GSA Networx Universal Contract Awards Announced - AT&T, Verizon & Qwest Win Pieces and Sprint-Nextel Doesn't

 

News came in this morning that the world's largest telephone bill (the one for the U.S. Government) will be split between three companies - AT&T, Verizon and Qwest - but the most conspicuous snub came for Sprint, which GovExec details well in the excerpt below:

"Award of the Networx Universal contracts is a historic moment at GSA, and reflects our goal of providing transformational products and services to our federal customers at the best prices available in the marketplace," said GSA Administrator Lurita Doan. "I look forward to working with our new industry partners to provide the best possible service and value to our customer agencies and the American taxpayer."

Networx Universal will provide voice, IP, wireless, satellite and IP-centric services to 135 federal agencies at locations spanning 191 countries, and is expected to transform the current federal telecommunications system.

Sprint, which currently supplies about 30 percent of all government telecommunications services, was shut out of the new contract. The company's federal branch serves the Defense, Homeland Security, Transportation, Veterans Affairs and Interior departments, and the Federal Reserve and the Federal Deposit Insurance Corp.

A Sprint spokeswoman said the company was disappointed not to receive a portion of Networx Universal, and will request a debriefing from GSA next week. A decision on whether to file a bid protest will be made after that meeting, she said.

"Sprint has enjoyed an 18-year relationship with its government customers," the spokeswoman added. "Federal agencies have come to rely heavily upon our high-performing network, our strong portfolio of converged IP solutions and mobile enablement."

Asked why Sprint was not given a Networx contract, John Johnson, GSA assistant commissioner for integrated technology services, said the agency set out its goals and objectives upfront. "We defined what we hoped to achieve in the Networx program and we believe the three awardees best meet our needs," Johnson said.

Warren Suss, president of Suss Consulting Inc. in Jenkintown, Pa., said the exclusion was "a devastating blow to Sprint," which had built its company around the federal business.

"The fact that they did not make the cut means they will primarily serve as a niche player in the federal space and the commercial space as well," Suss said. "They are not in the game now for broad-based network services."

GSA's inclusion of the Denver-based Qwest was an impressive victory for the company and will require Verizon and AT&T to "be continually sharpening their pencils and watching their backs," Suss said.

Networx is the largest federal telecommunications acquisition, and is the third in a series of programs GSA developed in partnership with other federal agencies. The entire Networx program, which also will include the smaller Networx Enterprise contracts, to be awarded in May, is estimated to be worth $20 billion over 10 years. The overall ceiling for the contracts is $68.2 billion, with $48.1 billion of that for Universal and $20.1 billion for Enterprise.

"We are proud of the message this program conveys about GSA's ability to deliver large acquisitions on schedule," said Jim Williams, commissioner of GSA's Federal Acquisition Service. "The advanced technologies and services defined in the Networx program will serve as a platform to transform the government's telecommunications infrastructure to a more seamless and secure environment."

Networx Universal is intended to ensure continuity of telecommunications services currently provided on FTS2001 Bridge and FTS2001 Crossover contracts. The contractors will be required to provide 36 mandatory services and 12 optional services.

About 30 days after the issuance of a "notice to proceed" by the Networx Universal contracting officer, the winning contractors can begin the test verification process for operations support. This is expected to take about 60 days.

GSA will then certify and accredit the companies' systems. At the same time, agencies will be encouraged to begin the process of selecting the contractor or contractors that they believe will meet their needs.

The companies are expected to post pricing data for the first year of the contract on their Web sites soon, Johnson said.

Verizon, one of the two telecommunications companies initially awarded the FTS2001 contracts by the GSA in January 1999, provides some level of telecommunications services to nearly every federal agency. As agencies move to Networx, Verizon Business will continue to offer the telecommunications services it currently provides under the FTS2001 bridge contract, according to the company.

AT&T also provides telecommunications services to a variety of defense and civilian agencies under the FTS2001 crossover contract, including the Defense, Homeland Security, Justice and Veterans Affairs departments, and the Internal Revenue Service and the U.S. Postal Service.

