AT&T, Sprint Nextel and competing phone companies will find out this month whether they can bid for the biggest U.S. government communications contract ever or get shut out of most federal work for a decade.
Carriers must win the right to bid on projects valued at more than $20 billion over 10 years, for work ranging from Internet- based telephone and video services to data-network security upgrades. As many as 135 agencies will pick providers from the list, limiting work for companies that are left out.
“This is high-stakes procurement,” said Ray Bjorklund, senior vice president at FedSources, a McLean, Va.-based research group that tracks government contracts. “It could be quite a hurt for some of these teams if they were to not win.”
Teams led by Qwest, AT&T, Verizon and Sprint, the four largest U.S. phone companies, are the entrants. The government says it may pick just two winners for the biggest part of the contract.
The aim of the program is a coordinated plan for government agencies to upgrade to Internet- based communication systems and technologies that emerge in the next 10 years. The government also wants to tighten network security and improve agencies’ ability to communicate with one another, particularly in emergencies.
The spending may grow to as much as $80 billion, Bjorklund said. That would provide each of the groups with as much as $2 billion a year in revenue if all four win the right to participate.
The phone companies say they have spent millions of dollars and assigned thousands of employees to parts of the work in the past three years to prepare for the orders. Verizon, the second-largest U.S. telephone company, in September opened a network operations and security center in Ashburn, Va. The facility provides services such as real-time security monitoring of agency networks and will help groups move to the newest systems.
“The more of us that are in the game, the better it is for the government,” said Diana Gowen, senior vice president for Qwest’s government services division in Washington. “The government likes to have as much choice as possible.”
Qwest’s lack of experience as a government-wide provider won’t put the company at a disadvantage because many of its experts used to work for Sprint, MCI or AT&T, Gowen said.
Denver-based Qwest is “smaller and more nimble and more agile” than other bidders, she said.
