Order Code RS20557
Updated May 30, 2006
CRS Report for Congress
Received through the CRS Web
Navy Network-Centric Warfare Concept:
Key Programs and Issues for Congress
Ronald O’Rourke
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Summary
Programs for implementing network-centric warfare (NCW) in the Navy include
the Cooperative Engagement Capability (CEC), the IT-21 program, and FORCEnet.
A related program is the Navy-Marine Corps Intranet (NMCI). Congress has expressed
concern for some of these programs, particularly NMCI. This report will be updated as
events warrant.
Network-Centric Warfare
Network-centric warfare (NCW), also known as network-centric operations (NCO),
is a key element of defense transformation. NCW focuses on using computers, high-
speed data links, and networking software to link military personnel, platforms, and
formations into highly integrated local and wide-area networks. Within these networks,
personnel share large amounts of information on a rapid and continuous basis. The
Department of Defense (DOD) believes NCW will dramatically improve combat
capability and efficiency.1
Examples of Navy NCW Programs
CEC. The Cooperative Engagement Capability (CEC) system links Navy ships and
aircraft operating in a particular area into a single, integrated air-defense network in which
radar data collected by each platform is transmitted on a real-time (i.e., instantaneous)
basis to the other units in the network. Units in the network share a common, composite,
real-time air-defense picture. CEC will permit a ship to shoot air-defense missiles at
incoming anti-ship missiles that the ship itself cannot see, using radar targeting data
gathered by other units in the network. It will also permit air-defense missiles fired by
1 For more on NCW, see CRS Report RL32411, Network Centric Warfare: Background and
Oversight Issues for Congress, by Clay Wilson. For more on defense transformation and naval
transformation, see CRS Report RL32238, Defense Transformation: Background and Oversight
Issues for Congress; and CRS Report RS20851, Naval Transformation: Background and Issues
for Congress, both by Ronald O’Rourke.
Congressional Research Service ˜ The Library of Congress

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one ship to be guided by other ships or aircraft. The Navy wants to install the system on
aircraft carriers, Aegis-equipped cruisers and destroyers, selected amphibious ships, and
E-2C Hawkeye carrier-based airborne early warning aircraft over the next several years.
The system has potential for being extended to include Army and Air Force systems.
Tests of CEC aboard Navy ships in 1998 revealed significant interoperability (i.e.,
compatibility) problems between CEC’s software and the software of the air-defense
systems on some ships. In response, the Navy undertook a major effort to identify,
understand, and fix the problems. The CEC system, with the new fixes, passed its
technical evaluation (TECHEVAL) testing in February and March 2001 and final
operational evaluation (OPEVAL) testing in April and May 2001.
Raytheon has been the primary CEC contractor but in 2002 faced potential
competition from two firms — Lockheed and a small firm called Solipsys — for
developing the next version of CEC, called CEC Block II. Solipsys had devised an
alternative technical approach to CEC, called the Tactical Component Network (TCN).
Solipsys entered into a teaming arrangement with Lockheed to offer TCN to the Navy as
the technical approach for Block II. In late-December 2002, Raytheon announced that it
had agreed to purchase Solipsys. In early-February 2003, Raytheon and Lockheed
announced that they had formed a team to compete for the development of Block II.
Some observers expressed concern that these developments would reduce the Navy’s
ability to use competition in its acquisition strategy for Block II. As an apparent means
of preserving competition, the Navy in mid-2003 announced that it would incorporate
open-architecture standards into Block II divide the Block II development effort into a
series of smaller contracts for which various firms might be able to submit bids. In
December 2003, however, the Navy canceled plans for developing Block II in favor of a
new plan for developing a joint-service successor to Block I.
The conference report (H.Rept. 108-283, page 290) on the FY2004 defense
appropriations act (H.R. 2658/P.L. 108-87) directed the Navy to keep the Appropriations
committees informed on potential changes to the CEC Block II acquisition strategy and
stated that, if the Navy adopts a new acquisition strategy, “the additional funds provided
in this act for CEC Block 2 may be merged with and be available for purposes similar to
the purposes for which appropriated.”
