Story updated at 9:45 a.m., July 3, 2008

The Homeland Security Department awarded a $390 million contract to government systems integrator Computer Sciences Corp. to outsource its data center services, the department confirmed on Wednesday.

Comment on this article in The Forum.The contract will help DHS complete consolidating its 18 data centers into two megacenters. The department first transitioned systems to a primary data center, the National Center for Critical Information Processing and Storage, which is based at NASA's Stennis Space Center in Mississippi. Prime contractor Science Applications International Corp. manages the center under an award it received through the Millennia Lite program, a General Services Administration governmentwide acquisition contract, which was scheduled to expire in this spring. The Navy has acted as co-contractor and program manager for the center.

In December, Government Executive reported that DHS planned to outsource the center's entire operations to the private sector under its Enterprise Acquisition Gateway for Leading Edge Solutions contract, which was created to purchase IT services and equipment for Homeland Security. SAIC, which also bid on the data center contract, has until September to transition all related activities to CSC, said DHS spokesperson Larry Orluskie. The contract, which extends until Dec. 31, 2016, includes an initial award of $17 million and a ceiling price of $390 million.

The second megacenter is being built under an $800 million contract DHS awarded to EDS earlier this year. Under the eight-year pact, EDS will operate the center as a backup for the primary center if it becomes inoperable due to a natural disaster or cyberattack. The center also will provide data services when the primary center cannot fully manage workloads.

DHS will transition over five years the data center's equipment and managed services from a government-furnished model to a contractor-furnished model, and CSC will charge DHS for the use of the data center using a utility pay-per-use model.

A spokesperson for CSC said the company did not have comment at this time.

Market analysis firm Federal Sources estimates the steady-state contract costs of running the main data center to be between $45 million and $65 million annually.

CORRECTION: In an earlier version of this story, Nextgov incorrectly identified the name of the contractor who won the data center contract. The correct name is Computer Sciences Corp.