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Electronic
Data Systems Wins Huge ($6.9B) U.S. Government Contract EDS Takes Over U.S. Navy EDS’ Navy Blue (Logo) Blends Well with U.S. Navy Blues
The latest EDS win won’t affect the company’s revenue significantly until the second half of next year. But when it does, “it’ll be a gusher,” according to Dick Brown, the EDS CEO, as quoted in a Wall Street Journal’s Oct. 9 report. And it will certainly help propel the EDS revenues back into the double-digit growth range. Naturally, Wall Street
applauded the big EDS win initially, but not Some $4.1 billion of the EDS Navy contract will come over a period of five years. The deal also includes an optional $2.8 billion three-year extension. EDS and its sub-contractors (Raytheon, WorldCom and WAM!NET) will install and upgrade the latest information technology solutions at Navy’s 300 onshore bases in the U.S. and around the world. The U.S. Navy Secretary Richard Danzig said the Navy expects to save about $200 million in annual IT costs as a result (from about $1.6 billion per year it is spending now, to about $1.4 billion). He likened the EDS outsourcing deal as to contracting for electricity. “Instead of owning the power plants and wires, the Navy will simply buy the service,” he said, according to the Journal article. Outsource
the U.S. Government? Three years ago, as EDS
was winning the British government outsourcing deals left, right and
center, we noted that the British government is practically outsourcing
itself to EDS. And we made a
tongue-in-cheek suggestion in a Nov. 6, 1997 letter to the New York Times.
Here's an excerpt (see Annex
Bulletin 99-01): "…So
why not take a cue from business, and outsource the whole darn federal
government? It's been done before, and successfully at that. EDS, for example, is practically running the British government. Much more efficiently than the civil servants did. And the business is booming. In the end, everybody wins: The taxpayers are happy because they save money. The EDS shareholders are happy because the company makes money. But
there would be a few unhappy losers, too - the crooked politicians and
some laid-off government bureaucrats. But then, they are losers even now
while in the federal government.” Well, after the huge latest EDS win, maybe our tongue-in-cheek remark is no longer as outlandish as it seemed three years ago. Maybe the U.S. Navy deal is just the first step in that direction? Wishful thinking, we know, especially with the big government-favoring Democrats in power. But keep dreaming, anyway… The Chinese Connection
So EDS may brace itself for some flak from the American public which may come along with the billions of dollars the company is about to receive from the Navy. Happy bargain hunting! Bob Djurdjevic NOTE: The print edition of this report, of course, contains additional charts and tables not included here. Can you afford not to know such things if you're a global competitor? To subscribe, just click on , or call us as (602) 824-8111. |
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Volume XVI, No. 2000-22 Editor: Bob Djurdjevic P.O. Box 97100, Phoenix, Arizona
85060-7100 |
PHOENIX,
Oct. 10
for long.
Speaking
of the Democrats and their Chinese connection, EDS may find itself having
to walk a political tightrope during the course of the Navy deal.