Lucent, GTE to share Navy Vivid contract

The Navy last week awarded contracts to four vendors for up to $2.9 billion worth of telecommunications equipment and services only to see two of the winners abruptly withdraw from the program because they feared their awards were too small to cover the required investment in the program.

The Infrastructure Modernization of Voice Video and Data (Vivid) Supplies Services and Local Access and Usage program - which may be the largest federal telecom equipment contract yet awarded - will provide a full array of telecommunications products and services.

However AT&T Government Markets and Bell Atlantic Federal Systems turned down an opportunity to provide local- access services to Defense Department facilities worldwide because company officials could not make a business case supporting the deals.

The Naval Information Systems Management Center which managed the Vivid acquisition said the Navy will now funnel Vivid requirements to the remaining two vendors: Lucent Technologies Inc. and GTE Government Systems Corp. Lucent now will be able to provide the entire gamut of services offered through the program. GTE will provide all the products and services covered by Vivid with the exception of those associated with local access.

Vivid will provide switches servers multiplexers voice mail phone sets fiber cable wireless equipment and other products as well as outsourcing services and voice video and data communications.

The Vivid solicitation said the winning vendors will compete for some task orders while others will be directed to specific vendors.

An AT&T spokeswoman had no comment on the company's specific reasons for opting out. "Because it was a partial award we didn't feel it was in our best interest from a business perspective " she said.

A knowledgeable source said AT&T officials were displeased with their award because it confined the long-distance carrier to providing local-access services only. The source said the company did not believe it would be able to compete effectively for that business with Bell Atlantic and GTE which are two accomplished local service providers.

Bell Atlantic announced its own withdrawal from the program one day after AT&T said it was pulling out. Barbara Connor president of Bell Atlantic Federal Systems said in a prepared statement that the company "could not effectively serve this important customer while meeting our business needs."

A source close to Bell Atlantic said company officials believed "there was no way they could even recover their operating costs. They were given such a small piece of business but were still expected to meet these huge requirements like setting up an office in California."

Federal market analyst Jon Klem senior vice president at Federal Sources Inc. said Navy officials recognized months ago that the types of line items involved with Vivid were so varied that it might be difficult for vendors to meet all the requirements. Consequently procurement officials decided to award partial contracts to those companies that could not comply with the full range of requirements.

"The Navy may have been overly ambitious by putting together requirements that covered everything from the desktop to the local-access point " he said. "But Lucent at least seemed to understand where the Navy was heading with this."

Lucent officials said the company was the only competitor able to win all aspects of the Vivid program because of the subcontractors it was able to bring together: local exchange carriers Ameritech Bell South SBC Communications and US West. The company also enlisted Internet service provider BBN network service provider CACI Inc. and integrators Wang Litton/PRC Inc. and Science Applications International Corp. The team is rounded out by small businesses Mandex and NCI Information Systems.

"We were the only company that could offer everything from soup to nuts " said Lucent president Jim O'Neill. "It's truly everything in terms of a communications network infrastructure."

Klem said Vivid may be the largest such telecom equipment contract yet awarded by the government although he added that the $2.9 billion maximum value cited by the Navy "is an inflated figure."

Former Navy official Mike Finn who came to Lucent last week as director of business development said the contract will serve as a handy vehicle for Navy organizations striving to meet the requirements of the service's Information Technology for the 21st Century initiative to base all ashore and afloat computing and telecommunications system on commercial equipment that is easy to buy use and maintain. IT-21 calls for a new emphasis on outsourcing or leasing information technology products and services.

"At the highest levels of the Navy there is great interest in outsourcing " Finn said. "Vivid will give them the opportunity to do that."

The Navy kicked off a pilot leasing project for its Atlantic Command headquarters last month with bids due in the middle of August.

Marv Langston the Navy's chief information officer also launched an outsourcing pilot project study for the Pacific Fleet in Hawaii earlier this year. Langston has characterized Vivid as a "bridge" between current Navy procurement contracts and future leasing or outsourcing contracts.

John Undset the command control communications and computer program manager for the Atlantic Fleet said he believes leasing is the only way he can keep the 190 ships in that fleet up-to-date. "I don't have the money to do a technology refresh for all those ships" through procurements Undset said. "But if we lease we can do a refreshment every 18 months."

Ed Hudson GTE's Vivid program manager said the company would partner with Electronic Data Systems Corp. and a number of other subcontractors. He said he was "not the least bit" disappointed in receiving only a partial award.