Federal contract a sign of telco changes

The federal government next month will launch a 10-year, $20 billion telecom services buy that has attracted the attention of every major U.S. service provider. The so-called Networx deal is important not only for its size but also for leading-edge IP, wireless and managed services that agencies are looking to buy.

With Networx, the government plans to buy integrated network packages rather than individual voice, data and video services. Carriers bidding on the deal say Networx is a harbinger of changes in the broader telecom marketplace.

"Obviously, we're bidding on Networx for the revenue. It's extremely important," says Bob Collet, vice president of engineering at AT&T Government Solutions. "But I think Networx is also important because it advances us . . . as a network integrator as well as a systems integrator. A major component of this deal includes elements of IT services such as hosting and storage and applications integration."

The General Services Administration's (GSA) vision for one program that combines telecom and IT services "is a microcosm of our industry," Collet adds. "Networx is important because it's a catalyst for us to get there as a whole corporation."

Run by the GSA, Networx will replace an expiring series of contracts known as FTS2001. Sprint and MCI hold the main FTS2001 contracts, but Qwest, AT&T, SBC and others hold what are called crossover contracts that let them bid on federal jobs.

The FTS2001 contracts expire in 2007. To replace FTS2001, the GSA plans to award seven contracts under its Networx program, which is divided into two parts: Universal and Enterprise.

Under Networx Universal, service providers will offer 37 domestic and international services, ranging from older frame relay and ATM to IP VPNs and VoIP.

The Networx Enterprise contracts are geared toward smaller, specialized carriers that can't meet the tougher Universal requirements. Carriers must bid a core set of nine IP and wireless services.

Bids are expected to be due in July, with an award date planned for April 2006.

"One big difference between FTS2001 and Networx is that wireless services are being added for the first time," says Tony D'Agata, vice president and general manager for Sprint's Government Systems Division. "There's also a greater emphasis on security items and IP-type services. IP is becoming a major platform for quality of service, class of service and converged services."

In addition, Networx demonstrates the government's increased willingness to buy managed network services rather than network piece parts that agencies manage themselves.

"There are a lot more managed services: managed network services, managed security services and managed mobility services," D'Agata says. "Government agencies are willing to rely more on industry to provide those capabilities."

Carriers say that winning Networx will help them develop new capabilities for the commercial marketplace, particularly in security.

"Security under Networx is a huge opportunity," says Susan Zeleniak, vice president of civilian networks for MCI's Government Markets Division. "If we can meet the government's requirements, we'll be able to meet the commercial requirements."