The Treasury Department has faced other challenges to its efforts to pursue a new TCE contract. In December 2004, it awarded a new $1 billion, three-year TCE contract to AT&T Corp., but cancelled the deal just six months later after other bidders protested and the Government Accountability Office recommended the AT&T deal be redone.

In September, the Treasury Department again put the TCE contract out for bids. A month later, the government received bids from four major telecommunications companies for the 10-year, $20 billion Networx telecommunications services contract. The four bidders on that contract are MCI Inc., Sprint Nextel Corp., AT&T Corp. and Qwest Communications International Inc.

The Networx program is designed to provide legacy and leading-edge voice, data and video services to all U.S. government agencies. Although the Networx program could be worth as much as $20 billion, the government has so far committed to spend only $575 million on the program.

Networx will replace a series of contracts that make up FTS2001 and are set to 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 called crossover contracts that allow them to bid on federal network jobs.

The GSA is expected to award the Networx contract in April, and could choose more than one winner.