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!