Here's the official GSA press release:

To: NATIONAL EDITORS

Contact: Jon Anderson of the U.S. General Services Administration, +1-202-501-1231, jon.anderson@gsa.gov

WASHINGTON, March 29 /PRNewswire-USNewswire/ -- The U.S. General Services Administration today awarded its highly anticipated Networx Universal contracts to

• AT&T Corp.
• MCI Communications Services, Inc., aka Verizon Business Services
• Qwest Government Services, Inc.

Providing voice, IP, wireless, satellite and IP-centric services to 135 federal agencies across 191 countries, Networx Universal will transform the current federal telecommunications system to a secure, worldwide IP and MPLS- based network compliant with Internet Protocol version 6 and other major technological advances anticipated throughout its contract life. The entire Networx program, to include the counterpart Networx Enterprise contract to be awarded in May, is estimated at $20 billion across 10 years.

"Award of the Networx Universal contracts is an historic moment at GSA, and reflects our goal of providing transformational products and services to our federal customers at the best prices available in the marketplace," said GSA Administrator Lurita Doan. Administrator Doan added, "I look forward to working with our new industry partners to provide the best possible service and value to our customer agencies and the American taxpayer."

"We are proud of the message this program conveys about GSA's ability to deliver large acquisitions on schedule," said GSA's Federal Acquisition Service Commissioner Jim Williams. "This effort represents a new era for GSA. The advanced technologies and services defined in the Networx program will serve as a platform to transform the government's telecommunications infrastructure to a more seamless and secure environment. I am extremely proud to be associated with the Integrated Technology Service Networx Team."

The historical, technologically ambitious Networx program is the largest federal telecommunications acquisition ever competed. It will meet the federal government's full range of worldwide telecommunications and networking requirements during the next decade. Its application-oriented architecture will support the federal communications infrastructure underlying key government operations. This will provide the seamless, secure and interoperable federal telecommunications environment that is necessary today and will prove even more crucial in years ahead.

Networx is the third in a series of telecommunications acquisition programs GSA developed in close partnership with federal agencies. To date, these highly successful programs leveraged federal buying power to provide premier telecommunications and networking services and saved American taxpayers hundreds of millions of dollars. Networx Universal will ensure continuity of telecommunications services currently provided on FTS2001 Bridge and FTS2001 Crossover contracts.

Founded in 1949, GSA serves as a centralized procurement and property management agency for the federal government. GSA manages more than one- fourth of the government's total procurement dollars and influences the management of $500 billion in federal assets, including 8,300 government-owned or leased buildings and 170,000 vehicles. GSA helps preserve our past and define our future, as a steward of more than 420 historic properties, and as manager of USA.gov, the official portal to federal government information and services. GSA's mission to provide superior workplaces, expert technology solutions, acquisition services, purchasing and e-travel solutions and management policies, at best value, allows federal agencies to focus on their core missions.

SOURCE U.S. General Services Administration

Meanwhile, AP has slightly more interpretation for us:

WASHINGTON - Qwest Communications International Inc., AT&T Inc. and Verizon Inc. on Thursday were awarded the government's largest telecommunications contract ever, a 10-year deal worth up to $48 billion.

The contract winners, who beat out Sprint Nextel Corp. , now have to compete with each other for the telecom needs of various federal agencies.

The contract covers voice, video and data services and technologies domestically and internationally for at least six federal agencies.

Industry analysts said they expect the federal government to spend at least $20 billion over the life of the Networx Universal contract, which is capped at $48 billion.

"The advanced technologies and services defined in the Networx program will serve as a platform to transform the government's telecommunications infrastructure to a more seamless and secure environment," GSA's acquisitions commissioner Jim Williams said in a prepared statement.

The two previous 10-year government-wide telecom contracts had two main providers. The first went to Sprint and AT&T. The second to Sprint and MCI Worldcom, since acquired by Verizon.

