Federal Computer Week and other sources are reporting that EDS Corporation is planning to roll out "enterprise-based" cellular phone service as part of the NMCI contract. The contract would be managed by FISC San Diego. The move is expected to go forward by the end of 2004.
NMCI officials are touting the move as a cost savings measure, claiming savings can be realized by economies of scale. EDS is saying this would provide the DoN with a contract vehicle to negotiate for the best deal possible on cellular voice service and mobile data for Research In Motion BlackBerry devices.
Once again we hear the famous "economies of scale" argument -- the ultimate in sophomoric, restaurant and hotel management double-speak -- and as usual we hear it with no data to back up the claims. It seems that this tactic works consistently because nobody actually bothers to do postmortem analysis of these claims to see if they ever hold true. Hence the reason we have the NMCI debacle in the first place, now crawling out from a $2 Billion-plus overage.
It is unclear what advantage there is to adding EDS and NMCI into the process of obtaining cellular provider contracts. The economies of scale argument has merit (e.g. pooling of minutes, large user-base contract breaks, etc.) but these advantages are independent of the profit-skimming, middle man aspect of NMCI. Navy and Marine Corps facilities already have enterprise-wide contracts with the likes of AT&T Wireless, Nextel and others. The Navy is free to contractually pool these users between bases and commands already, as they always were, without the "help" of NMCI. Large corporations like Motorola and Ford manage to negotiate cellular contracts every day without the help of NMCI.
What infrastructure does EDS and NMCI bring to the party? How many cellular towers and backhaul circuits do they have to support cellular users?
If NMCI chooses to flex its muscle and interpret the contract as an enabler for this type of service, that's fine. If they would like to interpret the contract even more liberally and deem themselves as the required source for this type of service, that's fine. But don't blow smoke up our legs and tell us we are going to save money by outsourcing this. We've heard that somewhere before.
