The DOD purchases three to six systems in its each year. The machines are used for cryptology, missile defense, weather forecasting and many other uses. It buys from all the major systems vendors.

On April 1, SGI said it was being bought by Rackable Systems Inc. for $25 million. In hindsight, the DOD's decision -- made at the same time that unraveling -- seems puzzling.

But Cray Henry, director of the DOD's High-Performance Computing Modernization Program, said his department was aware that SGI's "financial situation was not as strong as we would have liked," Henry said. But they believed the company was still "financially responsive."

The Defense Department also had a history to work with. SGI "continued to do business with the federal government without incident" during its , Henry said.

The multi-year, $25-million contract with SGI was signed in January for six systems for a number of DOD computing centers. SGI was picked on the basis of an annual review that included a complete evaluation of the technology. "SGI offered the most compelling solution with the best usability, overall performance and price/performance," Henry said.