Networking jumps over fallen telecom comrades

Lee Holcomb, infrastructure director for the Department of Homeland Security, said the agency is considering projects in authentication, particularly biometrics, knowledge management and data mining, wireless communications and other areas.

Henrik G. de Gyor

The traditional government telecommunications market is dead. Long live the new networking market.

A two-day conference held last month in Washington repeatedly drove home the point that the telecom market, defined for years by contracts dominated by the major carriers, has come to a close. Federal agencies now are focused on organizationwide networks geared to handle voice, data and video requirements, including the use of secure wireless technologies.

Money will be spent on telecommunications, said Sandra Bates, commissioner of the General Services Administration's Federal Technology Service, which oversees the major government telecom contracts. Citing forecasts by Input Inc., a Chantilly, Va., market research firm, Bates said the federal government will spend $11.9 billion in fiscal 2003 on its telecom needs, growing to $13.9 billion by fiscal 2005.

But the bulk of this money will not go through traditional telecom contracts primed by the carriers. Rather, telecom requirements will be embedded in larger infrastructure and networking contracts, said Warren Suss, president of Suss Consulting Inc. and host of the Federal Networks 2003 conference.

As examples of this trend, Suss pointed to the FBI's Trilogy contract, held by DynCorp and Science Applications International Corp.; the Transportation Security Administration's infrastructure contract with Unisys Corp.; Harris Corp.'s win of the Federal Aviation Administration's Telecommunications Infrastructure contract; and Electronic Data Systems Corp.'s Navy-Marine Corps Intranet contract.

Representatives from civilian and military agencies at the conference said they are looking for solutions that fit into enterprisewide architectures, offer true interoperability and address the growing need for bandwidth.

The Agriculture Department, for instance, is exploring frameworks for a Universal Telecommunications Network contract, said Janice Lilja, the agency's associate chief information officer for telecommunications. Lilja said the new contract would be based on converging voice, video and data requirements, including voice over IP, virtual private networks, wireless communications, unified messaging and video on demand.

All of these make the potential contract far more about networking than telecommunications. Within the next six months, the Agriculture Department will decide whether to let the contract. If so, it will take four months for the RFP to be written and released. No dollar value has been estimated yet for the Universal Telecommunications Network.

In the Defense Department, the drive toward network-centric warfare shows in contract requirements such as the Global Information Grid Bandwidth Expansion contract. This is an $877 million program to acquire fiber and other elements to support the GIG-BE network, a worldwide, ground-based voice, data and imagery network. The department is expected to release the request for proposals in early to mid-March.

One huge opportunity remains: building the infrastructure for the Department of Homeland Security. Lee Holcomb, director of infrastructure at DHS, was mum on specific contract opportunities for his agency, but said projects are being considered in areas such as knowledge management and data mining, improved authentication, particularly biometrics, geospatial technologies, response management, simulation and modeling, middleware, such as enterprise architecture integration tools and wireless communications for first responders.

His list did not include traditional telecommunications requirements, such as local and long-distance services.

The increasing emphasis on networks is not the best news for telecom providers. Companies such as AT&T Corp., Sprint Communications Corp. and WorldCom Inc., and regional Bell operating companies such as Qwest Communications International Inc., BellSouth Corp. and SBC Communications Inc. may vie for a position on these and other contracts. However, the market trend is not in their favor.

For instance, when the GSA in January awarded its Connections contract to provide federal agencies with a range of telecom equipment and services needed for "the last mile," from the desktop out to carrier lines, only two of the 17 contractors selected -- Verizon Communications Inc. and SBC -- were telecom providers. The rest were systems integrators, large and small, including EDS, SAIC, Booz-Allen Hamilton Inc., Veridian Corp. and ManTech International Inc.

The telecommunications companies, seeing the handwriting on the wall, are seeking subcontractor roles on teams led by systems integrators. When Harris won the FTI contract in July, for example, its team of subcontractors included Sprint, a national carrier, and four regional Bells: Qwest, BellSouth, SBC and Verizon.

AT&T, once the quintessential telecommunications carrier, is actively remaking itself as a systems integrator so it can win prime contracts for larger networking contracts. Chris Rooney, president of AT&T's government solutions business, said in January that his firm is shifting toward teaming more with integrators and is willing to serve either as prime or as a subcontractor.

The convergence of telecom and systems integration contracts -- with integration as the most important aspect -- will continue as the government drives toward a Federal Enterprise Architecture, with each department responsible for its own enterprisewide information systems structure, industry officials said.

Unisys' win of TSA's infrastructure contract reflects this trend, they said. Starting with a blank slate for a new agency, decision-makers emphasized integrating different elements into a single system and selected an integrator to mastermind it.

Even large, traditional telecom contracts are becoming networking vehicles. For example, GSA has added services, such as portals and Web hosting, to the FTS2001 long-distance contract through its crossover strategy, and has allowed local telecom providers to be added as well. GSA is evaluating elements to include in the successor contract in 2006.

The Treasury Department is looking to release the RFP by September for its new networking vehicle, the Treasury Communications Enterprise contract, which is geared toward managed services, using service-level agreements and ongoing technology refreshment -- all elements not included in traditional telecom contracts.

Suss said the Treasury Department wants to create a governmentwide acquisition contract that can provide services to agencies being relocated to the Department of Homeland Security. For the Treasury Department to do that successfully, contract requirements for the Treasury Communications Enterprise program will have to fit within its enterprise architecture, which has yet to be established.

Another sign the marketplace is evolving: The 16-year-old Federal Telecom Conference changed its name this year to the Federal Networks Conference, said Suss, who has hosted them all.

The financial crisis that has engulfed telecommunications companies, carriers and equipment makers over the past two years hit the industry before the companies could figure out how to address the agencies' new network requirements, he said. This reinforced agencies' impulses to find alternative providers.

"One CIO is reported to have sworn to dump his long-term carrier," Suss said. Telecom companies have worked so hard to regain profitability and cut so many workers, they may not be able to provide the service that government customers require, he said.

For at least two years, Suss said, he has predicted a clash of the titans, with systems integrators and telecom carriers going head to head over network solutions for government agencies.

"As the clash plays itself out, it looks like the integrators have begun to eat the carriers' lunch," he said. *

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

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