Navy awards NGEN to incumbent HP Enterprise Services

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The Navy Department announced June 27 it awarded a $3.45 billion, 5 year contract to incumbent information and communications technology contractor HP Enterprise Services for its Next Generation Enterprise Network.

In the announcement, it says the contract will be worth $321.69 million in its first year; the remainder of the 5 year contract will be in 1 year options.

With the contract award, HP captured both major parts of the NGEN request for proposals – the network transport services and the enterprise services halves, the latter being for computing services for 400,000 seats and 800,000 users. The Navy could have chosen to award each half to a different contractor, but ultimately decided against it.

HP has been the Navy's ashore network contractor since 2000, when Electronic Data Systems – which HP acquired in 2008 – won a contract for the Navy/Marine Corps Intranet contract, which expired in 2010. Since then, HP has continued to operate as the Navy ashore network contractor under a sole-source vehicle dubbed the Continuity-Of-Service-Contract, which the Navy on June 24 announced it raise the ceiling of to $5.6 billion from $4.92 billion and added another network operations services option, potentially extending its life through June 2014.

The transition from COSC to NGEN should take the Navy (but not the Marine Corps) 13 months, said Victor Gavin, program executive officer for enterprise information systems, during a June 27 press call.

The evaluation criteria for the contract was lowest price, technically acceptable; both bid proposal teams submitted technically acceptable offers, Navy officials said, stating that HP won on price.

Asked how large a role the fact of HP's incumbency played in its winning bid through relatively lower transition costs than a newcomer, Navy officials responded that transition costs are not broken out in the contract itself.

"Anybody concluding that anybody that but the incumbent could not have won – that's really shallow analysis to arrive at this conclusion," said Sean Stackley, assistant secretary of the Navy for research, development & acquisition, during the call.

Also, "the incumbent is not the incumbent. HP is leading a team, but it's a different team from the NMCI team," he added. Later during the call he did acknowledge that much of HP's role itself will be unchanged under NGEN, and "that does in fact greatly simplify the transition."

Asked about whether removal earlier this month of the head of the NGEN program, Capt. Shawn Hendricks – reportedly due to a relationship with a subordinate contractor– may be cause for a protest by a HP competitor allegeding a conflict of interest within the program office, Navy officials said it shouldn't.

"No one involved either in the winning, or otherwise associated with one of the business teams, was associated in that instance," Stackley said.

Setting up the successor contract vehicle to NGEN should be easier than developing the NGEN proposal was, officials also said.

It took years for the Navy "to figure out exactly what it had, and that environment was a contractor-owned, contractor operated environment," said Gavin. Because under NGEN the infrastructure is government owned, "we're in a much better position not only to shorten that [RFP development] period, but to actually make the next competition conducted at a much more faster pace," he added.

NGEN is structured so that implementing new technology during its lifetime should be easier than it was under NMCI, Stackley said. "The flexibility of the contract allows the NGEN system to evolve as technology requirements evolve, and not be stuck inside of a 5 year window, and have to wait until the end of the contract for what comes next," he said.

Members of the HP team include AT&T Government Solutions; IBM; Lockheed Martin Services, and Northrop Grumman Systems.

For more
- read the contact award announcement

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