Qwest, AT&T, Verizon win $48 bil gov't contract

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WASHINGTON -- Qwest Communications International Inc., AT&T Inc. and Verizon Inc. on Thursday were awarded the government's largest telecommunications contract ever, a 10-year deal worth up to $48 billion.

The contract winners, who beat out Sprint Nextel Corp., don't simply split a pool of money. They now have to compete with each other for the telecom needs of federal agencies, the General Services Administration announced.

The contract covers voice, video and data services and technologies domestically and internationally for at least six federal agencies, but could apply to as many as 135 agencies operating in more than 190 countries.

While Qwest, AT&T and Verizon gained access to an important and deep-pocketed client, the announcement was a huge blow to Sprint, analysts said, because it has been providing telecom services to the federal government for nearly 20 years.

"The federal government was Sprint's first major customer since the company started," said technology consultant Warren Suss.

For the winners, Thursday's announcement was perhaps most significant for Qwest, the smallest among them. Suss said Qwest can now leverage its government business to gain more corporate clients.

Industry analysts said they expect the federal government to spend at least $20 billion over the life of the so-called Networx Universal contract, which is capped at $48 billion.

"The advanced technologies and services defined in the Networx program will serve as a platform to transform the government's telecommunications infrastructure to a more seamless and secure environment," GSA's acquisitions commissioner Jim Williams said in a prepared statement. GSA procures and manages federal assets.

The two previous 10-year government-wide telecom contracts had two main providers. The first went to Sprint and AT&T. The second to Sprint and MCI Worldcom, since acquired by Verizon.

For the losers of the Networx Universal contract, there is a consolation prize on the table. GSA is planning in May to award a second telecommunications contract called Networx Enterprise -- worth up to $20 billion -- that contains fewer mandatory requirements and services in select areas across the nation.

In midday trade, shares of Qwest rose 7 cents to $8.92, shares of AT&T advanced 11 cents to $39.05, shares of Verizon gained 19 cents to $37.42 and those of Sprint were up 26 cents to $18.77. All stocks trade on the New York Stock Exchange.
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