State of Hawaii Renews Application Management Agreement with NaviSite

Business Wire, Oct 27, 2004

ANDOVER, Mass. -- NaviSite to provide Application Management and Professional Services to State Department of Labor and Industrial Relations

NaviSite, Inc. (NASDAQ SC: NAVI), a leading provider of application services, announced today that the State of Hawaii Department of Labor and Industrial Relations has renewed its agreement with NaviSite whereby NaviSite will provide application management and professional services to the State's Department of Labor for its custom work-force management application.

Under the terms of the agreement, NaviSite will continue to oversee Hawaii's use of AOSOS (America's One Stop Operating System), a unique application designed by NaviSite (through its acquisition of ClearBlue Technologies Management, Inc. which had acquired AppliedTheory) to help state and local workforce agencies meet the requirements of the evolving Workforce Investment Act of 1998 (WIA). AOSOS is a single application that seamlessly blends state and local programs and delivers federally mandated performance results and reporting while providing services to individuals, employers, workforce and training service providers and staff via the Internet.

The State of Hawaii, with the full cooperation of Department of Labor and Industrial Relations, originally enlisted NaviSite's expertise to help with its AOSOS implementation and management in 2001. Since that time NaviSite has overseen the management of this hosted application which resides in the State's data center in Honolulu and provides one-stop workforce services, including job searching and resume matching, for up to 48,000 individuals.

"We are both very pleased and honored to be chosen to continue the work we have begun with the State of Hawaii. It indicates the joint success of our efforts to this point in helping to implement and manage the AOSOS application," said Denis Martin, CTO for NaviSite.

About America's One Stop Operating System (AOSOS)

In 1999, the professional services organization of AppliedTheory (now owned by NaviSite) developed AOSOS under contract to the New York State Department of Labor to meet emerging requirements stemming from the Workforce Investment Act of 1998. The AOSOS software is currently available free of charge through The AOSOS Consortium to other states wishing to take advantage of its comprehensive, "one-stop" features.

About NaviSite

NaviSite is a leading provider of outsourced hosting and managed application services for middle-market organizations, which include mid-sized companies, divisions of large multi-national companies, and government agencies.

This release contains forward-looking statements that address a variety of subjects, including the success and performance of NaviSite's service offerings. All statements other than statements of historical fact, including without limitation, those with respect to NaviSite's goals, plans and strategies set forth herein, are forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: NaviSite's success is dependent on its ability to achieve and maintain profitability; NaviSite's success is dependent upon its ability to integrate the companies and assets it recently acquired, including Surebridge; NaviSite's recent acquisitions may not produce expected cost savings, operational efficiencies or revenues; NaviSite's products, technologies and resources may not successfully interoperate with the technology, resources and/or applications of third parties; NaviSite's success, including its ability to decrease its cash burn rate, improve its cash position, and grow its business and revenues to reach profitability, depends on its ability to execute on its business strategy and the continued and increased demand for NaviSite's services and the Internet in general; NaviSite's business may be adversely affected by further slowdown in general economic conditions; the loss of customers due to the shutdown of their businesses; decreased or delayed purchase patterns of prospective or current customers or loss of current customers and market consolidation; the decreased renewal rate of our customers; increased competition and technological changes in the markets in which NaviSite competes; the effects of recent combinations involving affiliated entities of ClearBlue Technologies, Inc. and the effects of the recent acquisition of Surebridge; the effects of any future acquisitions of businesses or technologies; changes in the uses of the Internet; and possible failure of systems or internal infrastructure. For a detailed discussion of these and other cautionary statements, please refer to the filings made by NaviSite with the Securities and Exchange Commission, including the most recent Quarterly Report on Form 10-Q of NaviSite. We do not undertake any obligation to update forward-looking statements made by us.