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.
The DOD is now watching Rackable's acquisition bid closely. Both SGI and Rackable "tell us they are committed to maintaining the systems we purchased in prior years and are committed to delivering systems we ordered for delivery this year."
Delivery of its first system is due this month.
Rackable and SGI hope to close the by the end of May, if the deal meets court approval. A case has been filed in U.S. Bankruptcy Court in New York. "There will be significant uncertainty through May," Henry, said, while the companies and courts sort it out. "But to date the active participants have committed to support our needs and they are demonstrating that commitment through active and ongoing production and delivery of systems and services," he said.