Navy considers price critical in Next-Generation Network contract

The Navy has set a simple standard for award of its Next-Generation Network: price. That's what top project officials told a packed industry briefing in Washington on Friday.

Capt. Shawn Hendricks, manager of the Naval Enterprise Networks Program Office, which manages NGEN, estimated the new network will cost $2 billion a year, or $10 billion over five years -- double what the Navy spent per year on its previous large-scale network contract, the Navy Marine Corps Intranet, originally awarded to EDS in 2000. The company is now HP Enterprise Services.

In this era of declining budgets, Hendricks said bidders should come in with offers that drive down costs through reduced staffing requirements and rely on governmentwide software license contract vehicles.

At the same time, he wants contractors to keep pace with technology innovation through periodic contract refreshments. Based on responses from industry to date on draft proposal requests, Hendricks said, there are fewer than five potential bidders that can meet the criteria set out in those drafts.

Hendricks said he believed even that small pool of bidders will generate enough competition to drive down costs, with more competition during the life of the contact if the Navy awards NGEN to two prime bidders. A former top Navy official, who declined to be identified, said he doubted the Navy would award NGEN to more than one bidder because that would make the contract more complex and unwieldy.

NGEN contracting officer Cmdr. John Windom said, "price is paramount" in the selection process, but noted the NGEN contractor will be able to receive unspecified award fees for technical innovation.

The Navy also intends to ensure it receives the best prices for information technology services during the life of the NGEN contract by checking the competitive landscape semiannually, Windom said.

Hendricks described NGEN as the largest federal IT contract that he is aware of today, designed to provide commercial applications and network connections to more than 400,000 computers and more than 750,000 Navy and Marine end users. The NGEN contractor will provide data centers and base and local area networks, but not long-distance networks, which the Defense Information Systems Agency will provide.

The Navy plans a tight schedule for the contract, with a final request for proposals due Dec. 21 and contract award in December 2012. The new network must be ready for operation on April 30, 2014, when the NMCI contract ends.

"We don't want the lights to go out," Hendricks said.