the Navy had said it planned to announce the winner-take-all contract award by Friday, the last business day of the government's fiscal year that ends September 30.

"We had hoped to award the NMCI contract by the end of this fiscal year but some of the questions from Congress had not been resolved," Navy spokeswoman Lt. Jane Alexander said.

Navy sources said some lawmakers were concerned that introduction of the computer contract could harm U.S. Navy battle readiness during the changeover period.

NMCI is the Navy acronym for the program that would see a commercial contractor own, maintain and update Navy and Marine Corps computers worldwide.

In the running are the world's three largest computer service suppliers -- International Business Machines Corp., Electronic Data Systems Corp., and Computer Sciences Corp. -- plus General Dynamics Corp., the Pentagon's No. 4 supplier last year.

No new target date has been set for an announcement of the contract award.

Alexander said the Navy was working closely with lawmakers concerned about any impact the phase-in of the contract might have on Navy and Marine Corps industrial activity such as shipyards and aviation depots.

"We are continuing to work closely with some members of Congress who still have questions about what impact -- if any -- NMCI will have on various Navy/Marine Corps industrial activities such as shipyards and aviation depots," she said.

Art Money, the civilian who serves as the Pentagon's chief information officer, said in a September 15 letter to Congress that the Navy contract could become the model for how the Defense Department acquires computer "infrastructure" in the future.

The ultra-secretive U.S. National Security Agency, an arm of the Pentagon, said in June that it planned to turn to the private sector for the overhaul of most of its non-spying support technology in what could be a 10-year contract valued at up to $5 billion.

By 2020, the Pentagon plans to connect its myriad networks involved in war-fighting and intelligence collection in a vast new architecture it calls the Global Information Grid, or GIG.

The GIG, the outlines of which are still being shaped, aims to provide "a seamless, secure, end-to-end environment for both war-fighting and business applications," Money said in a speech this month.

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U.S. Navy
IBM Corporation
National MultiCultural Institute (NMCI)
Electronic Data Systems
Computer Sciences Corporation
General Dynamics
U.S. Department of Defense
The National Security Agency
The Pentagon

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