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Carriers mobilize for $24B in military telecom contracts

AT&T, Verizon and others target four DoD contracts expected in 2008
By Carolyn Duffy Marsan , Network World , 12/04/2007
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It’s the high-tech spoils of war: The U.S. military plans to award telecommunications contracts worth as much as $24 billion, and the top-tier carriers are signing up to get a piece of the action.

The U.S. Department of Defense is working on six major telecom contracts, and four of them are expected to be awarded in 2008. All of the nation’s largest carriers -- AT&T, Qwest Communications, Sprint Nextel and Verizon Business -- are planning to bid on these megadeals.

"Over the next two-year period, there are going to be some pretty significant awards made," says Ray Bjorklund, senior vice president of FedSources, a market research firm that tracks military telecom spending.

"These contracts are important to chase because they are big plums, but you have to eat those plums one bite at a time," Bjorklund adds. "The Defense Department is not going to be spending that money all at once. They’re making big investments in telecom by buying 10 years' worth of service today."

Lowdown on DTS-P II

The first military telecom deal expected to be awarded is dubbed "DTS-P II," for Defense Information Systems Network Transmission Services Pacific II. With an estimated value of $4 billion over 10 years, DTS-P II will provide data services to military bases in the Pacific including those in Hawaii and Guam.

Verizon Business (formerly MCI) is the incumbent contractor. The DTS-P II award is expected in March 2008.

"DTS-P II will be worth at least a couple billion dollars," says Susan Zeleniak, vice president of Verizon Federal. "Right now, that’s focused on a single winner."

DTS-P II is a "huge Chinese menu of private lines, from the lowest speeds you can think of to megawaves throughout the Pacific into the Middle East, Latin America and Alaska," says Diana Gowen, senior vice president and general manager of Qwest Government Services.

Also expected to be awarded in the March-April time frame is Uni-Comm, a contract to provide, support and maintain PBXes and other communications gear at Air Force Space Command bases around the United States. The six-year Uni-Comm contract has an estimated value of $383 million.

"Uni-Comm is the consolidation of many base-level contracts for communications services," FedSources' Bjorklund says, adding that one Uni-Comm winner is expected.

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