HP Holds Navy Network 'Hostage' for $3.3 Billion

HP Holds Navy Network 'Hostage' for $3.3 Billion
HP Holds Navy Network 'Hostage' for $3.3 Billion

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By Noah Shachtman 
Danger Room
August 31, 2010

Someday, somehow, the U.S. Navy would like to run its networks -- maybe 
even own its computers again. After 10 years and nearly $10 billion, 
many sailors are tired of leasing their PCs, and relying on a private 
contractor to operate most of their data systems. Troops are sick of 
getting stuck with inboxes that hold 150 times less than a Gmail 
account, and local networks that go down for days while Microsoft Office 
2007 gets installed ... in 2010. But the Navy just can=E2=80=99t quit its 
tangled relationship with Hewlett-Packard. The admirals and the firm 
recently signed another $3.3 billion no-bid contract that begins Oct. 
1st. It's a final, five-year deal, both sides promise, to let the Navy 
gently wean itself from its reliance on HP. But that=E2=80=99s what they said 
the last time, and the time before that.

It's become a Washington clich=C3=A9 that the military and the intelligence 
community rely too much on outside contractors. Everyone from President 
Obama to Defense Secretary Robert Gates has promised to cut back on 
Pentagon outsourcing. But the Navy's ongoing inability to separate 
itself from Hewlett-Packard -- after years of trying -- shows how 
difficult that withdrawal is going to be.

Just to make sure its core networks keep running -- to make sure marines 
and sailors can keep e-mailing each other on Oct. 1st -- the Navy is 
paying Hewlett Packard $1.788 billion. (Booz Allen Hamilton, another 
outside contractor, handled the negotiations with Hewlett-Packard for 
the military.) The service will spend another $1.6 billion to buy from 
HP the equipment troops have worked on for years, and to license the 
network diagrams and configuration documents, so that the Navy can begin 
to plan for a future in which they're not utterly reliant on HP for 
their most basic communications. In essence, the Navy is paying to look 
at the blueprints to the network it has been using for a decade.

"HP is holding the Navy hostage, and there isn't a peep about it," one 
Department of the Navy civilian tells Danger Room. "We basically had two 
recourses: pay, or send in the Marines."


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