Citing Cost, Innovation and Flexibility, Navy Awards NGEN Contract to HP Group

The U.S. Navy has awarded the $3.45 billion Next-Generation Enterprise Network (NGEN) contract to replace the Navy-Marine Corps Intranet (NMCI) to a consortium headed by HP. Other team members include AT&T Government Solutions; IBM Global Business Services Federal; Lockheed Martin Services; and Northrop Grumman Services.

The ability to incorporate innovative technologies is a key element of the contract, according to Victor S. Gavin, program executive officer for Navy enterprise information systems. The government will have a much greater opportunity to transition to more innovative technologies—at cost—as they come into being, he says.

Innovation may appear at either government’s or HP’s initiative, he continues. HP is encouraged to innovate at lower cost, because the contract will allow the government and HP to split any savings realized.

Sean J. Stackley, assistant secretary of the Navy for research, development and acquisition, explains that the contract is segmented to realize savings and encourage innovation. The request for proposals (RFP) was structured so that separate teams could win each of the segments, but the HP team won all of the segments across the RFP.

Bill Toti, vice president and account executive, HP Navy and Marine Corps Accounts, relates that HP looked at several options for each segment of the contract. “Of each option, only one of those had the lowest price, so it made sense for us to bid just that one—and that’s what we did.”

These segments are broken up by capability, Gavin notes, and at any time the segments can be recompeted. One of the strengths of this approach is that it will help the government’s efforts to move into the cloud, he points out. Stackley adds that NGEN also will allow the Navy and the Marine Corps to address better the future cyber threat. And, Barbara Hoffman, Department of the Navy principal deputy chief information officer, allows that NGEN is the department’s crucial path toward the Joint Information Environment, or JIE.

Small business will play a big role in NGEN. “We put a heavy weight on small businesses inside NGEN,” Stackley declares. By design, 35 percent of the money in NGEN must be spent on small business. This will help encourage innovation, as these are the types of companies that bring innovation to the table, he adds.

Stackley states that the winning bid will result in more than $1 billion in savings over the next five years. He emphasizes that, while winning bidder HP is running NMCI, it did not have any incumbent advantage. Its consortium is a different team than the one operating NMCI, he points out, and this new team prevailed in a “very tight competition.”

Toti says, “We certainly from the beginning wanted everyone to understand that this wasn’t ‘NMCI Part II.’ This was going to be a different team with a different philosophy, responding to different operating environments in 2013 as opposed to 2000.

“The lights will never dim for the sailors and Marines that are doing our nation’s work,” Toti declares. “As we transition to this new contract structure, we want to ensure that the level of service is not degraded—in fact, it only improves.”