Navy net price tag hits $10B

The Navy last week released the details of its servicewide intranet project, designed to be the foundation for high-tech warfighting, and revealed that the total price for the project will be about $10 billion, making it one of the most costly government IT projects ever mounted.

Experts have characterized the program as a high-risk proposition. They warn that unless the Navy can prove to Congress that a massive intranet will reap benefits for the entire Defense Department, the service may find it difficult, if not impossible, to squeeze out of Capitol Hill the extra money the program needs. Today, the Navy does not have the money to pay for the system.

The Navy planned to release on Friday the request for proposals for its Navy/Marine Corps Intranet (N/MCI), which will provide a telecommunications backbone to enable the Navy and Marines to rely more heavily on computers to fight future wars. The program, which senior Navy officials say will be awarded by May, will provide end-to-end communications service, including network hardware, desktop PCs and software.

"This train is moving," said Lee Buchanan, assistant secretary of the Navy for research, development and acquisition, to reporters at a meeting in the Pentagon. He said talks are ongoing with commanders to iron out specific bandwidth and service requirements.

The N/MCI will serve Navy and Marine Corps users at bases in the continental United States and Hawaii. It will connect ships at sea, Navy bases and units using the Navy's Information Technology for the 21st Century project. IT-21 will connect bases with ships using commercial networks. Naval and Marine bases overseas also will hook into the intranet.

Navy chief information officer Dan Porter called the N/MCI "the ultimate manifestation of Defense reform," which when fully fielded will enable the entire Navy Department, including the Marine Corps, to "be on the cutting-edge of the e-universe," with one of the largest, fully integrated and cost-efficient computing architectures in government.

Current plans call for outsourcing desktop and communications support services for up to 350,000 Navy users and up to 68,000 Marine Corps users, Buchanan said. Buchanan declined to comment on what the total cost of the program will be, but he said based on the Navy's study of private-sector projects that are similar in size, the Navy has been able to estimate what the actual costs will be.

Rough estimates have placed the annual cost of the N/MCI at about $5,000 a desktop. Multiplied across the N/MCI enterprise, the price tag comes to about $2 billion a year, or $10 billion over the life of the five-year contract.

Currently, the Navy does not have the budget to pay for N/MCI. Senior Navy officials, including Rear Adm. Jay Johnson, chief of Naval Operations, in the past year have repeatedly expressed concerns to Congress about shortfalls in DOD's budget for modernization funding, including money for N/MCI.

An industry source familiar with N/MCI called the program "an awful big risk" because "there's no new money identified for it." The source also said the Navy will likely have to appoint a spokesperson to sell the program to Congress as one that will benefit all of DOD and that fits into the overall Defense Information Infrastructure.

"This is the brainchild of a guy who is a political appointee," the source said, referring to Buchanan, who is slated to leave his post when President Clinton's term ends in January 2001. "If he has any slips in the schedule, he has almost no way of pulling this off. I would make sure I have a pilot program early on to make sure this thing is going to stick."

The RFP will focus on three levels of service, including availability, security and customer service and satisfaction. Joe Cipriano, head of the Navy's Program Executive Office for Information Technology, said bandwidth requirements will amount to about 5 percent of the overall cost of the project, with the bulk of the money being spent on help-desk services and labor.

Al Edmonds, chief operating officer and senior vice president of Electronic Data Systems Corp.'s federal group, said, "This is not incompatible with the whole concept of the DII," referring to the overall goal of the program to plug the Navy and Marines into the larger Defense establishment. "The Navy has been very clear that they plan to use the DII as the government-furnished capability."

Under those guidelines, "you can do as well as your imagination and tenacity allows you to go," Edmonds said.

Austin Yerks, senior vice president for business development at Computer Sciences Corp.'s Defense Group, said the N/MCI program is a benefit for all of DOD and called it "a major step forward and a new way to conduct business." But the challenge is in the order of magnitude, Yerks said. "The Navy is going to have to show that it [has] a more efficient way of conducting IT infrastructure [support]."