AT&T snares billion-dollar DISN pact

AT&T captured the premiere Defense Department network contract of the decade with a bid of $970 million over a nine-year period a figure far below earlier DOD estimates and roughly half the rate of competing bids.

The Defense Information Systems Network Transmission Services-Continental United States (DTS-C) covers long-haul communications across the United States providing the large pipes to easily move high-bandwidth images such as satellite reconnaissance photos or digital maps to key users. DISN will provide a common user network for all the services and Defense agencies as well as service within eight DISN local-access regions.

Air Force Lt. Gen. Al Edmonds director of the Defense Information Systems Agency said AT&T's winning bid represents a 49 percent savings on long-haul transmission costs for the Pentagon based on DOD's original estimates. The contract could be worth up to $5 billion if all options are exercised.

Edmonds said AT&T won the contract because "they had the lowest bid" compared with offers from MCI and Sprint. He emphasized that AT&T submitted the low bids for "all the regions" too. Because DTS-C was a priced-based competition Edmonds said he would be "shocked" if the other bidders filed protests.

Industry sources said AT&T which has held the major Pentagon long-haul telecommunications contract for 12 years came close to a half billion dollars below the offers from Sprint and MCI.

Diana Gowen director of Defense and national information infrastructure at MCI Government Markets said there are no grounds on which to protest. "They clearly outbid us " she said. Last August MCI won the DISN Switched/Bandwidth Manager Services contract which Gowen said makes MCI the "brains" of the new network.

Bill Brougham director of Sprint's Defense program office indicated the company would not file a protest saying "It's tough to protest low price."

Warren Suss a Pennsylvania-based telecommunications analyst dubbed AT&T's bid "staggeringly low" compared with the competition. "DISA achieved its goal to drive down prices " Suss said.

Dick Lombardi president of AT&T Government Markets said his company bid "aggressively [but] we believe the prices reflect our costs." Lombardi added that his division and AT&T corporate headquarters viewed DTS-C as a "very important piece of business.... It reinforces a key relationship with a key customer."

In addition to the AT&T and MCI DISN contracts DISA last June awarded the $2 billion DISN Support Services-Global contract to Boeing Information Services Inc.

Edmonds said the DISN program showcases "acquisition reform at its best.... I like having three contractors the giants in the business doing it all together [as part of] an integrated process team."

DISA has designed DISN which will eventually include extensions serving the Pacific and Europe as a single integrated cost-effective "global infosphere" designed to move high-bandwidth data as well as voice from as Edmonds put it "the foxhole to the White House." Edmonds said DISN will help move the Joint Chiefs of Staff plans for warfare in the next century called Joint Vision 2010 from concept to reality.

Lombardi said AT&T initially will provide DISA with OC-3 circuits that will serve as a continentwide backbone connecting key switching and network sites installed and operated by MCI under its Bandwidth Manager contract.

This backbone in turn will feed into T-3 and T-1 lines serving Army Navy Air Force and Defense agency installations with the services responsible for the networks on those bases.

DISA's network plan calls for much of the traffic AT&T delivers on its long-haul networks to the MCI hubs to be handed off to local telephone companies in the eight regional access locations.

AT&T's subcontractors who will help provide this portion of the network include Bell Atlantic Bell South Ameritech Southwestern Bell US West Communications Nynex Corp. Pacific Bell and GTE Corp.'s telephone operating companies and local phone companies owned by United and Central Telephone Companies Inc.