For the losers of the initial Networx Universal contract, there is a consolation prize on the table. GSA is planning in May to award a second telecommunications contract called Networx Enterprise, which contains fewer mandatory requirements and services in select areas across the nation.

In morning trade, shares of Qwest rose 18 cents to $9.03, shares of AT&T advanced 22 cents to $39.17, shares of Verizon gained 24 cents to $37.47 and those of Sprint were up 26 cents to $18.77. All stocks trade on the New York Stock Exchange.

Verizon was the first company to issue a formal press release:

Verizon Business Selected as a Prime Contractor for Networx Universal
Thursday March 29, 11:30 am ET

Partners With Verizon Wireless to Provide Advanced Communications Services to Federal Agencies Under Multibillion-Dollar Program

BASKING RIDGE, N.J., March 29 /PRNewswire/ -- Verizon Business will help the federal government usher in a new era of advanced communications services -- providing cutting-edge voice, data, wireless and Internet services to government agencies around the world -- under a multibillion-dollar contract awarded today by the U.S. General Services Administration.

Verizon Business was one of three prime contractors awarded the long- anticipated GSA Networx Universal contract, which authorizes it to compete for business from individual agencies.

Networx Universal is the first of two Networx contracts awarded by the GSA to modernize federal government communications. It is designed to enable the government to choose among a comprehensive range of integrated telecommunications and network services, ranging from converged voice, video and data services over a single network to a variety of next-generation offerings, including advanced IP services, managed services and advanced security services.

Through Networx, Verizon Business will leverage its global network and will act as a services and solutions integrator in meeting the many product and service requirements of the government. Verizon Wireless will provide wireless voice and broadband services.

The second contract, Enterprise, is expected to be awarded later this spring. It has fewer mandatory requirements than the Universal contract and is intended to allow additional companies to participate in the Networx program.

The Networx program is among the largest federal communication contracts in history and has an overall value of as much as $20 billion over 10 years spread among all awardees. Networx will replace FTS2001 and several other telecommunications agreements.

"With a proven track record of providing communications to the federal government for nearly 20 years, Verizon Business is well-positioned to continue helping customers meet their special requirements," said John Killian, president of Verizon Business. "Verizon Business has earned its position as one of the top communications providers to the federal government through continued investment in our networks and our tireless commitment to meeting our customers' needs for complex end-to-end solutions."

Susan Zeleniak, vice president for Verizon Federal, an organization within Verizon Business dedicated to serving federal government customers, said: "The GSA has been forward-thinking on the Networx contracts and is offering federal agencies end-to-end solutions that require a service provider with experience at delivering complex services. We appreciate this show of confidence and stand ready to work with the GSA to help take federal government communications to the next level."

Verizon Business, one of the two telecommunications service providers initially awarded the FTS2001 contracts by the GSA in January 1999, serves virtually every federal agency under that contract. As agencies transition to Networx, Verizon Business will continue to offer the telecommunications services it currently provides under the FTS2001 Bridge Contract.

Under Networx, just as with FTS2001, federal agencies worldwide will be able to capitalize on Verizon Business advanced voice and data network services as well as a variety of next-generation offerings, including managed services, advanced security services, enterprise wireless, storage, application, management and collaboration services, teleworking, Web hosting and advanced call center services.

Verizon Business is already ahead of the game in meeting the government's demands for next-generation networking services. The company last year opened a new Government Network Operations and Security Center (GNOSC), a state-of- the-art facility in Northern Virginia dedicated to supporting the unique security and operational requirements of federal government customers. The GNOSC, built to government security standards, supports the managed network services Verizon Business provides to a wide variety of federal government agencies.

The GNOSC, along with Verizon Business's vBNS+ (Very High Speed Backbone Network Service), will also play an important role in helping the federal government adopt the next generation of Internet protocol -- known as version six, or IPv6 -- and meet the Office of Management and Budget's mandated transition target of June 2008. Verizon Business is a pioneer in developing and delivering IPv6 capabilities to market, helping to expand the availability of IP address space and to accommodate the growing number of IP-enabled network devices in the marketplace.

