Navy gets a software deal

A new licensing agreement allows Microsoft to deepen its reach into the Navy and lets the service move ahead with an initiative to standardize software across 16 overseas installations at a savings of about 25 percent in licensing costs.

As an added bonus, the deal could be worth up to $11 million to reseller CDW Government, according to company officials.

Awarded by the Space and Naval Warfare Systems Command on behalf of the Program Executive Office for Command, Control, Communications, Computers, Intelligence and Space, the contract will ultimately provide software for 28,000 desktop computers and 884 servers in the Naval Network Warfare Command Outside the Continental United States Navy Enterprise Network (ONE-Net). The organization's 16 installations span Europe, the Middle East and the Far East.

Mike Bradshaw, director of Microsoft's defense sector, said that although the licensing agreements mean a possible loss of revenue in the short term, they have long-term benefits. "Once we can start looking at an organization as one entity, and we purchase that way and standardize that way, it leads to an optimization and centralization of some operations," he said.

The Army and Air Force are already involved in similar standardization efforts, he added. The Navy Marine Corps Intranet project was one of the Navy's earlier moves toward greater standardization, he said.

Another benefit of licensing agreements is lower costs for the developer, Bradshaw said. "It does make it easier if we have one agreement instead of many," he said. "Obviously, we can predict our revenue stream because of that, and it's easier to process one or two orders instead of hundreds."

Max Peterson, vice president of federal sales at CDW-G, said ordering efficiency benefits the reseller. "CDW-G's got the responsibility for processing a lot of those orders," he said. "So we give one order to Microsoft and it's one big award to CDW-G."

The ONE-Net deal will help move Microsoft into command and control operations, an area in which Bradshaw said the company has been weak.

"It's a long transition, and we're just now starting to see some traction," he said. "What we're trying to do is put a program in place that can be renewed each year without a lot of changes."

Standardizing the technology will enable the Navy to use new technologies, such as Web conferencing, across all the installations. That's more difficult to do when software platforms and versions differ widely from one location to the next.

"This is one of the building blocks," Bradshaw said.

The agreement gives the Navy some additional advantages, too. It gives the Program Executive Office the ability to upgrade to the latest software versions and gain insight into Microsoft technology and products under development, with an eye toward incorporating them into future upgrades of ONE-Net, according to office officials responding to questions via e-mail.

"ONE-Net was already designed with standardization and consistency in mind," Navy officials wrote. "The Microsoft arrangement doesn't change that. It just provides a vehicle to stay in step with licenses as requirements change. There is, however, less tendency for commands to go out and procure systems and software on their own and put it on the network, if we can provide the capability they require."