Feds get four bids for $20B telecom contract

Four major telecommunications companies have submitted initial bids for the U.S. government’s 10-year telecommunications services contract, known as Networx and potentially worth up to US$20 billion.

The Networx program is designed to provide legacy and leading-edge voice, data and video services to all U.S. government agencies.

The contract has two parts: Networx Universal, which covers 37 domestic and international telecommunications services; and Networx Enterprise, which is geared toward smaller carriers and designed to provide a core set of IP and wireless services in particular geographic regions.

The four lead bidders — MCI Inc., Sprint Nextel Corp., AT&T Corp. and Qwest Communications International Inc. — submitted proposals for the universal pact to the U.S. General Services Administration earlier this month. Each is also expected to offer proposals for the Networx enterprise work. Those bids are due Monday.

The GSA is expected to take up to a year to review the bids, and it could choose more than one winner, said Blake Williams, an agency spokesman.

“We have not determined the precise number of awards for Networx,” he said. “However, we anticipate two to three for the universal acquisition and around five for the enterprise acquisition.”

Although the Networx program is valued at as much as $20 billion, the government has so far committed to spend only $525 million on the universal contract and $50 million on the enterprise contract.

And because agencies aren’t required to use only Networx providers, losing bidders could still solicit business from individual agencies. The Networx program will replace a series of contracts known as FTS2001, which will expire in 2007. MCI and Sprint hold the main FTS2001 pacts.

Warren Suss, president of Suss Consulting Inc. in Jenkintown, Pa., said the GSA must make sure the winning bidders can deliver a broad range of services. “In the government arena, unlike in the commercial arena, a response that says ‘trust me’ won’t fly,” he said.

Possible Front-runners

Suss and Sean Buckley, an analyst at Washington-based Current Analysis Inc., both gave MCI and Sprint an edge in the bidding as incumbent suppliers, but agreed that there are no guarantees.

“MCI is the incumbent,” Suss said. “That’s their strength going into this. They offer agencies the lowest perceived risk in terms of transition issues.”

Buckley added that MCI has “served the government since the mid 1980s, so obviously they have that network reach across the world. But that doesn’t always mean it’s going to be a winner, either.”

Sprint not only holds part of the FTS2001 contract, but also part of its predecessor, FTS2000, Buckley noted. “Sprint also has a strong wireless play that MCI doesn’t have, and Sprint just bought Nextel,” he said.

Suss and Buckley also gave AT&T and Qwest a chance to win the Networx contract but said that each has more hurdles to overcome than MCI and Sprint do.

Both analysts added that they wouldn’t be surprised if the GSA does decide to choose more than one winning bidder.