Carriers mobilize for $24B

Carriers mobilize for $24B in military telecom contracts
AT&T, Verizon and others target four DoD contracts expected in 2008
Source: Fedsources

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.

Also in 2008, the Defense Department is expected to place billion-dollar orders for voice and data services through Networx, a telecommunications services contract open to all federal agencies. (See related story, "Carriers brace for federal buying spree".) Carriers on Networx include AT&T, Level 3 Communications, Qwest, Sprint Nextel and Verizon Business.

"DoD has issued questions to all of us and given us time to respond. They’ve met with all five Networx carriers," Qwest Government Services' Gowen says. "They are on the trajectory to make at least a voice decision early next year. . . . They’re projecting midyear on making their data decisions."

In the fall of 2008, the U.S. Air Force is expected to issue an RFP for its NETCENTS II program. This will be a recompetition of its Network-Centric Solutions (NETCENTS) contract, which provides the Air Force and other military agencies with networking equipment and services including integration; installation; and operations and maintenance of voice, data, and video hardware and software.

Expected to be awarded in the fall of 2009, NETCENTS II is a five-year contract worth as much as $9 billion. The first NETCENTS contract was awarded to eight multivendor teams led by such systems integrators as General Dynamics, Booz Allen Hamilton and Telos.

"NETCENTS II will offer a wide variety of communications and professional services," Verizon Federal's Zeleniak says. Verizon Business was on the Booz Allen Hamilton team for the first NETCENTS.

The U.S. Navy’s plan
Further out on the horizon is the Navy’s Next Generation Enterprise Network (NGEN), which will provide computing and communications services to all Navy and Marine Corps. users worldwide. NGEN is a 10-year contract with an estimated value of $8.8 billion. The NGEN RFP is expected out in the fall of 2008, although an award is not expected until 2010.

"NGEN is a follow-on to the Navy-Marine Corps intranet, which is run by EDS," FedSources' Bjorklund says. He says NGEN will include computing and communications services outside the scope of the EDS contract, which operates in the United States. "The Navy is trying to consolidate its whole communications infrastructure in NGEN," he says. NGEN will have "everything but the kitchen sink," Zeleniak adds.

U.S. military plans to put Internet router in space

Bjorklund says the common theme in most of these DoD telecom buys is consolidation. "The DoD has a real big focus on consolidation of its existing contracts," he says. "NGEN is like that. Uni-Comm is like that. It makes good sense business-wise, but the bigger these procurements become, the more challenging it is to effectively and efficiently prepare the solicitations. They have to be all-encompassing and forward-looking, and then you have to successfully make an award. There’s so much at stake for the vendors that you’re at greater risk for a protest after award. The more consolidation you have, the fewer crumbs for the vendors."