Dell, MS big winners in EDS $9bn US Navy contract

EDS has clinched a contract worth up to $9 billion to supply the US Navy and Marine Corps with a single, seamless network. It's the biggest ever US government contract, but it only takes a quick look at EDS' major subcontractors for you to realise that the deal is a massive victory for the PC business - and therefore for Wintel - over big iron.

Microsoft, which already has the gig to supply the Navy with shipboard infrastructure, is on the list, as Redmond stalwart Dell. Networking gear comes from Cisco, the network itself from MCI Worldcom, and rather less famous WAM!NET seems to be contributing secure IP technology. Defence specialist Raytheon is the other named major subcontractor. Clearly, Microsoft, the PC and the Web have made the crucial breakthrough into large-scale government contracts, and they look poised, at last, to set the standards there.

The losers in the Navy contract were General Dynamics, IBM and Computer Sciences, and they've quite possibly lost a lot more than this one. The Navy's thinking was to have one single contractor responsible for computers, servers, networks, the whole shebang, and thus to achieve major economies of scale. EDS seems to have picked up the US Navy's curious mindset quite nicely here, pointing out that savings will be $1 billion, or "a battleship" a year. We know the US Navy still runs battleships*, but surely it's not going to build more? This is new - or rather, old.

The Navy contract is being seen as a pilot for the way the military as a whole will run its IT in the future, so provided EDS doesn't screw up, a very substantial door is going to start swinging open for the new boys. Microsoft, provided it doesn't screw up, is nicely positioned to spread its tentacles further; there's obvious synergy between this contract and its role in provision of the IT infrastructure for US Navy carriers. The latter has a longer lead time than the latest contract, however. The EDS systems are intended to be fully operational by June 2003, which means the PC business will rule the Navy a couple of years in advance of the Win2k carrier going down the slipway. ®

* Actually, it turns out it doesn't. A couple of readers have informed us that the Iowa, recommissioned by good old Ronnie in 1984 to shell the crap out of Beirut, was decommissioned again in 1990 following a powder explosion in 1989. As one reader pithily remarked: "Now, they were thinking about building an 'Arsenal Ship', which was nothing more than a big ocean-going barge crammed full of cruise missiles and other goodies to provide that 'gotta make lots of stuff blow up' capability, but that got canceled when it was realized that indeed, the Cold War was over, and we have plenty other things we can fire cruise missiles from to punish Big Evil Men with."

So now we've even less idea what the guy from EDS was on about.

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