The newest with Networx

Three telecom giants vie for GSA deal; others likely

The teams chasing the lucrative Networx telecommunications contract are becoming clearer as three major telecom players have announced their lineups of partners to chase the deal.

AT&T Corp., MCI Inc. and Sprint Nextel Corp. are leading the teams announced so far. The General Services Administration's 10-year Networx telecommunications and IT services contract, scheduled for award next year, is worth nearly $20 billion.

Other telecom carriers, including Qwest Communications International Inc. and Verizon Communications Inc., are expected to bid on Networx. Spokeswomen for both companies said neither has set a date for an announcement.

Sprint Nextel Corp. is teaming with Lockheed Martin Corp. of Bethesda, Md. The team includes more than 40 other companies, many of which are technology firms and small businesses, said Stephanie Taliaferro, a Sprint Nextel spokeswoman.

Sprint Nextel, which formally announced its team Aug. 26, was the latest telecommunications company to enter the fray.

AT&T Government Solutions Inc. announced its team in early August. It consists of Cingular Wireless LLC, EDS Corp., Global Crossing Ltd., GTSI Corp., Northrop Grumman Information Technology, SRA International Inc. and other small and midsize government communications and IT companies.

MCI Inc. said it was partnering with Anteon International Corp., Computer Sciences Corp., G2 Satellite Solutions Corp., Hewlett-Packard Co., Protus IP Solutions Inc., Proxim Wireless Networks, TeleTech Government Solutions LLC, WilTel Communications Group Inc., Verizon Wireless and Comtech Telecommunications Corp.

The face of telecommunications industry today is reflected in the competitive field, analysts said.

"This program is too important for major players not to be involved," said Warren Suss, president of Suss Consulting Inc., a federal telecom networks and information technology consultancy in Jenkintown, Pa.

There are two parts to the Networx contract: The Universal part will offer government locations a broad range of telecom services nationwide. Enterprise will offer a mix of specialized Internet protocol or wireless services in specific geographical areas. All three telecom firms that have announced their teams will bid for both parts, the companies said.

Company proposals are due by Oct. 5 for the Universal portion and by Oct. 7 for the Enterprise portion. GSA will issue multiple awards for both parts in April 2006.

"Winning any portion of these contracts, Universal or Enterprise, guarantees you a steady source of revenue, so it's imperative for these guys to get a good team together and make the right bid," said Sean Buckley, senior analyst for public-sector solutions at Current Analysis Inc., a telecom and IT market research firm.

All three companies are strong competitors, analysts said. GSA, the government's main procurement agency, will select winners based on pricing and technical capabilities and compliance, they said.

"They all bring a wealth of capability to the table, and the issue is going to be how they propose it to the government," said Charles Viator Jr., vice president of the government group at Rivulet Communications Inc. of Portsmouth, N.H. He is also the chairman of the shared interest group on networks and telecommunications at the Industry Advisory Council, a Fairfax, Va., organization of IT professionals who provide products and services to the government.

Networx will replace the FTS2001 contract for governmentwide telecom services, which expires in 2006. MCI and Sprint are the two incumbents on FTS2001.

MCI has the "lion's share of the FTS2001 business, and they've had a long, successful track record of serving their current [government] customers," Suss said.

Sprint's strengths are that it is the second-level FTS2001 incumbent and has a sound set of wireless solutions. AT&T aggressively has pursued government business and has a strong management board, he said.

Buckley said he was concerned about how the proposed takeovers of AT&T by SBC and MCI by Verizon will affect their possible participation in Networx.

"While AT&T and MCI have sizable presence as government solutions providers, their respective mergers with SBC and Verizon could have an impact on their ability to deliver services under Networx," he said.

SBC Communications Inc. of San Antonio agreed in January to buy AT&T for $16 billion. Verizon agreed in May to purchase MCI for about $8.5 billion.

Sprint Corp. and Nextel Communications Inc., two of the country's largest wireless operators, completed their $35 billion merger in August. The new company has its corporate headquarters in Reston, Va., and its operational headquarters in Overland Park, Kan.

Staff Writer Roseanne Gerin can be reached at rgerin@postnewsweektech.com.

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