Hewlett-Packard is coming off of a year with CEO scandal to snag one of the most lucrative contracts that can be gotten: a $2.5 billion contract to provide hardware, software, computer networks and everything that supports it all. The contract will cover the next ten years and wraps up a decent year for HP, which had 33.3 billion in fourth quarter net revenue, up $2.5 billion from the previous year's fourth quarter.
The NASA contracts HP will be taking over much of the existing work from Lockheed Martin. The new contract will combine some services that were patch worked across several earlier contracts that went throughout NASA.
The ten year contract has four base years and three option years for a potential total of ten years of service to reach the maximum of $2.5 billion.
According to NASA spokesman, Michael Sweigert in a Bloomberg interview, “It’s basically everything that’s plugged into the wall that’s IT,”
Lockheed is disappointed in losing the IT contracts, but still maintains a healthy set of contracts with NASA for the bulk of services. It is that IT has apparently been separated into a more distinct area and the contracts consolidated to one firm. This means that some personal computers, software, standardized software, peripherals and other technology will be under Hewlett-Packard's contract.
This is not HP's first giant contract with NASA. In 2007, HP was awarded a five year, $5.6 billion contract for an indefinite delivery indefinite quantity (IDIQ) contract that provided "desktops, workstations and blade PCs with Linux and Unix capabilities, servers and printers, among other offerings".
It may seem that all of this is just for NASA, but NASA serves the entire Federal Government with some IT services under the NASA Solutions for Enterprise-Wide Procurement (SEWP).
SEWP is a program developed by NASA to provide IT products for all Federal Agencies. Statutory authority allows SEWP contracts by the entire Federal Government with NASA's as an Executive Agent that is designated by the Office of Management and Budget. This is all under the Information Technology Management Reform Act of 1996.
SEWP has netted HP over $620 million for products between 1992 and 2007. The 2007-2012 SEWP contract was a continuation of the collaboration. The new contract will extend for the next ten years.
HP underwent a string of other wins that included an $800 million contract with the Air Force in August to provide desktops, laptops and other services. Wall Street Pit reported a five year contract between HP's German unit and E.ON’s IT GmbH for $1.4 billion.
With such a positive revenue stream and future, HP has helped to keep up with its strategy of giving integrated information technology products and services.