A Qwest for federal business

From his 14th-floor office, Qwest Government Systems vice president Jim

Payne can see the Washington Monument. But more importantly, he has a clear

view of his customer base: the federal government.

"We're reminded every day that we are serious about participating in

[the federal market]," Payne said. "We may be a relatively new company,

but we realize that if we are going to win the contracts, we must look into

the future and get a sense of the next next-generation Internet."

What began in 1998 as five employees wanting to form a government sales

division has turned into a 100-person operation and the fourth-largest telecommunications

supplier in the federal market. Industry experts expect further growth as

Qwest Communications International Inc. merges with US West, which has a

strong federal presence.

In less than two years, Qwest has received more than $500 million in

government contracts, beating out more established companies such as AT'T.

"They

are a company to watch and are really shaking up the market," said telecom

analyst Warren Suss. "Sometimes the new kids have the advantage because

they have the more advanced, more efficient networks and don't have to worry

about upgrading their systems."

Two months after Qwest formed its government division, the company signed

a $430 million contract to custom-build a virtual private network for the

Defense Department and provided the network backbone for the Internet2 Abilene

Project, a multiagency network that connects universities. Qwest also was

asked to be a subcontractor on the $1 billion Treasury Communications Systems

project in 1999.

"If Qwest continues to move at the pace it is, I think you will see

them as a major contender for the mega-projects," Suss said. "They are moving

like lightning. They have the latest technology and very aggressive pricing."

Even though it is growing, Qwest's government division must pick and

choose the contracts it will bid on. "We must be careful how our money is

spent and research projects before we bid on them," Payne said. "We can't

even afford to advertise like some of the larger companies we compete with."

In January, Qwest beat out three major telecom companies for the $50

million Energy Sciences Network (ESNet) contract. Qwest will upgrade the

system, which connects federal contractors, universities, research centers

and about 50 Energy Department laboratories. ESNet is almost three times

faster than any commercial Internet provider and will transmit more than

a trillion bits of information when the upgrade is complete.

"The government is the leading user of technology and is responsible

for bringing a lot of technology to the civilian market," said Shaun Gilmore,

Qwest senior vice president of national accounts and government services,

who oversees the government division. "The government will give us a precursor

to the trends in the industry."

The company is looking to bid on Department of Veterans Affairs contracts

as well as Defense Information Systems Agency projects, according to Howard

Seeger, Qwest Government System's vice president of sales and marketing.

"We are very interested in the agencies that are very data-intensive,"

Seeger said. "They seem to fit our model well, and it is an area we have

proven we can provide the technology and support for well into the future."