Feds to award flood of telecom deals

Last week, AT&T won a 10-year, $20 million deal to provide voice services to U.S. Customs and Border Protection, an agency with stringent security requirements and 47,000 employees nationwide.

AT&T won the deal as a task order under the massive Networx program, which will provide voice, data, video and wireless services to the entire U.S. federal government for the next decade. The General Services Administration (GSA) awarded Networx last year to AT&T, Verizon Business, Qwest, Sprint Nextel and Level 3 Communications.

Networx was billed as the largest telecommunications deal in the world. But until now, the amount of business awarded under Networx has been a mere trickle. Federal telecom vendors expect the trickle to turn into a flood this spring and summer.

At least a dozen Networx deals are due for award between now and the end of September, when the federal fiscal year ends. That's because GSA's pool of funding that agencies can use to transition to the Networx program from the predecessor FTS 2001 contract will dry up in September.

"Every large agency is going to make a large Networx procurement in this calendar year," predicts Jeff Mohan, executive director of AT&T's Networx program office. "The GSA has some transition funds that are available, so agencies can avail themselves of those funds if they make their decision by the end of September. They don't have to do the implementation, just select a vendor."

"There are a lot of deals coming in the next six months," agrees Diana Gowen, senior vice president and general manager of Qwest Government Services. "People waited until the last minute to start the transition to Networx before all the GSA transition dollars are going to be used up."

Networx is divided into two parts: Universal and Enterprise. Networx Universal provides comprehensive telecommunications services globally, and it is shared by AT&T, Verizon and Qwest.

Networx Enterprise is geared toward emerging IP and wireless services nationally and is shared by AT&T, Verizon, Qwest, Sprint and Level 3.

Networx Universal was awarded in March 2007, and Networx Enterprise was awarded in May 2007.

Only three large deals have been awarded under Networx so far, and all of them were from Networx Universal.

The first Networx deal was a $1 billion voice and data services contract that the Treasury Department awarded to AT&T. The Treasury Network, known as TNet, will be a secure MPLS network spanning 1,000-plus locations and supporting more than 100,000 employees.

The other two sizeable Networx awards were: AT&T's $20 million voice services deal with Customs, which includes local, long-distance and toll-free telephone service, calling cards and audio conferencing; and Verizon' s recent win of the Coast Guard's voice and private line data services, which has an estimated value of more than $50 million. (Verizon hasn't disclosed the dollar value of the Coast Guard win.)

Federal telecom vendors say a backlog of Networx deals will be awarded soon.

"It takes time for people to decide how they want to [transition] and to have discussions with the vendors," says Susan Zeleniak, group president of Verizon Business. "We're starting to see more statements of work come out from the agencies, and we're expecting a pretty steady flow now through summer. GSA has indicated that they have several of them….The wheels on Networx are starting to turn."