The federal government is close to awarding the largest telecommunications contract in U.S. history, and two Colorado companies are in the running.
Denver-based Qwest and Broomfield-based Level 3 Communications are two months from learning whether they’ll get a piece of a contract worth up to $68 billion over 10 years.
The U.S. General Services Administration initially solicited information from the industry in 2003 for the so-called Networx contract, which will enable most federal agencies to upgrade their video, phone, data and other communications systems.
A formal request for proposals for the two-part contract was issued in 2005. Teams led by Qwest, AT&T and Verizon submitted final bids last month for the first part of the contract, called Universal.
Universal is worth up to $48 billion over 10 years, and winners will be announced in March, said John C. Johnson, the GSA official overseeing Networx. The second part of the contract, called Enterprise, is worth up to $20 billion over 10 years and will be awarded in May.
Final bids for Enterprise are expected to come from the teams vying for Universal as well as a separate team led by Level 3. Level 3 is also a member of Verizon’s bid for Universal.
Johnson said the GSA could potentially issue awards to every company that has submitted bids, in effect carving up both the Enterprise and Universal work.
He said awardees of Universal will receive at least $525 million worth of work. Enterprise winners will receive at least $50 million.
The goal of Networx is to “ultimately achieve a more seamless, secure and interoperable government,” Johnson said.
The contract winners will provide telecom products and services to as many as 135 government agencies, including Treasury, U.S. courts, and Health and Human Services.
After winners are selected, the companies still must sell their services to the individual government agencies outlined in the contracts.
“This is a crucial contract,” said Warren Suss, a Jenkintown, Pa.-based consultant to companies seeking federal contracts. “It’s a make-it-or-break- it deal.”
If selected, winners will provide services such as upgrading the phone systems for participating agencies from traditional landline to an Internet-based system.
Call-center, data-storage and other information-technology work could also be part of the deal, Suss said.
Diana Gowen, senior vice president and general manager of Qwest’s government services, said the contract is pivotal.
“We certainly wouldn’t go out of business if we weren’t an awardee, but it makes life certainly a lot easier to expand and grow our business base,” Gowen said. “It’s a key contract win for us.”
She said receiving an award would also help Qwest’s enterprise business by building credibility with larger clients. “It may not do much with the mom- and-pop pizza shops, but it certainly does a lot with big Fortune 500 customers,” she said.
She said about 100 of her staff of 400 worked on the Networx RFP along with staff from other units, such as IT.
In 2005, Qwest’s revenue from the federal government was about $400 million, according to trade publication reports.
The Qwest team includes Bearingpoint, SAIC, Accenture, Hughes Communications, Akamai Technologies, BellSouth, Hawaiian Telecom Services, Istonish Holding, Lucent Technologies, Wire One Communications, American Satellite Communications and Concert Technologies. BellSouth is still part of Qwest’s team despite its merger with AT&T.
Jerry Hogge, senior vice president of government markets for Level 3, said the company didn’t want to speculate on possible outcomes or potential values of the Networx contract.