The House and Senate Armed Services Committees, in their reports (H.Rept. 109-89,
page 178, and S.Rept. 109-69, pages 108-109, respectively) on the FY2006 defense
authorization bill (H.R. 1815/S. 1042), expressed satisfaction with the Navy’s efforts to
improve interoperability between the CEC system and other combat direction systems and
ended a requirement established in the conference report (H.Rept. 105-736) on the
FY1999 defense authorization act (P.L. 105-261) for the Navy to report to Congress on
these efforts on a quarterly basis.
IT-21. IT-21, which stands for Information Technology for the 21st Century, is the
Navy’s investment strategy for procuring the desktop computers, data links, and
networking software needed to establish an intranet for transmitting tactical and
administrative data within and between Navy ships. The IT-21 network uses commercial,
off-the-shelf (COTS) desktop computers and networking software that provide a
multimedia (text, data, graphics, images, voice, and video) organizational intranet similar
to the Capitol Hill intranet or corporate intranets. The Navy believes IT-21 will

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significantly improve U.S. naval warfighting capability and achieve substantial cost
reductions by significantly reducing the time and number of people required to carry out
various tactical and administrative functions. FY2007 funding requested for IT-21 is
intended “to provide Integrated Shipboard Network Systems (Increment 1) procurement
and installation to achieve a Full Operational Capability (FOC) for all platforms by
FY2011.”2
FORCEnet. FORCEnet is the Navy’s overall approach for linking various
networks that contribute to naval NCW into a single capstone information network for
U.S. naval forces. The Navy has highlighted FORCEnet as being at the center of its Sea
Power 21 transformation vision. Some observers have criticized FORCEnet for being
insufficiently defined.3 The Naval Network Warfare Command issued a functional
concept document for FORCEnet in February 2005, but Navy officials acknowledged at
the time that the concept was not yet adequately defined and stated that an improved
version of the document would be published in 2006.4
The conference report (H.Rept. 107-732) on the FY2003 defense appropriations bill
(H.R. 5010/P.L. 107-248) expressed concern about “the lack of specificity and
documentation on the program,” and directed the Navy to submit a detailed report on it
by May 1, 2003 (page 279). The Senate Appropriations Committee, in its report (S.Rept.
108-87, page 156) on the FY2004 defense appropriations bill (S. 1382), expressed support
for the FORCEnet program but also said it “is concerned that no requirements have been
approved or implemented and that there is duplication of effort, especially in the areas of
experimentation and demonstrations. The Committee directs that the FORCEnet program
establish these requirements, test them within the Navy Warfighting Experimentations
and Demonstrations line (PE0603758N), and release the approved requirements changes
as quickly as possible.”
NMCI.5 Although not an NCW system itself, a significant program related to NCW
is the Navy-Marine Corps Intranet (NMCI), which is a corporate-style intranet linking
more than 300 Navy and Marine Corps shore installations. NMCI is to include a total
344,000 computer work stations, or “seats.” As of January 2006, the Navy had ordered
341,000 seats and fully implemented about 264,000. The Navy plans to achieve steady-
state operation of all NMCI seats during FY2007. In October 2000, the Navy awarded
an industry team led by Electronic Data Systems (EDS) Corporation an $6.9-billion,
five-year contract for installing, supporting, and periodically upgrading the NMCI. In
October 2002, Congress, through P.L. 107-254, authorized a two-year extension to this
contract, which is now worth $8.9 billion. The Navy’s FY2007 budget requests $1,681.5
million for the program.
2 U.S. Department of the Navy, Highlights of the Department of the Navy FY 2007 Budget, p. 5-
10 (i.e., Section 5, page 10).
3 See, for example, Malina Brown, “Van Riper: Navy’s ForceNet Too Broad, Mysterious To Be
Meaningful,” Inside the Navy, Apr. 7, 2003. See also Malina Brown, “Mullen Acknowledges
ForceNet Concept Not Clearly Understood,” Inside the Navy, July 5, 2004.
4 Jason Ma, “Naval Network Warfare Command Issues FORCEnet Concept Document,” Inside
the Navy, Feb. 14, 2005.
