On October 6, 2000, the US Navy awarded a 5-year contract for Navy Marine Corps Intranet (NMCI) services to EDS for an estimated 412,000 – 416,000 seats and minimum value of $4.1 billion. The original contract also included a 3-year option for an additional $2.8 billion in services, bringing the potential total contract value to $6.9 billion. Extensions and restructuring have made it a 10-year, $9.3 billion information technology services program. Through a contract that contains numerous performance-based incentives, the Navy is buying network (intranet), application, and other hardware and software services at a fixed price per end user (“seat”) to support about 550 sites. As a form of perspective, for FY 2006 the US Navy’s IT budget was about $5.8 billion, which included funding for the development, operation, and maintenance of Navy-owned IT systems, as well as funding for contractor-provided IT services and programs like NMCI.
The US Government Accountability Office has issued a number of reports during NMCI’s lifetime, some of which have been helpful in refocusing the program. The 2003 report “DOD Needs to Leverage Lessons Learned from Its Outsourcing Projects (GAO-03-371),” which looked at leading commercial outsourcing practices and noted discrepancies, is a good example.
Their December 8, 2006 report “DOD Needs to Ensure That Navy Marine Corps Intranet Program Is Meeting Goals and Satisfying Customers” (GAO-07-51) attempts to match NMCI’s strategic goals to its performance measurements under the contract’s service level agreements (SLAs). The result is a 114-page auditor’s report that will offer readers many useful details about NMCI as a program and identifies some of its shortfalls and challenges, but falls short as an attempt to ascertain NMCI’s broad success or failure. That would require more use of the commercial auditing industry’s growing practice of using industry or project comparables for perspective, and noting leading practices and common pitfalls in order to offer a comparison based on peer as well as internal criteria. It would also assess the initial performance measurements themselves as a subject for inquiry, since it is common practice for understanding of what can and should be measured to change sharply once an intranet is implemented and running. Readers who persevere to the very end of the report, for instance, will find a Navy response that outlines a number of ‘surprise’ spinouts from the NMCI effort. As such, they are unmeasured under the original criteria of the SLAs and could not figure in the GAO’s report. They are nevertheless significant, and represent possible targets for future measurement that could help answer the strategic value question in a more comprehensive way. The GAO report may be found here.