) Enterprise Services unit recently won a contract from the U.S.
Department of Navy. The contract named Next Generation Enterprise
Network (NGEN) is worth $3.45 billion and has five one-year
Per the contract, H-P will be responsible for providing a wide
range of information technology (IT) services and support to the
Navy's communications network that connects 8,00,000 users. To
complete the contract, H-P will get support from
) and Northrop Grumman Corp. The recent deal is basically an
extension of a contract initiated in the year 2000.
The U.S. Navy has always been active in providing secure network
access to its personnel. In a bid to provide secure network
communications, the U.S. Navy formed Navy Marine Corps Intranet
(NMCI) services, an IT outsourcing service program, in 2000. H-P
was one of the prime vendors for the Navy's networking services.
In order to bring in more government control over data-centric
network operations and ensure consistency and security of the
information services, the U.S. Navy is planning to transform the
NMCI platform to the NGEN platform. H-P would extend its services
to ensure that the transition is smooth.
However, despite having a close business tie with the Naval
agency, winning this deal was not easy for H-P. In a neck-to-neck
competition, H-P managed to defeat other bidders such Computer
Sciences Corp. and Harris Corp.
Though this appears to be a significant win, especially at a time
when H-P is looking to expand its margins, the financial impact
of the deal is likely to be far less than the deals signed in the
past. The contract has been agreed upon at a lower price mainly
due to stiff competition and federal budget cuts.
Currently, H-P has a Zacks Rank #3 (Hold).
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