State begins secret Spectrum work

<@VM>Artel something to envy ... or fear

Spectrum contract holders

American Tower Corp.
(parent of Verestar)

Headquarters: Boston, Mass.

2001 revenue: $1.1 billion

2001 employees: 3,200

 

Artel Inc.

Headquarters: Reston, Va.

2002 revenue: $48 million

2002 employees: 170

 

AT&T Corp.

Headquarters: Basking Ridge, N.J.

2002 revenue: $37.8 billion

2002 employees: 117,800

 

Qwest Communications International Inc.

Headquarters: Denver

*2001 revenue: $19.7 billion

2001 employees: 61,000

 

WorldCom Inc.

Headquarters: Clinton, Miss.

*2001 revenue: $35.2 billion

2001 employees: 85,000

Revenue and employee numbers from Hoovers Inc.

*According to reports filed with the Securities and Exchange Commission through Feb. 13, 2003, neither WorldCom nor Qwest have filed a complete set of quarterly reports or a 2002 annual report with the commission. Both companies are undergoing SEC scrutiny and may have to restate some part of prior earnings.

The Spectrum contract provides WorldCom an avenue to restore its credibility. "It really put WorldCom back in the game," said Warren Suss, president of Suss Consulting.

WT file photo

Project to establish telecom services for embassies, consulates

The State Department is moving to strengthen its global telecommunications network, as a looming war and threatened terrorist attacks create an urgent need for reliable communications.

The department has begun to issue task orders for its secretive Spectrum program to establish satellite, landline and other communications network services for some 260 embassies and consulates around the world.

A State Department official said that 10 to 12 task orders have been released so far, but he could not provide any details, including which companies have received the work.

The secrecy surrounding the Spectrum contract is part of the State Department's security measures, he said. The agency does not want to divulge its capacities or reveal what is being done at each post, and takes steps to preclude potential enemies from putting together a unified picture of its communications capabilities.

The 10-year, $750 million Spectrum contract was awarded in November to five prime contractors: AT&T Corp., New York; WorldCom Inc., Clinton, Miss.; Qwest Communications International Inc., Denver; Verestar Inc., a subsidiary of American Tower Corp. of Boston; and Artel Inc., Reston, Va.

As the contract is set up, a vendor can receive task orders worth up to $36 million per year, though the ceiling on the contract remains fixed at about $75 million per year, according to a State Department official.

The contract is managed by the State Department's Diplomatic Telecommunications Service Program Office, which provides telecommunications for all U.S. government agencies that operate out of consulates and embassies, the official said.

Because Spectrum includes all agencies that fall under the diplomatic program office, the department operates almost as a reseller, bundling together individual agency requirements and managing the contract to meet expanding bandwidth demands. The department is responsible for the capacity of the communications network, not the services provided over it, the official said.

The State Department is responsible for all the other agencies' telecom needs for various reasons. It wouldn't make sense, for instance, for the nearly 50 agencies in London to set up their own telecom services into the embassy, the official said.

Similarly, there are parts of the world where there simply isn't much in the way of telecommunications. In those cases, the department is the party responsible for getting permission from host countries to put in its own communications terminals and paying the appropriate licensing fees.

This is not a new arrangement for the State Department. Spectrum is the successor contract to the Diplomatic Commercial Satellite Program, the official said.

The contract's request for proposals was issued to a limited group of vendors, and prospective site visits during the competition were limited to those with secret clearance. The winning companies were reluctant to talk about the contract.

"We're proud that we won, but beyond that I have no comment," said Abbas Yazdani, president and chief executive officer of Artel, a small company of about 170 employees.

Warren Suss, president of Suss Consulting Inc., a Jenkintown, Pa. research firm, said Spectrum provides an avenue for WorldCom to restore its credibility in the federal market. The telecom giant has been holding on to its contracts in the federal space, but Spectrum is the first big, new contract the company has received since filing for bankruptcy in June 2002, he said.

"This will make other agencies more willing to give them an award without the perception of risk," Suss said. "It really put WorldCom back in the game." *

Staff Writer Patience Wait can be reached at pwait@postnewsweektech.com.

"Nobody asks us how small we are. We're winning multibillion-dollar contracts." ? Artel President Abbas Yazdani

Olivier Douliery

The smallest of the five companies awarded the State Department Spectrum contract may have the most to crow about.

Artel Inc., a 170-person systems integrator based in Reston, Va., reached $48 million in 2002 sales, 100 percent growth from the previous year, according to company president Abbas Yazdani. And the company expects to double its revenue again this year.

"Nobody asks us how small we are. We're winning multibillion-dollar contracts," said Yazdani, who founded the firm in 1986. The company holds a strong niche in satellite communications and also provides information assurance and e-government services.

Artel has shunned media attention, concentrating instead on winning and keeping its government customers, Yazdani said.

"Our clients know who we are," he said. In 17 years of doing business, the company has never had a bad reference or lost a single key client, he said.

Artel is one of the three small businesses chosen for the single largest small-business set-aside contract ever awarded by the government: the Defense Information System Network Satellite Transmission Services-Global program, valued at more than $2.2 billion over 10 years.

In addition, the Defense Information Systems Agency chose Artel as a vendor on its seven-year, $1 billion Next Generation Engineering contract.

The company also was selected for two of three functional areas on the Commerce Information Technology Services contract, called Commits, a five-year, $1.5 billion multiple-award contract.

"Artel [has] been very successful in the federal marketplace," said Warren Suss of Suss Consulting Inc., a Jenkintown, Pa. market research firm. "One of their keys to success has been they've worked as a prime and had large integrators and carriers and hardware providers as subcontractors to them, sort of a flip on the traditional relationship. In that way, they've controlled their own fate more than many small companies."

Yazdani described the company's competitive position more bluntly: "They envy us, they fear us, or they partner with us."

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