News release

HP to Supply Compaq Evo Desktop and Notebook PCs to IRS in Contract Valued at More Than $100 Million

HP (NYSE:HPQ) today announced it potentially will sell more than $100 million worth of Compaq Evo desktop and notebook PCs to the United States Internal Revenue Service, a branch of the Department of Treasury, under the terms of a three-year agreement. The announcement comes less than four months after HP and PlanetGov Inc., the prime contractor based out of Chantilly, Va., announced a separate delivery order with the IRS to provide $35 million worth of HP systems.

"No one understands the complex technology challenges facing an agency of the magnitude and importance of the IRS better than HP," said Jim Milton, senior vice president, HP Enterprise Systems Group, and managing director, HP Americas. "HP's industry-leading technology and services -- combined with our intense focus on putting the customer first -- gives HP an edge in the public sector market."

Milton noted that the public sector market, as a result of double-digit growth in key segments, has become HP's largest single vertical industry.

Under the terms of the new three-year agreement, it is anticipated that HP annually will supply the IRS with more than 30,000 Compaq Evo desktop and notebook PCs and monitors.

The HP and PlanetGov team was selected following the FAR Part 8.4 process that involved other vendor teams that included some of the largest PC suppliers in the world.

As on its earlier contract with the IRS, HP is working with PlanetGov, an information technology systems integrator and professional services company that assists primarily federal government customers in leveraging the power of the Internet and other advanced technologies to improve productivity. PlanetGov is a privately held corporation with annual revenues approaching $300 million.

"PlanetGov recognizes the technical strength and product depth of HP, and was proud of the partnership that our two companies were able to forge to deliver the initial $35 million in desktops and notebooks to IRS," said Steve Baldwin, chief executive officer, PlanetGov. "HP assisted us in meeting the requirements of the IRS under that initial order and we look forward to continuing our relationship with HP under this new agreement and in the federal government marketplace as a whole."

The IRS projects there will be 232 million tax returns filed in 2002, with that number increasing 1.5 percent annually through 2008. By far the largest component of that total is individual tax returns, which are filed either as paper or electronic documents.

About HP

HP is a leading global provider of products, technologies, solutions and services to consumers and businesses. The company's offerings span IT infrastructure, personal computing and access devices, global services and imaging and printing. HP completed its merger transaction involving Compaq Computer Corporation on May 3, 2002. More information about HP is available at http://www.hp.com.