MCI Puts Heat on AT&ampT for DoD Contracts

The DISN management contract shows MCI is coming into its own in the federal market

MCI Government Markets is emerging as a rising force in the defense communications market after winning the $400 million contract to provide switched and bandwidth management services for the continental United States portion of the Defense Information System Network over the next 10 years.

The McLean, Va.-based company's award also illustrates the new competitive pressures that AT&T, the historical telecom vendor of choice for the Department of Defense, faces as the agency moves to create more opportunities for commercial communications vendors.

"It certainly is bad news for AT&T. This is a watershed event that changes the rules of the [DoD communications acquisition] game," said Warren Suss, who heads a federal market consultancy based in Jenkintown, Pa.

In fact, the Defense Information Systems Agency has structured this long-haul communications infrastructure contract in such a way that, conceivably, 12 different service providers could be involved in deploying this generation network.

"It's possible that you could have different providers offering transmission services for eight access regions, another contractor for the backbone, and yet another contractor for the video services," says Suss.

The managed services contract is the largest MCI has garnered from DoD to date. It follows a string of awards in recent years, including the establishment of a $30 million ATM network in 1995 for the Naval Air Force to demonstrate the protocol's ability to manage broadband multimedia dates in supporting the war fighting effort, and a $150 million contract in 1992 to provide military units in the Pacific Rim with high-bandwidth connectivity.

MCI's efforts in the federal market reached their apex in 1993 when it won a $900 million contract from the Federal Aviation Administration to build the Leased Inter-facility Network Communications program.

"That contract, in which we provided end-to-end services for air traffic control networking, has served as a stepping stone to the DISN award," said Jerry Edgerton, vice president, MCI Government Markets. "We showed that we could take an exciting set of services and connect them to new technologies without disturbing operations. That is what we will be doing for the DISN project as well," he says.

Under the terms of the Digital Switched/Bandwidth Manager Services contract, MCI will provide the most critical pieces of the CONUS-based portion of the DISN. MCI will provide switches to route voice traffic, bandwidth managers to direct data communications and network management to establish the foundation of the defense community's most reliable network.

"Their network today is fundamentally structured on T-1 [1.54 Mbps] technology. We will be taking it to OC-3 [155 Mbps] representing a hundredfold increase in network capacity over the next few years," says Edgerton.

According to DISA, MCI will unite a team of subcontractors to provide the circuit-switched services, bandwidth management services and network management services.

Initial plans call for the deployment of digital bandwidth managers, upgrading existing infrastructural technology installed by AT&T and other vendors during the previous management contract. There are also plans to integrate voice and data traffic to a single, high-capacity backbone managed by MCI.

While there are long-term plans to deploy asynchronous transfer mode, the broadband multimedia protocol that most commercial carriers are installing today, actual rollout of ATM technology on the backbone is not expected to take place until the computer security community can ensure high levels of encryption in the virtual circuit environment.

The DS/BMS is the second of four initial DISN components designed to create a network that will keep pace with advances in information and communications technology, as well as changes to military strategy. The first contract -- DISN Support Services-Global pact -- was awarded in June 1996 to Boeing. The contract awards transmission services, estimated to have a $5 billion value over nine years, and video services, valued at $125 million over five years. The contract will complete the initial phase of the DISN program.

As for AT&T, Suss says that it must diversify its suite of services within the DoD to hang on to market share. In addition to competing for the remaining $5 billion worth of contracts, he expects AT&T to move aggressively into offering solutions at the tactical level, providing communications solutions for the "last mile" of the defense network to support soldiers in the field.

"The international portions of the DISN competition will also hit the streets soon, so there are plenty of opportunities for AT&T," says Suss.

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