EDS gets $3 billion U.S. Navy contract extension

The multibillion dollar outsourcing contract between the U.S. Department of the Navy and Electronic Data Systems has been extended through September 2010, marking another chapter in this project’s long and often troubled history.

This extension will add more than $3 billion to the value of contract, known as the U.S. Navy/Marine Corps Intranet (NMCI), EDS and the Navy announced Friday.

An EDS spokesperson on Monday declined to say what the total value of the contract is right now, saying the company will provide those details during its next quarterly earnings call in May.

EDS announced with great fanfare in October 2000 that the Navy had chosen it to build and maintain an intranet to serve the Navy and Marine Corps. At the time, NMCI was a five-year, $4.1 billion contract, with options to extend it three years for a maximum value of $6.9 billion. In October 2002, its basic length was extended to seven years and its minimum value increased to $6 billion, while its maximum value increased to $8.8 billion.

Over the years, NMCI has experienced delays and controversies over its scope, and has caused financial and logistics problem for EDS. In early 2004, Michael Jordan, who had become EDS chairman and chief executive officer in March 2003, said the company had gotten the project under control but acknowledged that the contract was “a mess.”

Among the problems Jordan encountered and addressed, he said at the time, were that responsibilities in NMCI were vaguely specified, so accountability was lacking. The project suffered from a lack of leadership on EDS’s part and from a lack of commitment on the Navy’s part, which led to delays and misunderstandings, he said

The extension seems to indicate the measures Jordan has taken to fix NMCI’s problems have been effective. Right now, NMCI operates a secure, private network serving more than 500,000 sailors and marines globally, EDS and the Navy said Friday.