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CSC snags big Navy services contract

Computer Sciences wins a U.S. Navy computer services contract worth approximately $500 million as the company prepares to make layoffs and report disappointing earnings.

Computer Sciences on Thursday won a U.S. Navy computer services contract worth approximately $500 million over a 15-year period, scoring the deal as the company prepares to make layoffs and report disappointing earnings.

El Segundo, Calif.-based CSC said it will be one of 21 companies working on the estimated $14.5 billion project to provide professional support services to the Navy's Naval Sea Systems Command (NAVSEA) and its affiliated offices.

CSC will provide engineering, program management, and financial management services to support NAVSEA through various phases of ship and weapon systems cycles including technology development, design, construction, production and maintenance. Work will be performed by CSC's Defense Group and involve about 250 employees working on the project in several U.S. locations.

The deal comes amid difficult times for the services behemoth. Just last month, CSC rocked Wall Street with sour news that fourth-quarter profits will fall sharply below analyst estimates. The company also intends to cut as many as 900 jobs in a restructuring plan meant to drive down costs.

Though CSC's profit warning shocked analysts, the company is not alone. Many of CSC's smaller counterparts in the Internet consulting niche have had it extremely rough in recent months. But CSC's own expected earnings shortfall indicated that larger players in the consulting sector are also feeling the heat. Old-line management consulting company PricewaterhouseCoopers said this week it would cut as many as 1,000 jobs in response to the dramatic slowdown in the demand for consulting services.

Under the NAVSEA deal, CSC, which has won a fair amount of computer services contracts in the government sector, said it is teaming with 33 small businesses to help support the project. The NAVSEA manages some 130 programs, which supports the Navy fleet, undersea and surface warfare centers, major shipbuilding locations, and headquarters.

CSC recently lost a high-profile bid for another large U.S. Navy contract against rival Electronic Data Systems. The big Navy deal, dubbed the NMCI project, was awarded to EDS last fall after a close race between several players including IBM Global Services and defense contractor General Dynamics.

With this latest deal, CSC said its goal is to help NAVSEA improve the efficiency of its management systems while cutting overall costs.