Alaska kills $100M voice and data contract

Alaska’s state government this week said it has terminated a US$100 million voice and data communications contract with Alaska Communications Systems Group Inc. (ACS), citing delays in an installation of voice-over-IP phones.

The five-year contract with Anchorage-based ACS called for 20,000 VoIP phones to be in place by last April, but only 239 had been installed as of last week, according to a statement from Gov. Frank Murkowski’s office. The deal, which was signed in December 2001 by the previous gubernatorial administration, also included outsourcing of the state’s voice and data network management functions to ACS.

In response to the termination notice, ACS said in a statement that the state had failed to meet its obligations under the agreement, “making it impossible for ACS to meet all of its performance objectives.”

State officials didn’t deliver an accurate inventory of existing communications services and equipment and didn’t work with ACS to develop a detailed transformation plan, the company claimed.

ACS CEO Chuck Robinson said in the statement that the company had invested more than US$20 million in the project “and has consistently accommodated the state even beyond the scope of the original agreement” by adding things such as more satellite phones and expanded Internet connectivity. He added that ACS will attempt to recover its costs from the state.

“We don’t agree with what ACS says went wrong, but we’re not getting into a shouting match,” said Ray Matiashowski, Alaska’s deputy commissioner of administration. There were “a lot of different issues involved” in the state’s decision to cancel the contract, Matiashowski said.

For example, the VoIP system, based on phones made by Cisco Systems Inc., “never did reach service-level acceptance” because of jitter problems that affected the sound quality, he said.

Matiashowski couldn’t pinpoint the cause of the problems. But he pointed out that the state’s network, which connects about 400 offices, is complex and stretches across a vast area with many high mountains.

Alaska officials still have a high degree of confidence in VoIP, Matiashowski added. “VoIP is good technology, and these kinds of technologies are worth pursuing, although they are complex and hard,” he said.

Sound quality was a problem with VoIP phones three years ago, but the issues have since been resolved, said Alex Hadden-Boyd, senior manager of voice marketing at Cisco. Hadden-Boyd said jitter is “never” a problem with the phones themselves, but instead usually involves line connections.

Cisco has already been invited by the Alaskan government to rebid the VoIP portion of the contract with another implementation partner in the future, she added.

The various functions that ACS was supposed to handle will be transferred back to the state’s IT group while government officials assess what needs to be done to prepare for a new bidding process, Matiashowski said.

However, he added that ACS will continue to provide some voice and data services until it is officially disentangled from the contract.

Matiashowski said the collapse of the communications pact with ACS has taught him and other state officials that they need “to pay more attention to how the contract is worded so we have a clearer understanding of expectations. We’ll take the lessons learned and move on.”