Earlier this week, the US government announced that it had selected three former Bell Companies - AT&T, Qwest and Verizon - to be the only ones who can bid for the individual federal contracts over next ten years. The total value of these contracts will be at least $20 billion, and according to some estimates could be as high as $48 billion.
This is clearly good news for Qwest, the weakest of the three Bells, but it is bad news for Sprint which was amongst the initial bidders but was left out in the end. Sprint’s government business is about a billion dollars. Sprint is going through a tumultuous period and has been one of the big losers in the mobile phone business in recent months.
The contract called Networx Universal (Jeez!) covers individual contracts from 135 agencies. The bidding process cost hundreds of millions of dollars and took the participants nearly four years to get their documents & proposals together.
GSA’s decision is highly curious, and makes us wonder if the US government authorities like GSA even believe in keeping the independent telecoms around, even for the sake of pretension. The Washington Post notes that there will be another smaller contract where smaller companies can participate and will have less rigid conditions. Its not like Sprint doesn’t have experience with working with the government… so what gives? How does Qwest qualify, after all it doesn’t really have any meaningful footprint in government contracts?
“It’s more of an embarrassment than a revenue hit. It’s a total black eye to be completely ignored by the United States government, especially as an incumbent,” said Patrick Comack, an analyst with Zachary Investment Research in Miami. (The Washington Post)
The company is going to be seeking an audience with GSA officials for a debriefing, which is Beltway speak for WTF!
5 comments so far
11:31 AM PT
What with some of the most recent revelations about how this administration does business, I wonder if they (Sprint/Nextel) were “underperforming” when it came to submitting to the will of the government; for example, complying with the PATRIOT Act, etc.? I’d always assumed the GSA was independent of the White House’s influence, but if the Justice Dept. has been politicized, why not the GSA?
Of course, it could also be who paid who how much and so on and so forth. Nothing is a surprise anymore, except displays of integrity and common sense.
11:55 AM PT
Sprint has a very strong foot print in the Government sector due to the large amount of IDEN direct connect users.
I find it hard to believe that the GSA did not consider the Nextel acquisition in the Sprint bid.
1:55 PM PT
Possible that Sprint strategically decided not to try to win this bid? I can only imagine what type of architecture will need to be built - architecture that will be obsolete as soon as it is live, w/ heavy, obsolete, expensive OSS and processes supporting it. If I was a Sprint shareholder (used to be), I’d rather have their efforts on the IP, especially wireless IP, side of the house. I say FSA is ringing the Bells w/ the bad news…
8:33 PM PT
Good news for Bells. A blip in the declining telecom revenues for few years but strange are the ways of US Government in deciding the contract terms. How does Qwest even qualify among At&T and Verizon?
8:02 PM PT
[...] When I asked Qwest CEO Ed Mueller back in March if they would buy a wireless operator like Sprint, his answer was no. “All we want to do is partner with a national wireless player where we can rebrand and remarket their service to our customer base. We are ambivalent about the technology but we want a partner with retail presence,” he had added. The quid pro quo of the deal: Verizon and Qwest will partner up and bid for government contracts, a very lucrative business indeed. [...]
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