Feds Award Networx Universal Contract, Overlook Sprint

The U.S. General Services Administration (GSA) on Thursday announced the winning bidders for its Networx Universal contract, the international version of the government’s $20 billion communications network upgrade initiative.

AT&T, Verizon Business Services (formerly MCI) and Qwest Government Services Inc. all landed what surely were plush contracts; the GSA would not divulge the financial terms of those bids.

The fourth bidder, Sprint Nextel Corp., got nothing. That’s quite a blow to the company, which has provided telecom services to the federal government since 1988.

“It is difficult to ascertain why Sprint did not win the Universal contract and at the very least the carrier is entitled to request a debriefing from GSA officials about their reasoning,” said Medley Global Advisors analyst Jessica Zufolo in a memo to clients. “But either way, it undermines Sprint’s market position relative to their competitive peers in the government procurement arena.”

Sprint officials said they will ask the GSA for a debrief next week.

“A decision whether to protest or not will be made after that meeting,” said a Sprint spokesperson, adding the company is “disappointed not to receive a portion of the Networx Universal contract.”

The carrier still has a shot at Networx Enterprise, however. Enterprise is Universal’s domestic counterpart. Both contracts are good for 10 years and will provide voice, IP, wireless and satellite services to 135 federal agencies across 191 countries. Winners of Networx Enterprise will be named some time in May.

The three awardees released statements touting their respective wins. Richard Notebaert, Qwest’s chairman and CEO, said the coup shows how much Qwest has progressed, referring to accounting scandals that sent the carrier reeling in the early 2000s.

The winners now can compete for business from individual federal agencies, and must do so with the help of their subcontracts. The GSA requires bidders to farm out “a significant portion of the contract to other providers,” Zufolo said.

AT&T’s subcontractors include Bechtel, Cingular, EDS, Global Crossing, GTSI, Northrop Grumman and SRA International. Qwest’s consist of Akamai Technologies, Alcatel-Lucent, Bearing Point, Hawaiian Telecom, Science Applications International and Wire One Communications. Verizon’s team includes Comtech Telecommunications, G2 Satellite Solutions, HP, Proxim Wireless, WilTel Communications (now owned by Level 3 Communications) and Verizon Wireless.

The stock market reacted favorably to the contract news. Sprint’s stock rose 32 cents, even on its contract loss, to $18.83 by early afternoon Eastern Time. AT&T shares were up 6 cents to $39.01, while Qwest’s prices increased by 10 cents to $8.95. Similarly, Verizon’s stock went up 9 cents to $37.32.

AT&T Inc. www.att.com  

Medley Global Advisors www.medleyadvisors.com  

Qwest Government Services Inc. www.qwest.com  

Sprint Nextel Corp. www.sprint.com  

Verizon Business Services Inc. www.verizon.com

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