THE NAVY-MARINE CORPS INTRANET, an internal Web site for the two service branches, was supposed to change all that. The network is to carry a broad range of information — things as sensitive as classified communication and as mundane as budget projections.
       But the $6.9 billion project has turned into a major technology headache for the services and the prime contractor on the job, Electronic Data Systems Corp. (EDS). The project is a year behind schedule, and some in Congress are concerned it won’t stay within its budget.
       It’s the largest federal information technology project ever attempted, and the pressure on the project’s managers is intense: Much of the military and intelligence establishment is closely watching the effort because of a Bush administration mandate to improve internal communications for homeland security.

And shadowing the whole project are the problems of two companies vital to its success: EDS and WorldCom Inc. EDS’s difficulties include an informal Securities and Exchange Commission inquiry and investors’ concerns after it warned that third-quarter earnings would be a mere 18 percent of the company’s previous estimate.
       “It has been very challenging, more than any of us really thought,” said Capt. Chris Christopher, deputy director for plans, policy and oversight of the Navy intranet project. “We’re fighting our way through this.”
       Among the problems, the Navy discovered that instead of tens of thousands of software applications, from a hodgepodge of e-mail programs to computer games, its systems actually housed a staggering 100,000. Hundreds of old applications can’t be moved to the new system, meaning that hundreds of workers still have two computers on their desks.
The intranet project is at the center of technology transformation spreading through the federal government and encouraged by President Bush’s proposed 8 percent increase in information technology spending. With pressure mounting for better communication within government agencies, many of them divided by geography and function, integrating disparate computer networks, software and technical capabilities has become a high priority. And despite its troubles, the administration considers the Navy intranet project a model, especially for the technology puzzle it faces in combining 21 agencies into the proposed Department of Homeland Security.

The proposed agency is likely to be one of the “largest technology overhauls in history,” Richard Clark, special adviser to President Bush for cyberspace security, said recently at the 2002 Pacific Crest Technology Forum. “The model that we’re looking at is the model of the Navy-Marine Corps [intranet].”
       The project’s problems are an expected byproduct of launching such an ambitious program, EDS and Navy officials said. “When you’re talking about a project this large you have to expect to have some of those [issues] from a start-up standpoint,” said Bill Richards, who heads the program for EDS. “You just have to work through it.”
       Before launching the project, Navy officials consulted the private sector, including senior executives at General Motors Corp. and Xerox Corp., which had gone through similar technology overhauls. “They all said it was painful and bloody and they don’t even have our size,” Christopher said.
       Much of the pain is borne by desk personnel who have to use the new system. “From an employee standpoint it has had a demoralizing effect because it’s making the job more difficult,” said Ken Polk, the Marine Corps representative to the Federal Managers Association, a nonprofit group representing professional federal employees.
       Polk, a security manager who has worked for the Marines for 16 years and eventually will be transferred to the new system, said he agrees that the Navy needs a better, more uniform way to communicate within the ranks. But, he said, “I would like to see the appropriate level of research done beforehand to make sure we are getting what we need.”
       
TECHNOLOGY GAP
       The new intranet was designed to address the Navy’s technology gap. For years, unit commanders have unilaterally made technology purchases, creating an information technology patchwork without communication. While some installations suffered through technology famine using black-and-white computer screens, typewriters and the earliest version of every software program, others had multiple terminals per officer with 20-inch screens — some even had CD burners.
       That also meant that when sailors wanted to send e-mail attachments to a Navy base across the country they sometimes found that their counterparts couldn’t open the Microsoft Word or Excel document.
       The new system was designed to change all that. For the first time, all Navy departments were to be on the same system using the same e-mail and financial management programs. Security was a top priority.
       But Congress has been skeptical about the cost benefit of the project ever since it was proposed. The Navy was originally set to announce the contract award in May 2000, but it was delayed four months after Congress raised objections. “The concerns were that we’re talking about a lot of money and institutional resistance” to change within the service, said Rep. Joel Hefley (R-Colo.), chairman of the House Armed Services Committee’s subcommittee on military readiness. Though a supporter of the project, Hefley worried that the time and money budgeted for the intranet could balloon.
       For now, the Navy is most concerned with the logistics of installing the new system. In addition to the 100,000 software applications it found on Navy computers — more than 10 times more than it wanted — the Navy discovered it housed a complicated mixture of applications, some illegal. On some computers, EDS found that Navy personnel were still working on WordStar, a decades-old word-processing program for which they no longer had the disk or license. Others were using DOS-based programs. But also cluttering the files were computer games like Doom and music-swapping Napster software.
       