As one of the largest communications service providers to the government, Verizon Business has delivered government customers many advanced services ranging from call center applications to dedicated security operations. The company will leverage its experience, product capabilities, IP leadership and vendor relationships as it transitions to the Networx contract. Verizon Business today provides a comprehensive range of communications services to civilian and defense agencies.

Verizon Business is one of the largest providers of advanced data, Internet and voice communications services in the United States and around the world. Verizon Business offers local-to-global-to-local network capabilities coupled with a broad range of telecommunications products and services, including managed network services and systems integration, to all levels of government. With this broad portfolio of services, Verizon Business can provide federal agencies with one-stop shopping for their communications or connectivity needs. The company has built the next-generation services that are helping to transform the way government customers -- and their constituents -- do business.

Qwest was second to go to press:

GSA Awards Qwest Part of $20 Billion Networx Universal Contract
Thursday March 29, 1:06 pm ET

DENVER--(BUSINESS WIRE)--Qwest Communications International Inc.:

• Qwest becomes a preferred provider of communications services to federal agencies nationwide
• Customers everywhere to benefit from innovation and efficiencies brought on by Networx
• Largest communications services contract award ever underscores Qwest's status as top-tier national carrier

The General Services Administration (GSA) today awarded Qwest Communications International Inc. a stake in Networx, the largest communications services contract in the world. Qwest will participate in the U.S. government program that is valued at approximately $20 billion over the next 10 years to provide leading-edge voice, data and video services, including managed and secure advanced data networks, to federal agencies nationwide.

Today, Qwest is a leading provider to more than 50 federal government agencies, including the Department of Energy, Department of Defense, Department of Justice and the Department of Treasury. The Networx Universal award enables Qwest to aggressively compete for billions of dollars of additional federal government communication business.

"This is a big win for Qwest that complements our progress over the last five years and is a testament to Qwest's status as a leading, national, tier-one communications provider," said Qwest Chairman and Chief Executive Officer Richard C. Notebaert. "All Qwest customers across the nation will see benefits. Qwest already is offering to its business customers many of the advanced features that are required in Networx and customers will continue to benefit from Qwest's investments in broadband technologies to support next-generation applications that are anticipated by GSA."

The Networx program will provide comprehensive, best-of-breed communications and networking services and technical solutions to all federal agencies. It will allow the agencies to focus resources on building a seamless and interoperable operating environment while GSA ensures agency access to the best technology industry has to offer.

"Although Qwest is already a leading supplier to the U.S. government, this award enables us to grow our federal business," said Diana Gowen, senior vice president and general manager of Qwest government services. "It's also good for government customers because including Qwest in Networx provides federal agencies with more choices, which will enable creative solutions and excellent price performance for the U.S. government and the taxpayers."

"A Networx Universal spot is akin to a 'Good Housekeeping Seal of Approval' for data and voice product portfolios, customer service and national network capabilities," said analyst Mark Winther, vice president of worldwide telecommunications at IDC. "Networx Universal winners secured the endorsement of one of the most discriminating customers in the world, in one of the most complex and thorough communications proposals ever. Networx winners will attract additional business and residential customers that want to work only with the best."

In addition to Networx, Qwest recently has received other large awards from the U.S. government. In November, Qwest was the winner of a contract worth up to $100 million from the Defense Information Systems Agency (DISA) to provide bandwidth transmission services for connecting military installations located across the West to the Global Information Grid (GIG) over the next 10 years. And last month, Qwest announced it will be the sole provider of telecommunications services to federal agencies in nine Western states in a contract from the GSA worth at least $10 million.

For information about the products and services Qwest is offering in the Networx contract, visit www.gsanetworx.com.

