Four major telecommunications companies have submitted bids for the U.S. government"s 10-year, US$20 billion telecommunications services contract, known as Networx.
The Networx program is designed to provide legacy and leading-edge voice, data and video services to all U.S. government agencies.
The contract is broken down into two parts: the universal contract, which covers 37 domestic and international telecommunications services, ranging from older frame-relay and Asynchronous Transfer Mode systems to virtual private networks and voice over IP (VoIP) technology; and the enterprise contract, which is geared toward smaller carriers and includes a core set of IP and wireless services in particular geographic regions.
Bids for the universal portion of the Networx project were submitted to the U.S. General Services Administration last week. Bids for the Networx enterprise pact are due Oct. 24. Although the Networx program is valued at US$20 billion, the government has so far committed to spend only $525 million on the universal contract and $50 million on the enterprise contract.
Because agencies are not required to use only Networx providers, losing bidders could still solicit business from individual agencies.
The following companies bid on the universal contract:
-- MCI Inc. and its team, which includes Hewlett-Packard Co., Anteon, Computer Sciences Corp., G2 Satellite Solutions, TeleTech Government Solutions, WilTel Communications and Verizon Wireless.
-- Sprint Nextel Corp., which was joined its bid by Lockheed Martin Corp. and others.
-- AT&T Corp., which teamed up with Northrop Grumman Information Technology, Electronic Data Services Corp., GTSI Corp., SRA International Inc., Cingular Wireless LLC, and Global Crossing Ltd.
-- Qwest Communications International Inc., which partnered with Akamai Technologies Inc., BearingPoint Inc., BellSouth Corp., Hawaiian Telecom Services Co., Istonish Holding Co., Lucent Technologies Inc., Science Applications International Corp., and Wire One Communications.
All four of those bidders are also expected to offer proposals for the Networx enterprise work.
Networx will replace a series of contracts known as FTS2001 that will expire in 2007. MCI Inc. and Sprint now hold the main FTS2001 pacts, while Qwest, AT&T, SBC Communications Inc. and others hold what are referred to as crossover contracts that allow them to bid on federal network jobs.
The GSA is expected to take up to a year to review the bids, and the agency could choose more than one winner, according to GSA spokesman Blake Williams. "We have not determined the precise number of awards for Networx, however we anticipate two to three for the universal acquisition and around five for the enterprise acquisition," he said.
GSA officials have said that the winner or winners of the Networx contracts will be the companies that can provide a variety of high-quality services while guaranteeing low prices.
In telephone interviews with Computerworld, the carriers touted their qualifications.
"We"re the leading incumbent on the current FTS2001 contract," said Susan Zeleniak, vice president for civilian networks at MCI Government Markets. "We currently have more business on that contract than all the other bidders, and I think that says a lot about the quality of service, both from a customer service perspective and the technical services we provide."
That fact also says a lot about MCI"s ability to support large agencies" domestic and global requirements, Zeleniak said.
"We"re able to meet their end-to-end needs," she said. "The strategy we"re promoting with GSA is that we"re a services-based integrator. We are a provider generally of network services, and what we do is bring in partners and other capabilities to provide the customer with an integrated end-to-end solution."
Tony D"Agata, vice president of Sprint Nextel"s federal government operation, argued that his company brings a level of experience to the process that is unsurpassed by the other bidders. "We"ve been an incumbent provider for the longest period of time -- 16 years," he said.
D"Agata also said his company has the most reliable network in the country as measured by the Federal Communications Commission.
"We have had the fewest reportable outages over last nine years on our network, so the agencies that are concerned about network reliability choose Sprint," he said. "And we are able to couple wireless and wireline capabilities that no other company that"s bidding can provide, at least from a single provider."
D"Agata added that Sprint has the flexibility to adapt and modify its capabilities to meet the needs of its users.
What sets AT&T apart from other bidders is that it has the most secure network of any of the carriers and can provide customers with professional services in addition to the network, said Hank Beebe, chief engineer at AT&T Government Solutions and head of the team that prepared the company"s Networx bid.
"But maybe the thing that distinguishes us from, especially MCI and Sprint, is... we are probably the hungriest, since they were the two winners of the FTS2001 contracts," he said. "We got back in the market a little bit with the crossover contract, but it certainly isn"t on the broad scale that the other two are. As a consequence of that, we"re probably more eager, more willing to serve, not only the GSA but its customers -- the client agencies."
Qwest officials could not be reached for comment.
Warren Suss, president of Suss Consulting Inc. in Jenkintown, Pa., said the challenges for the GSA in evaluating and awarding the universal contract will be to ensure that the bidders can deliver on a broad range of services. "In the government arena, unlike private sector, a response that says "trust me" won"t fly," he said.
Sean Buckley, an analyst at Washington-based Currently Analysis Inc. agreed. "The biggest challenge for the GSA initially is to look at all the proposals and see which one has the best price and which contractor is going to bring the best value and see which is the best fit for the contract," Buckley said.
Suss and Buckley evaluated the strengths and weaknesses of each of the bidders.
"MCI is the incumbent. They are the dominant player today, and they have the largest base of federal business. That"s their strength going into this, they offer agencies the lowest perceived risk in terms of transition issues," Suss said. But "there"s always a risk of being an incumbent," he added. They have to demonstrate that they"re ready to do whatever it takes to hold on to their basic customers rather than take that for granted."
Even though MCI is an incumbent supplier under the FTS 2001 contract, that"s no guarantee, Buckley said. "A strength for MCI is they serve upwards of 75 federal, state and local agencies via FTS2001, so they have a strong customer base. They"ve served the government since the mid 1980s, so obviously they have that network reach across the world, and they"re very forward looking in terms of technology. But that doesn"t always mean it"s going to be a winner either."
As the second incumbent, Sprint Nextel, has the second largest base of federal business, Suss said.
"Sprint... [is] transitioning on the corporate level to a company that"s focusing on the wireless marketplace," Suss said. "The biggest risk is that they will be less of a strong partner in the future for the wire line business, which is the primary portion of the [universal contract]."
Buckley also noted that Sprint not only holds part of the FTS2001 contract, but also holds part of its predecessor, FTS 2000.
"And Sprint also has a strong wireless play that MCI doesn"t have, and Sprint just bought Nextel," Buckley said. "But maybe that could be a little bit of an issue because they"re going through the process of mixing those companies together."
Third in line is AT&T, Suss said.
"AT&T has been coming on very strong in the federal marketplace in the last couple of years," Suss said. "They"ve been very aggressive in terms of pricing and they have the strongest commitment on the corporate level to making the federal initiative succeed."
AT&T is not as well positioned as MCI and Sprint because it lost out on the FTS2001 proposal, he said.
Qwest is probably the weakest player, Suss said, although it does have aggressive new management.
"But they have a couple weaknesses going in: Their base of business is very nichey at this point in terms of federal government.... They have a relatively small base of existing business compared to the others," he said. "And since the failed attempt to take over MCI, from a pure financial point of view, they"re probably the weakest player.
"That also means that they will not be able to support as large a federal group and have as much depth of resources as the others," Suss said.
Buckley wouldn"t call Qwest is weakest player, but said AT&T, MCI and Sprint "are the stronger players."
"Qwest got up to speed pretty quickly to get a bid out on time, but they"ve been through a little bit of [corporate] upheaval over the past year," he said. "And Qwest had other ups and downs -- over the past year it lost a bid to [acquire] MCI and lost to AT&T for a Treasury telecommunications contract, which is now being rebid."
Both analysts said they wouldn"t be surprised if the GSA chose more than one winning bidder.