HUNDREDS OF INCOMPATIBLE PROGRAMS
       The large number of old applications uncovered another set of problems: Some programs can’t be merged into the new system. They are either too antiquated to be compatible with the Microsoft Windows 2000 operating system or aren’t in compliance with security requirements.
       The incompatible applications — 862 in all — have been “quarantined” in separate terminals, meaning some employees have two computers — one handling the new system’s traffic and another with the old programs. The House Appropriations Committee report found that at one test center more than 50 percent of workstations require more than one computer.
       The problem is not that extensive, Navy officials contend. Of the 20 sites transferred to the new system so far, only five need two workstations for 20 percent of the workforce, and the number is much lower at the others, they said. Programs in quarantine will eventually be upgraded to meet security requirements or eliminated all together, Navy officials said.
       But continuing the rollout while such problems exist creates “the potential for this crisis to grow exponentially,” according to a June House Appropriations Committee report on the Defense Department budget.
       “It’s become apparent that a lot more testing needs to be done” before the intranet project is allowed to continue, said Rep. Jerry Lewis (R-Calif.), chairman of the House Appropriations Committee’s subcommittee on defense. “I haven’t been satisfied so far.”
       
WORRIES ABOUT WORLDCOM
       Costs also continue to be a concern. The General Accounting Office is scheduled to release a report this month on whether the complexity of the project will raise operational costs at shipyards. The Navy says it won’t. And a House Armed Services Committee report found that the $1.4 billion the Navy requested for the system next year doesn’t include several costs, including the expense of maintaining old systems and the classified network used by the Defense Department, which could add another $600 million.
       “Costs are a great concern in areas that we’re applying new technology,” Lewis said. “We must insist that any changes to the budget are reviewed carefully.”
       Then there is the WorldCom connection. The bankrupt telecommunications provider is slated to provide the new system’s Internet backbone. But its bankruptcy has raised questions about whether it will be able to fulfill its duties, congressional staffers said.
       For example, a sale of WorldCom could further delay the intranet project if the new owner doesn’t want to be in the defense business, Lewis said. “When you have a big piece of the pie in trouble, it just gums up a process that already has great difficulty,” he said.
       EDS and Navy officials dismiss such concerns. “EDS is closely monitoring the situation with WorldCom and will obtain alternative providers if necessary,” an EDS spokesman said.
       For Plano, Tex.-based EDS, which competed with General Dynamics Corp. and Computer Sciences Corp. for the contract, the Navy job represents a lone bright spot in an otherwise bleak IT market. The company’s shares have been battered by investors since it announced that earnings would fall well below previous expectations for the rest of the year. Then the Securities and Exchange Commission launched an informal inquiry.
       EDS says there are about 3,500 people working on the Navy intranet. Of those, 1,136 are EDS employees, and the rest work for one of the 303 subcontractors also involved in the project at naval facilities around the world.
       
MOVING FORWARD
       Deploying the equipment and manpower has been costly. After already investing $650 million to $800 million in the Navy intranet, it will take longer than expected for EDS to turn a profit, analysts said. Financially, it may only account for a small portion of EDS’s revenue, “but it is using a lot of capital, it’s costing the company a lot of money to get the contract up,” said Bill Loomis, an analyst with Legg Mason Inc.
       And given its financial position, reaching profitability is increasingly important, analysts said. “With the drain that [the project] has been, investors are looking for them to gain some momentum,” said Chris Penny, an analyst for Friedman, Billings, Ramsey & Co. The question is, “can they turn that thing profitable over the next two quarters.”
       EDS dismisses such concerns, noting that the contract model has always called for the firm to invest money upfront and make a profit later. The Navy has asked Congress to extend the contract from five to seven years, which would make up for delays and allow EDS to recoup its costs.
       EDS points out that the system passed a Defense Department test in May verifying that it was working properly. Earlier this month the firm announced it had linked two top Navy officials — Adm. Robert J. Natter and Vice Adm. Albert H. Konetzni Jr. — to the system as well as 522 computers used for classified operations.
       More important, the rollout is gaining momentum, company officials said. EDS tackled the most complex Navy sites first, but with less complex sites coming up it should be able to accelerate the rollout, said Kevin Clarke, a company spokesman. Navy officials said they will eventually be able to connect 10,000 computers a month to the intranet. “The NMCI program is steadily and successfully moving forward,” Clarke said.

MSNBC

-- Anonymous, October 18, 2002