AT&T's $1 billion Treasury deal called into question

The Treasury Department must reopen negotiations for a $1 billion telecommunications contract that the agency awarded to AT&T in December, the Government Accountability Office has ruled.

The GAO this week sustained five protests filed by other bidders on the Treasury Communications Enterprise (TCE) contract. The protests were filed by Broadwing Communications, Level 3 Communications, MCI, Northrup Grumman Information Technology and Qwest Government Services. A seventh bidder on the contract – Sprint Communications – did not submit a protest.

“We found there was merit to the protests, and we recommend the agency reopen its negotiations,” a GAO official said. “Treasury didn’t have discussions with all the bidders, and we’re telling them to do that.”

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The Treasury Department must reopen negotiations for a $1 billion telecommunications contract that the agency awarded to AT&T in December, the Government Accountability Office has ruled.

The GAO this week sustained five protests filed by other bidders on the Treasury Communications Enterprise (TCE) contract. The protests were filed by Broadwing Communications, Level 3 Communications, MCI, Northrup Grumman Information Technology and Qwest Government Services. A seventh bidder on the contract – Sprint Communications – did not submit a protest.

“We found there was merit to the protests, and we recommend the agency reopen its negotiations,” a GAO official said. “Treasury didn’t have discussions with all the bidders, and we’re telling them to do that.”

The GAO received an administrative report from the Treasury Department and held a hearing on the five protests before making its decision. Because the TCE bids involve trade secrets and proprietary information, the GAO decision was issued under a protective order. However, the GAO official said a redacted version of its findings will be released to the public later this week or next week.

The TCE contract would provide telecommunications services and support to more than 1,000 domestic locations and tens of thousands of agency users in the United States and overseas. The Treasury Department includes the Internal Revenue Service, the U.S. Mint and the Comptroller of the Currency among its bureaus.

The TCE contract calls for three base years and seven one-year options, and its value is estimated as high as $1 billion.

AT&T Government Solutions planned to build a secure, high-speed IP VPN to handle Treasury’s voice, video and data traffic. AT&T’s team for the TCE bid included Accenture, BAE Systems and Lucent Technologies.

“We definitely plan to rebid TCE,” says Jerry Edgerton, senior vice president of MCI’s Government Markets Division. Edgerton says TCE is one of the biggest telecommunications procurements underway in the federal government market, and it is among MCI’s top priorities this year.

"We're disappointed in the GAO's decision but we fully intend to compete vigorously to retain this award as the Treasury Department amends it and collects additional information from bidders," said Lou Addeo, president of AT&T Government Solutions, in a statement. "We strongly believe we submitted far and away a superior solution to Treasury's networking needs and we look forward to making our case again to Treasury."