AT&T Solutions Lassos Texas For First State Contract

By John Makulowich Senior WriterAT&T Solutions snagged a major contract from the state of Texas that continues the turnaround in its fortunes and represents a milestone for the professional services subsidiary of the telecommunications giant. The contract, with a value ranging from $250 million over five years up to a potential $1 billion over 10 years, is the first state contract the unit has ever won and will be a springboard to attract work from other states.On Aug. 30, the Texas General Services Commission announced it contracted with AT&T to build and manage its backbone network and provide a range of services for TEX-AN 2000, the communications network of the future for Texas and a project of the telecommunications services division of the GSC.AT&T Solutions will design, build and operate the TEX-AN 2000 backbone network, including switches and transmission facilities, and offer Texas agencies a portfolio of AT&T's business services.The ultimate value of the contract will depend on whether local agencies choose to participate fully in the service offerings. The base contract is for five years and includes five one-year renewal options."What is different about this deal is that Texas allowed suppliers to come in and give their best recommendations about the ubiquity of service, capabilities and costs. Taking a page from the commercial sector, they told us the outcomes they wanted and asked us to offer a solution based on value. That's a very big step for a government to take," said Rick Roscitt, president and chief executive officer of AT&T Solutions, Florham Park, N.J.His unit, set up in 1995, turned the corner in profitability last year and continued that trend in the first two quarters of 1999. While a company spokesman declined to disclose figures for 1995 and 1996, he did state that revenues for 1997 and 1998 were $785 million and $1.05 billion, respectively. The Solutions unit recorded net loses from 1995 through 1997, turning profitable for the first time last year.AT&T Chairman C. Michael Armstrong challenged AT&T Solutions during a talk to analysts in January 1998 by saying he expects a $5 billion a year business by the end of 2002. That statement has become the company's rallying cry of "Five in Five," that is, $5 billion in five years.With this award, Charles Schwarz, AT&T Solutions client partner, will be assigned full-time to focus on state business, said Roscitt. A Solutions spokesman confirmed that the company has identified at least 10 other states that are candidates for the types of services that AT&T Solutions will offer to Texas and its agencies. The Texas initiative, TEX-AN 2000, addresses the state legislature's goal to create a single, centralized communications network available statewide to all levels of government. It will cover 250 state agencies and 4,500 sites, including over 1,350 cooperative purchasing program members, all municipalities, counties and school districts.In announcing the award to AT&T Solutions, GSC Chairman Gene Shull said: "The best thing we like about it is it's going to be a system that, whether you're in the urban areas of the state or in the rural areas, it will apply equally to all citizens of Texas."The TEX-AN 2000 project started in August 1998 by collecting user requirements and conducting vendor focus groups. According to Steve Parker, GSC director of telecommunications, the traditional approach would have been to work internally and with those who designed the network, taking that information to the vendor community with the command, "Tell us how much to build and put this in."Said Parker: "This time, we said with the way technologies are going and the requirements that continue to increase from our users, let's take a very different approach. Let's go out and not design it, let's go out and specify the outcomes we'd like to purchase, what are features, functionalities and services we need, and then not in any way try to limit the creativity of the vendors that may choose to respond to our procurement."With that approach, Parker in November 1998 solicited through pre-bid announcements over 1,600 different companies for the procurement. In December, bids, or what Texas calls requests for offers, went out to about 350 different vendors.More than 200 vendors attended the mandatory pre-bid conferences. Finally, 39 vendors were asked to submit responses."We structured this very differently this time, where we had a lot of different components or modules. Everything from all of the backbone, access and long distance, but we also had components in there, things like firewall systems and Web hosting," Parker said. "Based on user input and requests, we expanded the bid to include pagers, cell phones and local services."The state expects to deploy the voice system in the next 30 to 60 days and data in the next 60 to 90 days. The new network will replace TEX-AN 3, which was installed in 1993 and 1994. That network is made up of point-to-point type backbone circuits, or time division multiplexing. The new network will allow access to leading-edge technologies, introduce bandwidth conservation and move from a time division multiplexing solution to an integrated services solution.AT&T Solutions' Roscitt noted that the company will build a hybrid ATM/frame relay backbone to include local access and local access switching."This is important for the state, because it allows them to carry the big bulk of their traffic on a hybrid public/private network. Hybrid in that the access will be relatively private, but the backbone will be a shared-use network that looks like it's a private network," said Roscitt.The new network also will include a wireless capability, calling card, intraLATA toll calling, dedicated hosting services, multiquest 900, an important feature for those without access in some rural areas, Worldnet Internet access and business long distance.