Fashionably late, AT&T finally issued their statement too:

AT&T Government Solutions Wins Networx Universal Contract From General Services Administration
Thursday March 29, 12:28 pm ET

AT&T and Its Partners Ready to Serve Federal Agency Customers Through Networx Vehicle

VIENNA, Va., March 29 /PRNewswire-FirstCall/ -- AT&T Government Solutions, a business unit of AT&T Inc., has been awarded a Networx Universal contract by the U.S. General Services Administration (GSA). The Networx Universal contract is an Indefinite Delivery - Indefinite Quantity (IDIQ) contract with a potential value of $20 billion over the next 10 years and allows AT&T to provide a full range of network and communications services to federal government agencies.

"AT&T is ready to do what we do best: help agency leaders meet critical mission objectives and better serve their customers by maximizing their communications capabilities," said Don Herring, senior vice president, AT&T Government Solutions. "AT&T will be a partner to all agencies that want to transition today, or when they're ready, to the converged IP world of the future, by helping them enhance their network infrastructure through Networx. The GSA's award of Networx to AT&T is a reflection of our commitment to exceed our customers' expectations and our past performance record of delivering integrated life-cycle solutions that meet each agency's unique requirements."

Under the terms of the Networx Universal contract, AT&T can compete for task orders for telecommunications and networking services. The AT&T Networx team brings together industry-leading networking and IT capabilities, which include Northrop Grumman Information Technology of McLean, Va.; EDS of Herndon, Va.; GTSI Corp. of Chantilly, Va.; SRA International, Inc., of Fairfax, Va.; Bechtel National of Frederick, Md; and Global Crossing of Florham Park, N.J.

"In terms of network reach, bandwidth capabilities, and experience in transition programs, AT&T has a proven and experienced Networx team," said Herring. "With AT&T's new integrated network architecture, agencies can access the world's most flexible, scalable, secure and fully integrated global IP and wireless network. AT&T is using this world-class network and our expertise to build solutions to overcome agencies' communications and IT challenges."

AT&T provides telecommunications services to multiple federal defense and civilian agencies under the FTS2001 Crossover contract. The company has signed IP network contracts with the U.S. Army, the Department of Defense, the Department of Homeland Security, Internal Revenue Service, the Department of Justice, the U.S. Postal Service, and the Department of Veterans Affairs. AT&T Government Solutions has more than 4,000 employees solely dedicated to serving the needs of the federal government, 85 percent of whom hold government- sponsored accesses and clearances, and 75 percent of whom are based in the D.C. area.

"Networx gives agencies a tremendous range of telecommunications solutions and services that are available at a low cost and will address everything from ensuring continuity of operations to securing data from cyber attacks," said Herring. "As a full-service provider, AT&T can help agencies address these challenges by delivering the best value through our broad portfolio of products and services, proven technologies and innovation from AT&T Labs and our Networx partners."

Networx consists of two contract vehicles to which AT&T has submitted bids: Networx Universal, which was awarded today, and Networx Enterprise, which is expected to be awarded in May. Networx will replace the expiring GSA Federal Technology Service 2001 (FTS2001) and FTS2001 Crossover contract vehicles. The IDIQ contract gives AT&T, its partners and others the right to compete for specific task orders within the scope of the Networx Universal contract.

About AT&T Government Solutions

AT&T Government Solutions is a long-standing, trusted source of network- enabled solutions for the federal government, integrating unmatched network resources and professional services expertise with innovative technologies from AT&T Labs and industry-leading partners. With headquarters in Vienna, Va., AT&T Government Solutions is best known for network leadership in voice, data, video and managed services. AT&T Government Solutions is a proven solutions integrator, with professional services expertise in areas such as Education and Training, Enterprise Application Solutions, Enterprise Resource Planning and Management, Information Assurance, Knowledge Management, Modeling and Simulation, Network Transformation and Management, and Program Management.

 

Then, TheStreet.com had better analysis of what this means to Sprint Nextel, the only outright loser in all this:

Sprint's (S) turbulent rebuilding effort is looking more like a demolition job.

