Site icon IT World Canada

Major U.S. carriers bid on $20 billion federal deal

COMMENT ON THIS ARTICLE

Around the Washington D.C. Beltway, all eyes in the network industry are on a big prize: a 10 year, US$20 billion telecommunications services deal that the U.S. federal government is expected to award as early as next week.

Called Networx, the deal is the largest pending network buy in the world.

All the top-tier U.S. carriers — AT&T, Qwest, Sprint, Nextel and Verizon Business — are bidding on it.

Networx will provide domestic and international voice, data, video and wireless services to federal agencies for the next decade.

Officials at the General Services Administration (GSA) say they will award the biggest component of Networx — called Networx Universal — by the end of March.

Telecom industry executives and employees in the Washington, D.C. area are awaiting an announcement of the Networx Universal award, as are the CEOs of the carriers bidding on the deal.

“Networx affects a lot of companies around the Beltway and around the country,” says Don Herring, president of AT&T Government Solutions. “There’s starting to be more and more talk around town about when it’s going to be awarded. Everyone’s paying attention.”

“We’re all a little anxious, but it will be an important contract for us to win,” says Tony D’Agata, vice president of federal government operations at Sprint Nextel. “It’s been such a long ordeal. We’ve been working on this for two to three years. It’s all kind of a blur.”

Industry watchers say Networx is as significant to the telecom industry as a military fighter plane project is to the defense industry.

“For those vendors that have bid on Networx, the interest is very high,” says Ray Bjorklund, senior vice president with FedSources, a market research firm. “It takes millions of dollars, dozens and dozens of people, and lots of time to put in a bid. A major weapon system program like the Joint Strike Fighter is a good analogy for Networx.” Federal telecom managers also are awaiting word of the Networx Universal award. Many agencies including the Department of Homeland Security and the Department of the Treasury have delayed network upgrades until Networx is awarded.

“They want to see Networx happen because it will give them more diversity in the offerings,” Bjorklund says. With 50 telecom services offered on Networx, they’ll “be able to use one contract vehicle and get a turnkey solution.”

In the meantime, carriers and their teammates have hundreds of employees working on last-minute details of the Networx bids, which were more than 5,000-pages long and featured more than seven million individual prices.

Upon winning Networx Universal, carriers must demonstrate that their operational support systems comply with the federal government’s stringent requirements.

“We’ve got a lot of work to do internally,” D’Agata says. “We have to do preparation for user verification testing. We also want to make sure we have all the processes and procedures in place for transition [to the new contract.] We are not standing still.”

Networx has been in various stages of procurement for more than two years.

What makes up Networx

Networx is split into two parts: Networx Universal, which provides everything from legacy frame-relay and ATM services to cutting-edge VPNs and VoIP; and Networx Enterprise, which is focused on emerging IP and wireless services.

The four Networx Universal teams feature the biggest names in the network and IT services industries:

— AT&T’s team includes Northrop Grumman, Electronic Data Systems, SRA International, GTSI, Global Crossing, Cingular Wireless and Bechtel.

Qwest’s team includes Akamai Technologies, Bearing Point, Hawaiian Telecom Services, Lucent Technologies (now Alcatel-Lucent), Science Applications International and Wire One Communications.

— The Sprint/Nextel team features Lockheed Martin, Hughes Network Systems and InterCall.

— The Verizon Business team includes G2 Satellite Solutions, HP, WilTel Communications (now owned by Level 3 Communications), Verizon Wireless, Comtech Telecommunications and Proxim Wireless Networks.

Many of the Networx Universal teams include 30 or more small subcontractors. That’s why interest in Networx is so widespread. “We have 50 or so dedicated individuals on Networx that are Sprint employees, but we have so many partners and teammates that at any given time we have many more people working on certain aspects of the proposal either directly with us or in their own offices,” D’Agata says.

Herring says AT&T has 30 dedicated full-time staff on Networx but is tapping many people across the company to help on the bid.

“We’re calling on lots of resources within the company, including AT&T Labs, product development, customer care, billing and provisioning to makes sure we’re ready,” Herring says. “We’ve got hundreds of people in the back office working on aspects of Networx.”

GSA plans to make at least two Networx awards, but the conventional wisdom is that all four Networx bidders will receive awards. If that doesn’t happen, there could be protests, Bjorklund says.

“It will be a surprise for the industry if there are only two awards,” Bjorklund says. “There’s a feeling in the industry that if you put in a credible proposal, there is a reasonable likelihood that you will be selected.”

The GSA’s previous telecom contracts — FTS 2000 and FTS 2001 — had a significant impact on the top-tier carriers. FTS 2000 was awarded to AT&T and Sprint in 1988, and FTS 2001 was awarded to Sprint and MCI in 1998 and 1999.

When Sprint won the original FTS 2000 contract, it gave the upstart carrier much-needed credibility.

“We are the only ones that have been a provider for the last 18 years,” D’Agata says. “We really want to continue that relationship.”

In fact, Sprint Nextel CEO Gary Forsee was in charge of Sprint’s original FTS 2000 bid.

“Gary once had my particular job years ago,” D’Agata says. “He had left AT&T at the time to run Sprint’s federal government team. He’s certainly aware of the contract platform and its importance to our federal team.”

Meanwhile, the FTS 2001 contract and its steady, sizeable revenue helped MCI emerge from bankruptcy in 2004. MCI was purchased by Verizon Business in 2005. Networx also is significant for AT&T, which struggled in the federal market for several years after being shut out of FTS 2001.

Exit mobile version