Navy says new network will cost $500 million a year less than previously estimated

The Navy has lowered cost projections for its Next-Generation Enterprise Network to below $1.5 billion a year from an estimated annual $2 billion figure provided last week at a media briefing in Washington.

The current network, the Navy Marine Corps Intranet, cost $1 billion a year under an original 10-year contract awarded in 2000 to EDS, now HP Enterprise Services. In July 2010, the Navy awarded HP a $3.4 billion continuity of services contract to keep NMCI in operation through 2015.

The new network "will generate savings relative to historical program spending," said Capt. Shawn Hendricks, manager of the Naval Enterprise Networks program office, which oversees NGEN.

"Historical NMCI costs, which include all NMCI contract expenses and other program costs, are approximately $1.5 billion per year," Hendricks said in an emailed statement. "All program office cost estimates project that spending on NGEN will be less than historical NMCI costs."

Hendricks did not provide a reason for the clarification, and the Navy has not responded to a request for further details. In March, the Government Accountability Office estimated it would cost the Navy $2.94 billion to run NGEN in 2015, its first year of operation. GAO also put total life-cycle costs for NGEN at $50 billion from 2015 through 2025, or $5 billion a year.

GAO said the Navy had failed to provide a reliable analysis of alternative approaches for NGEN and the plan in place as of March could cost $4.7 billion more than other ways to execute the program.