GSA Prepares to Award Huge Telecom Deals
Tuesday January 9, 10:55 am ET
By Dan Caterinicchia, AP Business Writer
General Services Administration Prepares to Award Massive Telecom Deals
WASHINGTON (AP) -- The nation's largest telecom companies will soon learn which ones are the winning bidders for a pair of contracts worth tens of billions of dollars to provide federal agencies with comprehensive telecommunications services.
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To be awarded in March by the U.S. General Services Administration, the first of two so-called "networx" contracts will move government phone networks from landline to more secure and flexible Web-based systems, said John C. Johnson, GSA's assistant commissioner for integrated technology services.
"This is not just an acquisition, it's a transformation," said Johnson, who oversees all of the agency's information technology buys.
Federal Sources Inc., a research and consulting firm in McLean, Va., says the government's phone system needs require equipment and services that are "carrier-class," which is what is used in consumer and business networks operated by telecom giants such as Verizon Communications Inc. and AT&T Inc.
For example, those networks require 99.999 percent network availability, among other criteria, according to a Fed Sources study released Monday that was commissioned by Tellabs Inc., a telecom equipment maker which supplies the network giants.
The contract that will be awarded in March has a ceiling of $48 billion over 10 years. The second pact has a $20 billion limit over that period and will be awarded in May.
GSA estimates about $20 billion will be spent on both contracts and will cover the bulk of the federal government, including the departments of Treasury, Defense, Homeland Security, Energy and the U.S. Courts, Johnson said.
Sprint and MCI were the primary vendors on existing telecom contracts that the government spent $10 billion on over the last eight years.
The nation's telecom giants have bid on the multibillion-dollar contracts and teamed with defense contractors, government consultants and other firms to meet the pacts' requirements.
The Qwest Communications International Inc.-led team includes Bearingpoint Inc., SAIC Inc., Accenture Ltd., Hughes Communications Inc. and others. BellSouth Corp., now owned by AT&T Inc., also is on the team, according to a spokesman for Denver-based Qwest.
The AT&T-led team includes Northrop Grumman Corp., Electronic Data Systems Corp., SRA International, Global Crossing Ltd. and others.
Verizon's Networx team includes Hewlett-Packard Co., Level 3 Communications Inc., General Dynamics Corp., Computer Sciences Corp. and others. And the Sprint Nextel Corp. team includes Lockheed Martin Corp. and Hughes.
GSA's Johnson would not provide details about the bids except to say that both contracts will have multiple awardees.
But even with the $68 billion ceiling, the companies may be competing for less dollars going forward. Fed Sources is forecasting federal telecom spending will decline to about $6.5 billion this year from about $6.9 billion in 2005, which means that government managers will be looking for solutions that help them do more with less, according to the report.
