HP's Good-News, Bad-News Day: New Contract with NIH, but 9,000 Layoffs Loom

The IT giant landed a 10-year multiple-award contract to supply various software and data center-related services for the National Institutes of Health, but must start layoffs.

Hewlett-Packard had two widely differing news stories on June 25 -- one good and one not-so-good.

The IT hardware, software and services giant announced that it has landed a 10-year Indefinite Delivery Indefinitely Quantity (IDIQ) contract to supply various software and data center-related services for the National Institutes of Health in Bethesda, Md. This is a project that will cap at $20 billion for all contract awardees over that span of time.

HP, the world's largest IT company by revenue, is expected to earn a substantial portion of that $20 billion.

Layoffs to Start Soon

On the other side of the news, it was revealed that HP will begin executing layoffs following its May 23 announcement that it will cut about 8 percent of its workforce by July 2014.

The layoffs are part of a companywide effort to save between $3 billion and $3.5 billion per year in operating expenses. HP actually announced its first round of layoffs last September in its webOS division.

The first one-third of the new job cuts -- 9,000 employees of the estimated 27,000, and all in the United States -- will receive their dreaded official notices in the next few weeks. Most of the jobs lost will be in the company's services division, which came to the company in the Electronic Data Systems acquisition in 2008.

HP bought EDS, founded in 1962 by H. Ross Perot, that year for $13.9 billion. HP also will be trimming about 8,000 jobs in the 27-country European Union.

The Palo Alto, Calif.-based conglomerate currently employs about 349,000 full-time staff members. HP's staff reduction is intended to preserve the long-term health of the company, CEO Meg Whitman has said.

More Detail on the NIH Contract

HP will provide IT services to the U.S. Department of Health and Human Services' National Institutes of Health Information Technology Acquisition and Assessment Center (NITAAC) to provide technology services to federal agencies under the Chief Information Officer -- Solutions and Partners 3 (CIO-SP3) contract.

Under the contract, HP and its team of small business partners can compete for individual task orders from federal agencies to address new and emerging IT requirements, including but not limited to data center consolidation, cloud computing, health IT, mobility and cyber-security.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...