5 The Navy’s site on the Internet for NMCI information is: [http://www.nmci.navy.mil/].

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The NMCI implementation effort has experienced a number of challenges and
delays. A 2005 report from DOD’s weapons-testing office identifies problems found with
the program in 2003.6 On September 30, 2004, the Navy and EDS restructured the terms
of the NMCI contract to consolidate the number of performance measures and focus on
measuring results rather than implementation steps.7 User reaction to the system
reportedly has been mixed but is gradually improving.8
The 106th Congress expressed concern over the difficulty of identifying the total cost
of the NMCI effort in Navy budget documents, the Navy’s ability to finance NMCI effort
without disrupting other important Navy programs, the pace at which the Navy planned
to implement NMCI, the Navy’s ability to properly structure and manage the huge NMCI
contract (the largest networking-services IT contract undertaken by a federal agency), the
potential impact of NMCI implementation on employees of existing naval networking and
telecommunications systems, and whether the network should be extended to cover
installations in the Marine Corps, which already had its own service-wide network.
In response, the Navy took actions to improve the visibility of NMCI costs in its
budget, stated that the NMCI would be financed to a large degree using funds
programmed for older IT procurement programs that the NMCI will supercede, stated that
implementing NMCI would have only a small net employment impact, and argued that
implementing NMCI in the Marine Corps as well as the Navy would result in greater
efficiencies and lower overall costs for the two services. At Congress’s direction, the plan
for implementing NMCI was restructured to begin with a smaller number of initial
installations, so that the success of the NMCI effort could be more carefully assessed
before the program was expanded to cover larger parts of the Navy and the Marine Corps.
The 107th Congress expressed substantial concerns regarding the implementation and
testing of the NMCI system. Section 362 of the conference report (H.Rept. 107-333 of
December 12, 2001) on the FY2002 defense authorization act (S. 1438/P.L. 107-107)
permitted the Navy to proceed with the NMCI project only after meeting certain testing
requirements. The provision also required the Navy to submit a report on the status of
NMCI testing and the implementation of the NMCI network, and to identify a single
individual whose sole responsibility will be to direct and oversee the NMCI program.
(The Navy in February 2002 announced that it had created a single program office to
manage the NMCI program, headed by an admiral. An NMCI senior executive council
headed by the Navy’s acquisition executive will provide senior-level review of the
program office.) The provision required GAO to study the impact of NMCI
implementation on the rate structure of naval shipyards and other repair depots. (GAO
6 Jason Ma, “DOT&E Report Identifies NMCI Problem Areas Found During 2003 Test,” Inside
the Navy, Feb. 7, 2005.
7 David McGlinchey, “Navy Says New Technology Contract Yields Rewards,” GovExec.com,
Nov. 3, 2004; John T. Bennett, “Godwin: NMCI Contract Changes Should Remedy Schedule
Delays,” Inside the Navy, Oct. 4, 2004; David McGlinchey, “Navy Streamlines Its Intranet
Contract,” GovExec.com, Oct. 6, 2004; Crayton Harrison, “EDS, Navy Agree,” Dallas Morning
News,” Oct. 2, 2004.
8 Jason Ma, “NMCI Customer Satisfaction Inches Up 2 More Percentage Points,” Inside the
Navy, August 8, 2005; Jason Ma, “NMCI Satisfaction Stays Flat, But Navy Touts Increase Of 2
Percent,” Inside the Navy, May 9, 2005.

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submitted its report [GAO-03-33] on October 31, 2002.) The conference report also
expressed concern about delays in implementing the program and the resulting shortage
of data about the viability and performance of NMCI. (See pages 55-57 and 641-642.)
The House Appropriations Committee, in its report (H.Rept. 107-532) on the
FY2003 defense appropriation bill (H.R. 5010/P.L. 107-248), commented extensively on
the NMCI program, expressing concerns over the incorporation of “legacy” computer
programs into the network and the adequacy of the testing program. (pages 198-199) The
conference report on the bill (H.Rept. 107-732) expressed continuing concerns for the
NMCI program and included a provision (Section 8118) prohibiting the Navy from
ordering additional seats beyond the 160,000 already authorized until certain conditions
are met. (Pages 48, 106-107, and 329.)
