Georgia Readies $2 Billion Outsourcing Project

Georgia officials this month will put out for bid a landmark communications outsourcing project that combines telecommunications and data services into a single contract, estimated to be worth more than $2 billion over 10 years.

Known as the Convergent Communications Outsourcing Project, or CCOP, the deal already has attracted the attention of leading systems integrators and telecom companies, as well as officials from other states who are looking to use the Georgia project as a model for their own outsourcing plans.

At press time, the request for proposal was scheduled for release Oct. 19, with the award targeted for the first quarter of 2002.

One team and four companies have pre-qualified to bid on the Georgia contract. The team includes Lockheed Martin Corp., AT&T Corp., BellSouth Telecommunications Inc. and Electronic Data Systems Corp.

The four pre-qualified bidders are WorldCom Inc., Clinton, Miss.; Motorola Inc., Schaumburg, Ill.; Science Applications International Corp., San Diego; and TRW Corp., Cleveland. As prime contractors, these companies may subcontract any portion of the work under the RFP to third-party companies, according to Georgia officials.

Warren Suss, who follows the telecommunications industry for Suss Consulting, Jenkintown, Pa., said the communications outsourcing market is just beginning to unfold in the public sector.

The vendor that wins CCOP will have "substantial 'first mover' advantages" in other projects, Suss said. "If you can do it right, then you've got credentials that a lot of other companies won't have."

Bob Young, a group manager of global telecommunications for SAIC, said the convergent communications market is "already exploding," and SAIC has identified as many as 200 new opportunities in the state and local and higher education markets.

"We've been bombarded with requests for outsourcing of telecommunications infrastructure, the building of metro area fiber rings for high-speed optical services and installation of IP area networks," he said.

Convergent communications refers to the bundling of telecommunications and information technology services into one contract. The Georgia project, for example, is expected to include voice communications, data communications, distributed computing, video communications, high-speed data access, mobile short messaging, television and radio broadcast distribution, two-way radio and mobile data communications, according to market research firm Federal Sources Inc. of McLean, Va.

The Navy-Marine Corps Intranet project, which will provide a broad range of desktop, network and communications services to 360,000 sailors and Marines around the world, is the best-known example of this approach. EDS of Plano, Texas, is the prime contractor on the $6.9 billion contract, awarded in October 2000.

Larry Singer, Georgia's chief information officer and executive director of the Georgia Technology Authority, said switching to a service-based outsourcing approach for telecommunications and systems integration will allow the state to improve its infrastructure to attract and support modern businesses.

"In today's economy, it is virtually impossible to get the large-scale capital investment from the state to bring our infrastructure up to what it needs to be to support the New Economy," Singer said.

The timing for Georgia couldn't be better, Suss said. By outsourcing communications across the state enterprise, Georgia will be able to get more and better qualified IT professionals, reduce program risk and obtain better technology.

"I believe outsourcing, when done right, makes all of the sense in the world," Suss said.

The convergence of telecom and IT services into a single contract is creating a new kind of competition among telecom carriers and systems integrators. In the past, carriers were responsible for providing services up to the point of entry into a site, while integrators provided services, such as desktop support, software and applications, within the site.

Now integrators are providing wider coverage, and "the carriers are trying to move up to that level," Suss said.

But it's unclear whether integrators always have a clear-cut advantage over the carriers. Ray Bjorklund, a senior vice president at Federal Sources, said although integrators can bring together new voice and data technologies, governments still need the telecommunications services underlying those technologies.

"It isn't really so much a technology contract as a telecom modernization contract," Bjorklund said, referring to CCOP.

To achieve new efficiencies and better economies of scale for its communications infrastructure, Georgia is pioneering what the commercial sector already has done as far as aggregating the outsourcing of its communications infrastructure, said Susan Maraghy, director of sales with Lockheed Martin global telecommunications. The Georgia initiative will allow state agencies to focus exclusively on their missions rather than expend valuable energy on commodity purchasing.

"We believe that the state has the right vision and is on the right path," she said.

WorldCom, another company chasing the Georgia contract, already has long-term communications outsourcing contracts in California and Virginia, said Jim Nystrom, senior manager of WorldCom's Covanet contract, a communications outsourcing project for Virginia.

"States are finding that five years down the road, they aren't able to keep up with the technology curve," Nystrom said. "So now they are buying services rather than buying assets."

Once the contract is in place, Georgia's enterprise network operations center will monitor the network from an audit and compliance perspective, and a 30-person customer service team will work with the contracting team to resolve problems, Singer said.

Singer said the customer service team "will have the real pulse [of the contract]."