MCI Team on Route to Postal Profits

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MCI Team on Route to Postal Profits

By Nick Wakeman

Staff Writer



Jerry Edgerton of MCI said the company has experience in managing networks.

MCI Communications Corp.'s multibillion-dollar Postal Service contract might be the biggest in the company's history, but it also will be a windfall for its subcontractors - which stand to earn hundreds of millions of dollars.

The Washington-based MCI put together a team that includes Cisco Systems Inc., San Jose, Calif.; Digital Equipment Corp., Maynard, Mass.; DynCorp, Reston, Va.; and JIL Information Systems, Arlington, Va., to pursue the Postal Service's Managed Network Services contract.

If the options are picked up, the program could be worth $3 billion over 11 years. It is MCI's largest contract win.

Most of the subcontractors' work will be performed in the first four years of the contract. Eventually, the network will connect 34,000 post offices and other postal facilities, MCI officials said.

"As we get things implemented and running, their roles fade out," said Jerry Edgerton, MCI vice president for government markets.

But subcontractors such as Cisco will play a key role in keeping the network up to date, which was a critical requirement of the contract, he said.

Cisco is providing wide area network and local area routers and hubs, said Andy Miller, Cisco's regional manager of federal systems.

"This network is going to be a milestone for other agencies," he said. Cisco expects to earn about $25 million over five years for the initial order of 4,000 nodes.

The contract is a form of outsourcing, Miller said, because the agency is letting a private company build and maintain its data and communication networks. "Other agencies are using large integrators to outsource their IT and [intranet] networks," he said.

One target for future business is the Justice Department. "With their linkages with local law enforcement, they have to eventually look at something like this," Edgerton said.

For DynCorp, the postal contract builds on a project it is pursuing for IBM Corp., Armonk, N.Y., to provide network management services to the Agriculture Department's Animal & Plant Health Inspection Service.

The Postal Service contract is a bigger version of the agriculture program by about 33,000 sites, said Mark Filteau, president of DynCorp's Information & Engineering Technology unit.

DynCorp will use a similar system of gathering and testing equipment in a central location and then bundling it according to the needs of a particular site rather than shipping equipment piecemeal to the site, he said.

The postal contract is a good step up for DynCorp, he said. "Each project is a building block, so it helps to walk before you run," he said.

The Postal Service contract is expected to generate $200 million to $400 million for DynCorp over the life of the contract, Filteau said. Most of that revenue will be generated in the first four years.

MCI sees the Postal Service contract adding to a core capability for building managed networks for clients. It has also built networks for the Defense Department and the Federal Aviation Administration.

"We've got a critical core of networks so we begin to see an evolving theme that we are fairly good at managing networks," Edgerton said.

The network that MCI and its partners build for the Postal Service must evolve because the Postal Service will add services such as kiosks, he said.

"As they continue to evolve new products and services they will have the infrastructure to do that," he said. "What we offered was an opportunity for the Postal Service to grow with us as we modify, change and enhance our technology," Edgerton said.

"Our goal is that the customer will be able to transact any business with us they want, any way they want," said Rick Weirich, vice president for information systems for the Postal Service. Those ways include telephone, the Internet or at the retail window at a post office.

The retail level will see some of the greatest advances in service, he said. Point-of-sale devices are replacing cash registers. They can give the clerk and the customer information on items as diverse as express mail packages and rent payments on post office boxes, Weirich said.

"It goes a lot deeper and wider than replacing a cash register," Edgerton said.

After the retail services are improved, the Postal Service will look to add other services. "But I don't want to pre-announce anything," Weirich said.

Edgerton said that the Postal Service is in a unique position to offer services to the public because it's the only organization that passes every house and business in the country on a daily basis.

Social service agencies such as Social Security might eventually use the Postal Service to deliver information on demand to citizens, he said. For example, Social Security recipients might be able to access benefit records via a kiosk at a post office.


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