All five carriers that bid on the U.S. government’s 10-year, multibillion-dollar Networx Enterprise program were awarded contracts on Thursday, opening up the federal telecom market to more competition than ever before.
All five carriers that bid on the U.S. government’s 10-year, multibillion-dollar Networx Enterprise program were awarded contracts on Thursday, opening up the federal telecommunications market to more competition than ever before.
The Networx Enterprise winners are AT&T, Level 3 Communications, Qwest Government Services, Sprint Nextel and Verizon Business. Networx Enterprise will provide secure, managed and wireless IP services nationwide to federal agencies.
Networx Enterprise is the second half of the federal government’s long-awaited Networx program, which has an estimated value of $20 billion through the next decade. Networx will provide domestic and international telecom services including voice, data, video and wireless services to 135 federal agencies. It is the world’s largest telecom program.
Networx is the primary way that federal agencies will upgrade their networks to support such new technologies as VoIP and IPv6, the next-generation Internet Protocol; as well as meet their needs for security, business continuity and disaster recovery.
"Agencies will be able to buy a more total solutions package than they have been able to buy in the past," says Diana Gowen, senior vice president and general manager of Qwest Government Services. "We plan to work with them to develop comprehensive solutions for their biggest pain points. That was not easily accomplished under FTS 2001, which had a more limited set of [services]."
Networx is divided into two parts: Networx Enterprise and Networx Universal. While Networx Enterprise provides emerging IP services nationally, Networx Universal provides comprehensive network services globally.
Networx Universal was awarded in March to AT&T, Qwest and Verizon Business. The fourth bidder – Sprint Nextel – was shut out of the Networx Universal program. Winning Networx Enterprise is a relief to Sprint Nextel, which held both of the federal government’s previous contracts, FTS 2001 and FTS 2000.
Sprint Nextel "bid aggressively and met the government’s requirements and was deserving of an award for those reasons," said John Johnson, GSA’s acting assistant commissioner for Integrated Technology Service, at a press conference held in Washington, D.C., to announce the Networx Enterprise winners.
"We’re thrilled," says Tony D’Agata, vice president for the Federal Government-Public Sector at Sprint. "We’re very happy to have the opportunity to continue to serve customers that we’ve had for 18 years. . . . We’re happy to sell them future technology and the things that they are interested in like next-generation IP services, wireless and convergence."
Networx Enterprise is a huge victory for Level 3 Communications, which until now has never won a major federal telecom contract. "We are delighted to have Level 3 in our contract portfolio," Johnson said. "They offer a very sophisticated technology to our customers."
"It’s a very good day for Level 3," adds Jerry Hogge, senior vice president of Level 3’s Federal Government Group. "Level 3 is built from the ground up with an IP network and world-class services. Now we’ve got an opportunity to offer that to the federal agencies through this program."
Level 3 already supports 35 federal agencies including the Department of Defense, the Department of the Treasury, the Department of Homeland Security, the Department of Veterans Affairs and the General Services Administration. "Now we can go after 100 more agencies," Hogge says. "It’s a new day for GSA and the agencies they serve with the Networx program. . . . We look forward to being a part of it."
GSA had hoped to attract an even wider array of carriers with its Networx program, which was conceived more than three years ago. But industry consolidation resulted in fewer players, thanks to the mergers of MCI and Verizon Business, AT&T and SBC, Sprint and Nextel, and Level 3 and WilTel Communications.
In the end, Level 3 was the only new entrant in the Networx program. The other four carriers – AT&T, Qwest, Sprint Nextel and Verizon Business – are incumbents in the predecessor FTS 2001 program.
Still, industry observers predict that competition under the Networx program will be fierce because five carriers are involved.
"Having more players out there with apples-to-apples comparisons on services is going to result in more aggressive competition than under FTS 2001," says Ray Bjorklund, senior vice president of Federal Sources, a McLean, Va., consulting firm. "It’s healthy for the government because they will have a larger group of contractors to choose from. From the industry viewpoint, it’s going to keep them on their game."
"I think it will be a very, very competitive landscape," says Susan Zeleniak, vice president of Verizon Federal. "The government is going to benefit from lower prices and all the new technologies that GSA has included on Networx. I think the agencies are really pushing forward with additional capabilities to deliver services to the citizens."
GSA said that Networx Universal prices are lower than those available on the existing FTS 2001 contract, and that Networx Enterprise prices are lower than those on Networx Universal.
Networx Enterprise offers the "best prices for secure managed IP network services nationwide," Johnson said. "We have achieved our goals of providing lower prices, alternative sources, continuity of service and security."
With Networx Enterprise, carriers bid on nine mandatory services, including three core IP network-transport services, four security services and two network-management services. Carriers could bid on as many as 41 optional services. In contrast, Networx Universal features 50 services -- 39 of them mandatory -- ranging from legacy frame relay and ATM to cutting-edge VPNs and VoIP.
It’s unclear whether agencies will prefer buying telecom services from the Networx Enterprise or Networx Universal contracts. "I still believe that agencies will use Networx Universal for very large nationwide or worldwide network needs," Zeleniak says.
"If you can buy the same products on both contract vehicles, you’ll use the one that can offer the best price," D’Agata counters. "Networx Enterprise pricing will be a little more favorable than Universal. Potentially, you could see a higher volume of usage on Enterprise."
The Networx Enterprise winners are each offering a different portfolio of services. For example, Level 3 is offering 20 services, while AT&T is offering 42 services.
"We got every service that we bid on for Enterprise," says Don Herring, president of AT&T Government Solutions. "What we think we bring to the table is a really broad product portfolio. We can offer everything from voice to data to video and IP."
Carriers expect to start processing orders under Networx in September. The first agency to commit to using Networx Universal is the Treasury Department, which has submitted a competitive bid to the Networx Universal winners. The Department of Homeland Security also has indicated it will use Networx Universal to upgrade its network.