Analysis affirms NMCI benefits

The Navy's effort to create an enterprise network across its shore-based facilities will not save the service much money, but it will provide the Navy with capabilities that it would not have had otherwise, according to the third cost-benefit analysis of the Navy Marine Corps Intranet.

The analysis, conducted by Booz Allen Hamilton earlier this year, reaffirms the conclusions of a July 2000 study that there is a sound business case for NMCI.

Lawmakers and the Office of Management and Budget requested the study. Unlike the two previous business case studies of NMCI, this analysis focused only on costs and used actual cost figures based on data from the initial rollout of NMCI seats.

The analysis was presented to the Navy on April 26, but was just released this month.

The study found the average cost of a pre-NMCI seat to be estimated at $3,545 per year. The cost of an average NMCI seat, by comparison, was $4,179.

Although the NMCI cost was 18 percent more, "the price of an NMCI seat includes capabilities that are not available in the pre-NMCI environment," according to the study. Those include compliance with Defense Department mandated requirements, such as records management, public-key infrastructure and security upgrades.

If those capabilities were taken into account for the pre-NMCI environment, the seat cost increased to at least $4,286, which is 2 percent higher than the NMCI seat cost, the assessment concluded.

"The business case cannot be made without comparing pre-NMCI performance with NMCI performance," according to the study. "The decision to undertake the NMCI initiative was not based only on cost — it focused on performance improvements that the [Navy] would not be able to provide though the traditional information technology acquisition approach."

Despite the initial rollout of seats, many issues remain difficult to quantify, the study says, including project management risks. Although NMCI uses a seat management concept that is common in the commercial sector, the government does not have significant experience with those kinds of efforts, the study says. Managing those kinds of initiatives does not fit into the standard DOD acquisition program oversight format.

Furthermore, delays in the rollout schedule have increased costs, and the study also cites the Navy's legacy application problem as a risk.

"Legacy applications could have an impact on NMCI performance and schedule, although application security compliance is not fundamentally an NMCI issue," the report notes. Many of the legacy applications have become a problem because they do not meet DOD security criteria and therefore cannot be moved onto the NMCI network.