The Defense Information Systems Agency (DISA) has awarded Vion Corp. a $700 million contract to provide "on demand" storage at 17 data centers in the United States and one in Germany.

This is the second major contract DISA has awarded in its shift to utility based computing services infrastructure. Last fall the agency awarded contracts to four vendors, including Vion, to provide it with server capacity at its 18 data centers.

Doug Moore, executive vice president of Vion, said the DISA Enterprise Storage Services contract is the largest contract that Vion, a small veteran owned business, has ever won. Industry sources said that EMC and Hewlett-Packard also bid on the DISA storage contract. Spokesman for both companies did not return calls for comment by deadline.

DISA said in its statement of work that it intends to use the enterprise storage contract to provide a reliable, responsive, and cost effective information storage infrastructure of "on-demand" enterprise services.

The agency said it plans to use the contract to provide a "dynamically scalable storage capability," one that can be readily adjusted for changes in processing and throughput requirements. The agency will pay on an "as used" utility basis.

Storage capacity provided by Vion must support a wide range of computing environments and operating systems, including HP-UX, Sun Solaris, IBM AIX, Windows, Red Hat Linux, SUSE Linux, IBM z/OS, IBM z/VM and ESX Server. The contract also requires Vion to ensure 99.999 percent availability.

Moore said Vion has been providing computing service to DISA on a utility basis at five data centers under a $25 million contract awarded nearly four years ago.

In a related development, Iron Mountain said DISA had awarded it a contract for offsite tape-vaulting services at 19 DISA locations. The company did not disclose the value of the contract.