The General Service Administration this morning will announce the winners in a four-way race to provide telecommunications services to hundreds of federal agencies.
Denver-based Qwest Communications is among the telecom companies seeking approval to participate in the Networx Universal contract, worth between $20 billion and $48 billion over 10 years.
“It represents a significant opportunity for us,” said said Thomas Richards, executive vice president of the Business Markets Group at Qwest. “We would love the opportunity, whether there are two, three or four winners.”
Unlike typical contracts where a single winner takes all, vendors approved for Networx are allowed to bid on providing local phone, long distance, cellular and high-speed data services to individual federal agencies.
At least two of the bidders and possibly all four could be approved.
Qwest’s participation in Networx should increase revenue, which has hovered at around $13.9 billion the past three years.
Higher sales also could boost Qwest’s profits by about 43 percent over time, estimates David Barden, an equity analyst with the Bank of America, in a research report.
But Qwest’s success, if it is approved, will depend on its ability to outbid other approved vendors while preserving its profit margins.
Richards said a better way to think of Networx is as a “hunting license” that will allow the company to bag more government contracts.
Qwest has assembled a team of 30 companies to compete with bids from AT&T and incumbents Verizon and Sprint.
Qwest already serves about 50 government agencies and could gain access to bid on business with up to another 163 federal agencies.
“While we believe that Qwest would recognize the greatest incremental benefit from a potential award, we believe that AT&T is the most likely to emerge the big winner,” said David Barden, an equity analyst with the Bank of America in a research report.
AT&T, with $19 billion in government-based revenue, and Verizon, with $14.2 billion, are considered more experienced government vendors than Qwest, with $4.1 billion in 2006, according to a report from John Hodulik, an equity analyst with UBS.
Besides the Universal contract, Qwest also is pursuing the right to offer more specialized telecommunications services under the Networx Enterprise contract.
An announcement on that contract, potentially worth $20 billion, is expected in May.
The GSA, the contracting arm of the federal government, opened up bidding on Networx nearly two years ago.
Hundreds of Qwest workers from across the company have spent thousands of hours working to win the bid, Richards said.
Even if Qwest isn’t chosen, much of the work done for the Networx bid should help the company better serve its commercial customers, Richards said.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
