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Sprint Nextel suffers major federal loss

Carrier left in the cold as AT&T, Verizon Business and Qwest win Networx contracts

By , Network World
March 29, 2007 03:54 PM ET

Network World - Sprint Nextel’s loss of a multibillion-dollar federal telecommunications services buy has left Washington, D.C., industry insiders stunned.

Sprint Nextel was the only bidder on the so-called Networx Universal program that didn’t receive a contract.

The General Services Administration announced at a press conference on Thursday that the Networx Universal winners are AT&T, Verizon Business and Qwest.

Networx Universal will provide domestic and international voice, data, video and wireless services to federal agencies for the next 10 years, and could be worth as much as $48.1 billion over that time. GSA officials, however, estimate that Networx Universal and its Networx Enterprise companion contract will be worth $20 billion over the next decade.

“This is a pretty significant loss for Sprint,” says Ray Bjorklund, senior vice president with FedSources, a market research firm. “People are scratching their heads a little bit about why Sprint didn’t get it. We don’t have enough of the facts to know, but over the next couple of days more details will come out about that.”

GSA says Networx is the largest federal telecommunications acquisition ever completed, and that it will support 135 agencies across 191 countries.

The Sprint Nextel team for Networx Universal included Lockheed Martin, Hughes Network Systems and InterCall.

GSA declined to comment on why the Sprint Nextel team was eliminated from the Networx Universal program. “The three [companies] that we awarded to addressed the objectives of our program more readily,” said John Johnson, assistant commissioner for Integrated Technology Services with the GSA’s Federal Acquisition Service.

Sprint Nextel is the only incumbent on the GSA’s predecessor contracts, FTS 2000 and FTS 2001, having served the U.S. federal market for 18 years on these contracts. Indeed, it was the FTS 2000 win in 1988 that put the then-fledgling carrier Sprint on the map.

Industry watchers guessed that Sprint Nextel may have been distracted by its recent merger, or that it failed to put together a comprehensive-enough team for the massive Networx Universal program.

“Sprint Nextel has had a bit of a struggle with trying to integrate those two companies,” Bjorklund says. “But Sprint has a great legacy of long-haul support, both terrestrial and space-based, for the government. I don’t quite know how to read their loss. Maybe their team members didn’t put together a broad-enough suite of services.”

The Sprint Nextel team spent millions of dollars and nearly three years preparing its Networx Universal bid.

In an interview in early March, Tony D’Agata, vice president of federal government operations at Sprint Nextel, said he had a team of 50 employees dedicated to putting together the Networx Universal bid, which was more than 5,000 pages long and contained more than seven million individual prices.

The Networx Universal loss probably will be personal for Sprint Nextel’s management team because CEO Gary Forsee was in charge of Sprint’s original FTS 2000 bid in the mid-1980s.

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