Navy launches PC, laptop lease

As part of an effort to refurbish its computing environment and ramp up for a servicewide intranet project, the Navy's Pacific Fleet last week awarded a three-year, $96 million leasing agreement to Dell Computer Corp. for desktop and laptop computers.

Although the idea of leasing computers never really has caught on at agencies, the deal with Dell will give the Navy "a homogenous solution and the ability to be flexible," according to Chuck Deleot, the deputy N6 and technical director for Pacific Fleet headquarters.

The deal, worth $32 million per year, will provide the Navy's Pacific Fleet with 42,000 Dell machines, including a mix of the company's top-of-the-line Optiplex workstations and Latitude CPi notebooks. The lease will enable the Navy to replace many older systems and others that are not Year 2000-compliant, Deleot said. Factors in the Pacific Fleet's decision to lease through Dell, Deleot said, were an attractive price, low out-of-the-box failure rates and the need to lower total cost of ownership in an environment marked by fast technology-refreshment rates.

Aside from an attractive deal - the details of which Deleot declined to comment on - the incentive for the leasing agreement came from the commander in chief of the Pacific theater, Adm. Archie Clemins, who wanted to "jump-start" a base-area network initiative in San Diego and other locations in the Pacific theater, Deleot said. In addition, the acquisition of leading-edge desktops and laptops also positions the Pacific Fleet for a smooth integration into the Navy/Marine Corps Intranet once that program begins to take shape, Deleot said.

The N/MCI, formerly known as the Navy Worldwide Intranet, will provide hardware and services ranging from PCs to communications pipes to support for 450,000 users worldwide. The Navy plans to design the N/MCI to support enterprise resource planning within the department, and it also will include the Marine Corps' Enterprise Network.

"This is just a start," Deleot said. "We're getting the best [systems] that we can today." However, once the N/MCI contract is decided upon, the Pacific Fleet's leasing agreement with Dell will become part of the Intranet deal, Deleot said.

He added that when the three-year deal expires, the Navy has the option of going with Dell again or whatever vendor's solution "makes sense." For this deal, the Pacific Fleet selected Dell over a similar offering from Compaq Computer Corp. because, according to Deleot, "it just turned out that Dell was better."

Officials at Compaq declined to comment until a full debriefing can be conducted.

Although he does not know the details of the deal that Dell offered to the Navy, Eben Townes, senior vice president of Acquisition Solutions Inc., said leasing traditionally has been the more expensive way to acquire PCs and laptops.

Leasing is not necessarily a less expensive way to acquire PCs and other equipment, but agencies are attracted to the ability to avoid full up-front costs as well as the availability of operations and maintenance monies that will fund the lease and spread it over several years, Townes said. "In most instances, this is a more expensive acquisition alternative, but we are seeing more of it happening," he said.

"When leasing became a hot topic a couple of years ago, I was a firm believer that it was going to take off," said Robert Guerra, president of consulting firm Robert J. Guerra & Associates. "I was wrong."

According to Guerra, leasing continues to have a stigma attached to it in the federal market because of the government's history of opting to use leases and paying for items several times over, as well as paying for leases that covered equipment that sat in storage. The Navy deal, however, was a unique situation, Guerra said.

"The Navy had tens of thousands of systems that had to be replaced, and they probably didn't have the budget to meet their mission goal," Guerra said.

"This is not a trend," he added. "Where I see a leasing concept taking hold is in the idea of seat management or desktop outsourcing. Leasing for the sake of leasing in other than the large telecommunications switch or mainframe business really does not seem to be building up a head of steam."