Adding to the Reston, Va., telco's list of woes Thursday was the announcement by the General Services Administration that Sprint was the only major U.S. carrier to be excluded from a massive $20 billion communications services contract.

Three phone giants -- Verizon (VZ) , AT&T (T) and Qwest (Q) -- were picked as suppliers to a five-year phone and Internet upgrade program called Networx.

Federal contract watchers and analysts say it is unusual for a major national service provider to fail to make the cut.

"This announcement is really a contract vehicle, naming the companies that are allowed to bid on task orders," says one former GSA procurement official who now works as a consultant. "If a company is not granted approval, it basically bars the company from seeking government contracts."

Sprint representatives were unavailable for immediate comment.

This latest setback adds to a long list of missteps and stumbles by Sprint.

Under CEO Gary Forsee's leadership, Sprint has managed to squander the advantage it acquired with Nextel and its horde of loyal, high-paying customers. Sprint now has the industry's highest churn or monthly customer defection rate.

Turnover in the executive offices has also been high. Three key leaders jumped ship last year: onetime chairman and former Nextel chief Tom Donahue, strategy man Tom Kelly and operations head Len Lauer.

Meanwhile, with its eroding customer base, falling long-distance and wholesale prices and weakening business services unit, Sprint managed to turn in four consecutive quarters of disappointing financial results last year.

In January, after losing 306,000 postpaid mobile phone subscribers in the fourth quarter, the company lowered guidance and said it would fire 5,000 workers. Even Sprint's roster of cell phones, once one of the industry's prime showcases for edgy new devices, has become a tech backwater.

For example, Sprint finally added the Motorola (MOT) Razr last quarter, missing out on the phone's two-year run as the hottest handset going. And Sprint's answer to the Apple (AAPL) iPhone Samsung's UpStage music phone has already earned a few tepid reviews.

Shares rose 24 cents Thursday to $18.75.

Finally, thanks go to my friend, Ulrich Tibaut Houzanme, who sent me the news excerpted below from Wireless Week alongside the provocative question of who I thought might win.

Industry players are holding their collective breaths, waiting on the U.S. government to name the winners of its 10-year, $20 billion contract. Called Networx, the project will provide domestic and international voice, data, video and wireless services to federal agencies through 2017. In line with bids are all of the top-tier operators, including AT&T, Qwest, Sprint Nextel and Verizon Business.

The Networx project is split into two parts: Networx Universal, which provides everything from VPNs and VoIP to frame-relay and ATM services; and the Enterprise component, which focuses on emerging IP and wireless services.

The four Networx Universal teams feature the big-name leaders in network and IT services: AT&T's team includes Bechtel, Cingular Wireless, Electronic Data Systems, Global Crossing, GTSI, Northrop Grumman and SRA International. Qwest's team includes Akamai Technologies, Alcatel-Lucent, Bearing Point, Hawaiian Telecom Services, Science Applications International and Wire One Communications. The Sprint/Nextel team features Hughes Network Systems, InterCall and Lockheed Martin. The Verizon Business team includes Comtech Telecommunications, G2 Satellite Solutions, HP, Proxim Wireless Networks, WilTel Communications/Level 3 Communications and Verizon Wireless.

Officials at the General Services Administration (GSA) say they will award Networx Universal by the end of this month.

The previous GSA telecom contracts - FTS 2000 and FTS 2001 - represented a significant boost for named operators at the time. FTS 2000 was awarded to AT&T and Sprint in 1988, and FTS 2001 was awarded to Sprint and MCI in 1998 and 1999.

If any of the bidders should lose Networx Universal, they will have another chance with Networx Enterprise, which is due to be awarded in May. All four Networx Universal teams submitted bids on Networx Enterprise, as did a team led by Level 3 Communications.

So, the question now, is who will be part of the Networx Enterprise contract award expected to arrive in May?

If you think you know, you could win a video iPod... like the one on the right.