News release

Compaq Inks Deal with Social Security Administration to Provide Computers, Peripherals and Services

Compaq Computer Corporation (NYSE: CPQ) announced today that it will replace nearly one-third of the desktop computers used by the Social Security Administration (SSA) to manage benefits for approximately 45 million Americans.

The agreement, valued at more than $30 million, originally called for Compaq to provide 32,000 computers over the next five months. However, SSA has decided to exercise its option to award a follow-on Blanket Purchase Agreement (BPA) to Compaq and estimates purchases of an additional 10,000 computers, for a total of 42,000. This BPA extends SSA's purchasing period through April 15, 2002.

"Compaq's relationship with the Social Security Administration stretches back more than a quarter of a century, and we see this as a wonderful opportunity to show SSA how much Compaq can offer in terms of its innovative products, integrated into cost-effective enterprise-wide solutions, that can be delivered globally," said Ron Ross, president of Compaq Federal LLC. "There isn't another company with a product line as extensive as Compaq's that could provide this many computers, this quickly, to this many locations."

Over the next five months, Compaq will pre-configure Deskpro EN workstations with a special series of software from SSA and install these units with peripherals in 945 SSA and state Disability Determination Service (DDS) locations across the continental United States, as well as in Fairbanks, Alaska, the Virgin Islands, and Mayaquez, Puerto Rico.

"Fulfilling an order of this magnitude is like deploying an army," said Steve Vollintine, vice president of Compaq Client Services for Government and Education Markets. "This multi-vendor solution required Compaq to obtain specific products, configure everything to SSA requirements, and get these units packaged up and out the door. Yet in only two weeks Compaq was able to ramp up to an ambitious production and delivery schedule."

Installing thousands of computers per week is the responsibility of Compaq Global Services. Relying on their project management experience and established methodologies for delivering large-scale migrations, Compaq Global Services will install approximately 2,000 workstations per week across the United States. Working with the SSA team, Compaq Global Services will continue to provide site coordination, scheduling and product installation to ensure the successful completion of this phase of the project.

Compaq has been providing technology to the Social Security Administration for more than a dozen years. Its relationship with SSA began in the era of Digital Equipment Corp., which Compaq purchased in 1998.