Defense spends $150 million on compute upgrades – Strategy – Hardware – Security


The Department of Defense will pay Leidos more than $150 million over the next two and a half years to upgrade legacy platforms and other technologies in its data center environment.

The department has awarded the IT services company a handful of new contracts related to its longstanding “centralized processing” project since the start of the year, bringing total costs to more than $1.8 billion.

Leidos (and Lockheed Martin before it) has held the framework contract since 2014, when it won IBM to secure what was then an $800 million deal to reduce the Defense data center footprint by 280 computer rooms at 11 local and three international facilities.

The effort was aimed at reducing costs and simplifying Defense’s massive IT environment, while improving system responsiveness and flexibility, disaster recovery and business continuity.

While the transformation component of the project reached final operational capacity at the end of 2017, the company continues to take care of the usual management of the 14 data centers.

The biggest of the new contracts – Leidos’ biggest with Defense since 2016 – is worth $102 million between January 2022 and June 2024.

A defense spokesman said iTnews the contract will provide “project services to upgrade legacy centralized processing platforms and technologies and improve user experience.”

Another project services deal, worth $49 million over a similar period, will also see Leidos “enhancing user experience on legacy Defense centralized processing platforms.”

Both contracts were drawn up under the framework contract, which is due to expire in September.

Defense said the new contracts “do not extend the centralized processing services contract with Leidos.”

“The Project Services Agreements established under the Centralized Processing Services Agreement are stand-alone agreements,” the spokesperson said.

“As a result, Project Services contracts may last beyond the initial Centralized Processing Services term of September 2022.”

Leidos also received a number of other contracts related to the centralized processing project worth $32.7 million, bringing the total contract value this year to $185.1 million.

The project exceeds $1.8 billion

While Defense puts the total cost of the project to date at $1.1 billion over eight years, publicly available contract information shows the actual value is about $700 million higher.

According to iTnews’ analysis of data from AusTender, contracts between Defense and Leidos for the project are now valued at $1.81 billion, although it is unclear how much of this goes to contractors.

In 2018, the value of the contracts was $1.58 million, double the value of the contract when it was signed in 2014.

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