Navy, AF May Be Buying 36,000 Obsolete Computers
The Navy and Air Force have contracted to buy up to $100-million worth of 1981-vintage personal computers in a deal that appears, according to market analysts, to lock them into either technological obsolescence or a losing proposition.
The contract was awarded May 1 to Federal Data Corp. of Chevy Chase, Md., which outbid five competitors by offering to sell IBM-compatible portable computers at steadily dropping prices that will hit bargain-basement rates at the end of three years.
The services can buy up to 1,000 computers a month at any point, causing contract officers to expect a big purchase as the end of the agreement nears.
But computer marketing analysts say the services will be forced by the pressures of technological change to concentrate their purchases in the early period of the contract, when Federal Data’s prices are higher than those quoted by other bidders.
Waiting for prices to drop in 1987 and 1988 would mean buying computers that are already at the end of their life cycle, experts say.
“Nobody will want that computer in three years,” said David Wilson, senior analyst at Future Computing Inc., a research and consulting firm based in Dallas. “With the technology advancing so rapidly, two years is a long time in this industry. A year or 18 months is the longest contract I’d get into for microcomputers.”
Another industry analyst said the Navy is “buying microcomputers the way it buys ships, which don’t change significantly in the short run.”
Wilson said Federal Data outbid its competitors by offering rock-bottom prices in the last 18 months of the contract, knowing it would sell most of the computers at the start, when prices were higher.
Capt. Ray Chalupsky, commanding officer of the Navy’s Automation Data Processing Selection Office, which negotiated the contract for both services, said there is no obligation to buy computers in the early, more expensive phase.
“It would be advantageous for us to get them in the third year,” Chalupsky said. “We’re not looking for scientific computers that can crunch numbers in a laboratory. We had a low-price shoot-out and Federal Data won with the lowest bid.”
When asked if the computer would be bought if it becomes obsolete, he replied: “I have absolutely no idea. I don’t state the requirements.”
The Navy solicited bids in February for a maximum of 36,000 portable computers to be bought over three years. Federal Data won, offering to sell the Chameleon XL computer, software and spare parts and to provide maintenance at the rate of $23.6 million per 10,000 machines.
The prices start at $1,435 per computer in the first six months and drop to $450 in the last six months.
Wilson said the $450 should have “raised a warning flag” to contract officers. The price is “unrealistically low” even for 1988, he said.
Federal Data President Dan Young said he believes the $450 will reflect lower manufacturing costs by 1988. He said he knows of no technological advance in the portable computer industry that will soon overtake the Chameleon XL--a point disputed by independent marketing analysts and computer salesmen who say a lighter, faster machine is on its way.
“I’d give the Navy 18 months before it looks for another machine,” an executive of a competing computer firm said.
