The contracts, awarded under the Networx Universal Contract, were announced Thursday by the U.S. General Services Administration.
The announcement was a blow to Sprint Nextel, which had also competed for a position as a prime contractor, and the award was something of a surprise for Qwest, the smallest of the former Bell companies in the competition.
The contracts awarded Thursday -- called Networx Universal -- enables government departments and agencies to select from a range of voice, data, video, IP, and security services offered by the three prime contractors. The three winners paired with various partners, and more than 100 smaller subcontracting firms are expected to share in the contracts.
A second contract, Networx Enterprise, is scheduled to be awarded later this spring; it will enable subcontractors to participate in the overall refurbishment and improvement of the nation's governmental telecommunications programs.
Verizon Business formerly MCI, will direct the firm's work under the contract. Verizon competed for the contract by opening a Government Network Operations and Security Center in Northern Virginia. AT&T also had a facility in Virginia dedicated to preparing bids for the contract over more than three years.
Verizon Business said its GNOSC and its Very High Speed Backbone Network Service helped position the firm for working on the next generation of the Internet called IPv6.
In a statement, the firm said: "Verizon Business is a pioneer in developing and delivering IPv6 capabilities to market, helping to expand the availability of IP address space and to accommodate the growing number of IP-enabled network devices in the marketplace."
Verizon Business had been providing services to virtually all federal agencies under the FTS2001 contract, an earlier version of Networx awarded in January, 1999. Verizon said it would utilize a FTS2001 Bridge Contract to transition agencies to Networx from the existing services.
Verizon Business will act as a services and product integrator for the government, while Verizon Wireless will provide wireless and broadband services. Verizon's services will include IP networking, managed services, where it would operate a network for an agency and make sure applications are performing well, security, and call center support, said Susan Zeleniak, VP of Verizon Federal, in an interview. Verizon Federal is an organization within Verizon Business dedicated to service the federal government.
As for AT&T, it also has a long history of supplying advanced telecommunications services to the federal government, although it has new leadership. SBC Communications acquired AT&T in recent months and changed its name to AT&T; most of AT&T's current top management came from SBC.
The Networx Universal contract is an opportunity for federal agencies to modernize their communications system. "This contract comes around about every 10 years; it's the most strategic and largest contract that the government will purchase telecom through," said Don Herring, senior VP of AT&T's government solutions, in an interview.
AT&T, Verizon Business, and Qwest will be providing the necessary technologies to support next-generation applications. "All things are going IP," Herring said. The federal agencies are looking to improve interoperability between the different communications systems used by sub-agencies like law enforcement through IP-based voice, video, and data. AT&T will also work with federal agencies to improve conventional voice services.
AT&T said its Networx team includes Northrop Grumman Information Technology, EDS, GTSI Corp., SRA International Inc., Bechtel National, and Global Crossing.
Qwest's chairman and chief executive Richard Notebaert said its status as one of the three prime contractors will be a boon for all of its customers. "All Qwest customers across the nation will see benefits," he said. "Qwest already is offering to its business customers many of the advanced features that are required in Networx and customers will continue to benefit from Qwest's investments in broadband technologies to support next-generation applications that are anticipated by GSA."
It's still too early to tell how much business will come out of the contract. Government estimates range from $20 billion over 10 years to as much as $48 billion. The federal agencies have yet to submit their requests for proposal, outlining exactly which technologies they want to implement.
The award was a negative for Sprint, which was a major participant in earlier federal telecom contracts. The firm, which has been struggling to integrate Nextel into its wireless infrastructure, could participate in the next phase of Networx, however.