In the 108th Congress, the conference report (H.Rept. 108-767, page 642) on the
FY2005 defense authorization act (H.R. 4200/P.L. 108-375) asked the Navy to accelerate
the transition of legacy applications and networks into the NMCI environment, and
directed the Navy to report on its efforts in this area.
Issues for Congress
Potential issues for Congress include the following:
! Is the Navy making sufficient progress in implementing and testing the
NMCI system?
! Does the Navy have a clear and adequate acquisition strategy for
developing a successor to CEC Block I?
! Is the FORCEnet concept adequately defined?
! Is the Navy taking sufficient actions for preventing, detecting, and
responding to attacks on NCW computer networks?
! Is the Navy taking sufficient steps to provide adequate satellite
bandwidth capacity to support NCW?
! Are Navy efforts to develop new tactics, doctrine, and organizations to
take full advantage of NCW sufficient?
! Has the Navy taken the concept of NCW adequately into account in
planning its future fleet architecture?9
! Are NATO and other allied navies investing sufficiently in NCW-
enabling technologies? If not, will the Navy’s implementation of NCW
hinder U.S.-allied naval interoperability?
Legislative Activity For FY2007
FY2007 Defense Authorization Bill (H.R. 5122/S. 2766). The House Armed
Services Committee, in its report (H.Rept. 109-452 of May 5, 2006) on H.R. 5122, states:
The committee supports the Navy Marine Corps Intranet (NMCI) and commends the
Secretary of the Navy for resolving the long standing contract dispute on the NMCI
9 For additional discussion of Navy force-structure planning, see CRS Report RL32665, Navy
Force Structure and Shipbuilding Plans: Background and Issues for Congress, by Ronald
O’Rourke.

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contract. The committee remains concerned, however, about the cost of the contract
and the enduring nature of legacy programs that a now mature NMCI was designed
to replace. For that reason, the committee cannot support the increased funding
contained in the budget request. Accordingly, the committee recommends $240.5
million in servicewide communications for NMCI, a decrease of $70.0 million. (Page
291)
The Senate Armed Services Committee, in its report (S.Rept. 109-254 of May 9,
2006) on S. 2766, states:
The budget request included $1,681.5 million for the Navy Marine Corps
Intranet (NMCI) program. Of these funds, the Navy requested $94.0 million for the
program management of the contract with Electronic Data Systems (EDS). The
requested amount for fiscal year 2007 is over three times the amount requested in
fiscal year 2004, and three times the amount budgeted for the future years of the
contract from 2008 through 2010. The Navy should better define its program
management roles, mission, and budget in future budget justification materials to the
Congress. The committee recommends a decrease of $30.0 million in Operation and
Maintenance, Navy, for the NMCI program office — to more closely align the 2007
funding level with future years plans.
The committee notes that the Navy recently had to reprogram $74.6 million to
settle numerous legal claims between EDS and the Federal Government. The
committee is concerned that the flawed development of the NMCI contract led to this
additional, unplanned cost. The committee notes that many organizations within the
Navy and the Office of the Secretary of Defense, including the Chief Information
Officers of both organizations and the Office of Program Analysis and Evaluation, did
not perform adequate oversight and analysis of the details of the contract and its
terms. The committee believes that the Department of Defense should examine the
development of this contract to derive lessons learned on structuring, managing, and
performing adequate oversight for similar information technology programs in the
future. Additionally, the NMCI program should remain on the “watch list” of major
automated information systems which the Department uses to monitor the progress
of such programs.
Despite past difficulties, the committee is encouraged by the recent negotiations
between the Navy and EDS. By exercising the 3 year option on the NMCI contract,
the Navy expects to realize lower costs per sailor and marine for information
technology services. Long-standing disputes surrounding the initial contract,
including fees and legacy systems migration, are being remedied.
However, the committee notes that entering the recent renewal negotiation, the
Navy was not in the best position to explore all possible options to acquire needed
information technology services. The committee has been assured that the modified
contract will enable the Navy to acquire the information technology services it
requires and be in a more flexible position to adjust how it acquires those services in
the future — should it be deemed necessary. With nearly $6.0 billion already spent,
and another $3.0 billion expected to be expended over the next 3 years, the Congress
will continue its close oversight of this program to ensure that sailors and marines
receive world-class information technology services. (Page 289-290)

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