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HP Enterprise scores major win with $3.5bn Navy network contract

Channel to cash in as 35% of work gets outsourced

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Meg Whitman will crack one of her infrequent smiles on Friday with the news that HP Enterprise is facing a potential $3,454,735,513 payday after winning the contract to manage US Navy's networks for the next five years.

HP helping Navy admins control networks

In the Navy, you can hack the seven seas...

In the world of intranets, the Navy and Marine Corps has one of the biggest – 400,000 computers and 800,000 users across 2,500 locations ferrying high-value data to outposts across the world – and HP already has a 13-year history in helping manage the swabbies' systems. But the new deal is going to prove especially lucrative as the Navy switches to its Next Generation Enterprise Network (NGEN).

With NGEN, the Navy wants to shift from a monolithic model to one in which sections of the network can be transferred to more efficient systems such as cloud control for relevant units and localized providers managing specific support for certain geographical regions. New Joint Information Environment (JIE) security standards will also have to be built in.

The initial win for HP is a $321,689,010 deal to manage the transition to the new network architecture, but over the next five years the costs of setting up NGEN's hardware, software, and support networks will kick in and bring some serious money into HP's coffers. The Navy will own the final network, but it will be managed by HP, and a contractually mandated 35 per cent of the work will go to HP's small business partner network.

Whitman's warriors beat off stiff competition from CSC and Harris Corporation for the contract, which was the first for the navy that includes the right for the government to audit its contractors' books to make sure it's not getting gouged on margins. Bill Toti, VP of Navy and Marine accounts at HP, told The Register that the new terms are calculated to cut costs wherever possible.

"If you buy a Ford it's a commercial contract – you don't have the right to audit Ford's books to see how much they are paying for the parts used to build the car," he said. "With this contract, just as in our work with the UK military, the government can check what is being spent and how much it is getting charged."

With regards to its partner network, HP is working with Lockheed Martin, Northrop Grumman, IBM, and AT&T, but its smaller partner network will be seeing over a third of the cash from the deal. Toti said that while HP has enough SMB partners to handle the contracted-for work, it's keen to hear new ideas from channel businesses with something to offer.

Toti also said that HP would be looking to introduce more open source systems into the network, claiming HP is a leader in the field. The Navy is already looking at Linux for its drone fleet and Android for mobile spying, and the new network architecture could be an opportunity for a less commercial approach to coding.

"The NGEN contract represents the next phase of Navy Marine Corps Intranet (NMCI) services, providing continued IT operational support to our Sailors and Marines, and creates a path toward aligning with the DoD's JIE," said assistant secretary of the Navy for research, development and acquisition Sean Stackley in a typically jargon-ridden military statement.

"The NGEN acquisition approach will allow sustained competition and significant savings for the department," Stackley said. ®

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