Cisco nabs secret NSA switch pact

Cisco Systems Inc. last month won a key network infrastructure contract with the secretive National Security Agency blowing away a field of competitors with prices at least 50 percent below the nearest bid.

The contract dubbed "Light Core" by NSA calls for Cisco to install "literally thousands of switches" throughout the agency's headquarters at Fort Meade Md. These switches primarily high-speed Asynchronous Transfer Mode devices will enhance the ability of the agency to move data about the NSA campus including to and from a supercomputer facility that houses the largest concentration of high-powered computers in the world. Cisco put a high priority on the NSA contract industry sources said with its president and chief executive officer "intimately involved" in the contract.

Cisco industry sources said won the five-year NSA Light Core contract with a bid of $40 million - almost one-third below the agency's internal cost estimates and "about half" of competing bids tendered by other bidders. Unsuccessful bidders on the NSA pact are said to include Cabletron Systems Inc. Fore Systems Inc. Network Systems partnered with Xylan and Optical Data Systems.

One industry source said Cisco priced products that sell in the multiple thousand-dollar range on other federal contracting vehicles such as the Air Force's Unified Local-Area Network Architecture II contract at below $100.Jim Massa federal sales director for Cisco last week said "terms of the contract preclude us from discussing" the NSA contract. But talking about the company's approach to federal pacts in general Massa said the firm often takes a "modular" approach to pricing which could account for wide price differentials between contracting vehicles. One industry source speculated that Cisco used this approach on the NSA job offering just bare-bones chassis of switches at low dollar amounts.

Massa added that Cisco takes "different" pricing approaches to each federal contract it bids keeping in mind that while indefinite-delivery indefinite-quantity contracts may carry a high price they provide little return due to a low level of orders. Other vehicles Massa said have more "value" because they guarantee more business than an IDIQ and industry sources say NSA Light Source offers those guarantees.

NSA did not respond to questions by press time.