Navy adjusts terms of intranet deal

The Navy held a closed-door meeting last week with officials from the four

potential prime contractors vying for the Navy's $16 billion intranet contract

to map out what sources on Capitol Hill say could be a major change to the

contract.

The Navy called the meeting about its Navy/Marine Corps Intranet (N/MCI)

contract because of "political considerations," according to a source on

the House Appropriations Committee.

The committee does not approve of how the Navy has designed the procurement

and has "concerns that the Navy has not done the homework it needed to do

and patently rejects the Navy's view of the rules as they apply to a procurement

of this size," the source said.

Scheduled for award in June, the N/MCI deal has come under fire from

members of Congress who are concerned that the Navy is pushing ahead with

what would amount to the largest networking contract in government without

adding any new money to its fiscal 2001 budget request. If the Navy is successful

in pushing the contract through Congress, N/MCI will link 360,000 users — far fewer than the original estimate of 700,000 — under a single network

umbrella.

But lawmakers have criticized the service for not yet conducting a business-case

analysis and not producing proof that the contract will comply with federal

regulations.

The Navy had not commented on the results of the meeting by press time.

An industry source said Congress is concerned that some of the money earmarked

for N/MCI is not coming out of operations and maintenance accounts, as the

Navy contends, but out of base acquisition accounts, potentially drawing

money from nontechnology-related projects. The source said an amendment

may be drafted to allay Congress' concerns.

Another source on the Hill, who spoke on the condition of anonymity,

said the Navy may conduct a smaller N/MCI pilot project first. "The Appropriations

Committee is not likely to stand in the wings if the Navy doesn't make an

appropriate choice here," the source said.

Insiders on the Hill say Appropriations Committee staff member David

Norquist is leading the N/MCI congressional oversight push. Sources say

Norquist is a respected member of the appropriations staff who does not

oppose N/MCI but is keeping a close watch on how the Navy plans to proceed

with the procurement.

Olga Grkavac, executive vice president of the Information Technology

Association of America's Enterprise Solutions Division, said it would be

"tragic" if Congress introduces a major obstacle to the contract at this

stage of the procurement.

An industry source estimated that the four potential primes have spent

about $10 million so far on the project.