HP Inks $440 Million Utility Computing Deals with U.S. Defense Department

Published: October 31, 2006

by Timothy Prickett Morgan

Hewlett-Packard has announced what could be the largest utility computing deals in this nascent part of the IT market. Last week, HP said that the U.S. Department of Defense's IT arm, the Defense Information Systems Agency (DISA), has signed two contracts worth a combined $440 million over an eight-year period.

In the inexplicable language of the government and the military, these contracts are called "indefinite delivery indefinite quantity," or IDIQ, contracts. This is the way the U.S. government copes with services contracts that have imprecise terms because they cannot account for all future conditions. The contracts are set for an initial five-year term, with three one-year extensions to get to the full eight years.

DISA plans to use utility computing services in 17 locations worldwide, and will deploy HP's X64-based ProLiant and Itanium-based Integrity servers under the utility computing contracts. The first contract from DISA is for the deployment of HP-UX on an unspecified number of Integrity systems, and the deal is capped at $250 million. The other contract covers ProLiant systems, which will support a mix of Microsoft Windows, Red Hat Enterprise Linux, and Novell SUSE Linux Enterprise Server. This contract is capped at $190 million over eight years. HP Services will use a mix of technologies--including OpenView and System Insight Manager management tools, as well as various provisioning and utility computing tools--to create the infrastructure that DISA will employ. Rather than contract the systems out to HP facilities, DISA is extremely security-conscious and wants the utility computing infrastructure that HP builds and manages at its data centers.

In addition to supporting the IT needs of the Defense Department, DISA also manages the IT systems that support the President and Vice President of the United States.