Bechtel moves on telecom

Payne leads effort focused on wireless, infrastructure

Bechtel

Headquarters: San Francisco

Chairman and CEO: Riley Bechtel

Employees: 40,000

Ownership: Private; Bechtel family owns a controlling stake in the firm

2005 revenue: $18.1 billion

2005 net income: Not published

What it does: The engineering, construction and project management firm operates worldwide. It has completed more than 22,000 projects in 140 countries, including Hoover Dam, the Channel Tunnel, Hong Kong International Airport, the San Francisco Bay Area Rapid Transit system, the reconstruction of Kuwait's oil fields after the Gulf War, Jubail industrial city in Saudi Arabia and the Alma aluminum smelter in Quebec.

Government work: Bechtel National Inc. of Frederick, Md., is the company's government services unit. It provides defense, space, demilitarization, energy management and environmental restoration and remediation services and helps wireless carriers expand and enhance their services. Work includes destroying chemical weapons stockpiles at military installations, treating contaminated wastes from nuclear production sites and managing the Nevada Test Site.

In Iraq, the company has helped rebuild power grids, water systems and other public works. In 2005, Bechtel National provided temporary housing for tens of thousands of displaced Mississippi residents following Hurricane Katrina. In December, the Energy Department awarded a contract to a team led by the University of California and Bechtel National to manage and operate the national nuclear laboratory at Los Alamos, N.M.

Payne-staking goals

James Payne's strategy for federal telecoms at Bechtel includes:
» Tripling the growth of Bechtel's federal telecom sector business
» Winning a broad series of prime contracts and form a "discreet number of primary relationships with key agencies" that are looking for alternatives to traditional telecom solutions
» Offering federal agencies alternative telecom choices, such as WiFi, WiMAX and alternate routing for critical infrastructure

James Payne, Bechtel's new president of federal telecoms

American engineering, construction and project management giant Bechtel isn't a company that comes readily to mind as a major telecommunications contender in the federal market. But that will change if James Payne, the new president of federal telecoms, has his way.

The long-time government telecom market executive took the newly created position seven months ago. Payne previously led the government business for Qwest Communications International Inc.

Payne has devised a strategy focused on wireless solutions and critical infrastructure protection to make Bechtel a contender in the federal telecom market, typically dominated by Regional Bell Operating Companies. The major players now are AT&T Inc., Sprint Nextel Corp., Verizon Communications Inc. and Qwest Communications International Inc.

The goal is to triple the growth of Bechtel's federal telecommunications business, Payne said, although he declined to specify figures. He also wants to win a broad series of prime contracts over the next three to five years, and to form a "discreet number of primary relationships with key agencies" that are looking for

To do this, Bechtel must offer federal agencies choices, such as wireless LANs known as WiFi and WiMAX, a wireless technology that provides high-throughput broadband connections over long distances.

Payne also advocates moving agencies' critical infrastructures to another part of the country and managing data services remotely with fiber-optics to secure against or serve as back-up systems for service disruptions.

Raising the bar

"I'd like to raise the whole tone of this debate up to a level of accuracy, so that ? we're not talking from the perspective of a router company, a fiber-based, long-distance company or a Regional Bell Operating Company, but [as] a global provider that can really speak to all the technologies," Payne said.

Significant disasters, such as the Sept. 11 terrorist attacks and the damage wrought by Hurricane Katrina, have underscored the need for government agencies to have viable and survivable critical infrastructure networks in place, he said.

"One of the interesting dilemmas that the government telecom infrastructure has is a challenge of diversity and survivability," Payne said.

Bechtel's federal telecom division will concentrate on the "federal government and [its] interests, including wireless, satellite and fiber infrastructure," Payne said.

But Bechtel is entering late into a market already crowded with traditional carriers as well as systems integrators and specialized technology companies, said Warren Suss, president of Suss Consulting Inc. of Jenkintown, Pa.

The company has its work cut out for it, Suss said. "But it is a large market space, and Bechtel is a very large, well respected company with some strong qualifications and past performance ? which gives it a leg up on a pure startup," he said.

Bechtel National Inc. is the Frederick, Md., government services division of San Francisco-based Bechtel. Bechtel National is known for engineering heavy work, such as destroying stockpiles of chemical weapons, treating contaminated waste and managing recovery work in Iraq, where it is repairing, rehabilitating and rebuilding the country's power grids, water systems and other public infrastructure.

Much of Bechtel's work focuses on defense, space, demilitarization, energy management and environmental restoration and remediation services.

Federal customers include the Defense and Energy departments, Environmental Protection Agency, NASA and the U.S. Agency for International Development.

Face the marketplace

Since Payne took up his post at Bechtel, the company's government services' unit has won three federal contracts.

In November 2005, Bechtel was one of six companies selected to compete for task orders under a 10-year, $10-billion Air Force deal to supply engineering, construction and support to the Defense Department and other federal agencies on missions worldwide. The work may include general services, disaster response and recovery, military operations not involving combat and anti-terrorist operations.

In December 2005, the Energy Department awarded a 20-year contract, estimated at up to $80 million per year, to a team led by the University of California and Bechtel National to manage and operate the national nuclear laboratory at Los Alamos, N.M.

Bechtel is also a subcontractor to Booz Allen Hamilton Inc. on the Army's Strategic Services Sourcing contract vehicle, awarded in March.

Seven companies are competing for work under the 10-year, $19.3 billion program for engineering, logistics and acquisition service support for Army command, control, communication, computer, intelligence, surveillance and reconnaissance systems.

Bechtel has outstanding bids in for between six and eight other government contracts, although Payne declined to name them.

Last month, Raytheon Co. joined forces with Bechtel National, BAE Systems Inc. and IBM Corp. to submit a proposal for the Homeland Security Department's Secure Border Initiative, another multibillion dollar initiative.

"Each one of those is going to greatly dictate [our] expansion, how we're really going to face the marketplace," Payne said. The company also has a General Services Administration schedule.

Payne hasn't ruled out a possible spot on one of the teams competing for GSA's 10-year, $20 billion Networx contract for governmentwide telecom services. Because GSA won't issue awards until 2007, there is still time for Bechtel to get in on the action, Payne said. And because Networx is designed to be adaptive, he added, the company also can wait until the contract is awarded and join a winning team. GSA's 10-year, $50 billion Alliant full and open contract for governmentwide IT services is yet another piece of work that Payne is tracking.

Bechtel's appointment of Payne to direct its federal telecom business was a sound choice, federal telecom market analysts said.

"Jim Payne himself is a proven performer and a known commodity, and ought to bring some real leadership to that portion of Bechtel," said Alan Balutis, president and CEO of government strategies at Input Inc.

Payne joined Qwest in 1999 after working for 13 years for Sprint Co. of Westwood, Kan. As senior vice president of Qwest's government services division, he oversaw the company's sales and marketing efforts in the federal market.

"I want Bechtel to be part of [the] new edge of not only the technology, but also the distribution of the technology, the new thinking about the technology," Payne said. "Because what I'm ultimately getting at is that the survivability of the infrastructure is very much dependent on these choices. You have to have alternatives."

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

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