Sprint Nextel Denied Bid For Huge Govt. Contract

[danny boi]

Highlights: http://www.bloomberg.com/apps/news?p...VuI&refer=home

By Molly Peterson

March 29 (Bloomberg) -- AT&T Inc., Verizon Communications Inc. and Qwest Communications International Inc. won the right to bid on orders under a government contract worth at least $20 billion, the biggest-ever federal telecommunications award.

Sprint Nextel Corp. was denied participation in the biggest part of the so-called Networx acquisition program, which lasts 10 years, the General Services Administration said today at a press conference. The decision will end the Reston, Virginia-based company's 18-year run as a government-wide contractor.

``It's clearly a disappointment,'' for Sprint, said David Kaut, an analyst at Stifel Nicolaus & Co. in Washington.

Shut Out

The program had been especially critical for Sprint, which gets several hundred million dollars each year for federal network services and has lost consumer customers in recent months. The company, which runs the third-largest U.S. wireless service, said in January it plans to cut 5,000 jobs this year as sales trail analysts' estimates.

Sprint said in a statement it will support a bridge contract to continue its work with government customers for as many as 40 additional months. The company said it is confident it will be found eligible to bid on a second, smaller part of the Networx contract that will be announced in May.

Lots of Work

The program was designed as a plan to help government agencies upgrade to Internet-based systems, add more wireless networks and adopt technologies that will emerge in the next 10 years. The government also wants to tighten network security and improve agencies' ability to communicate with one another, particularly during emergencies.

The phone companies say they have spent millions of dollars preparing for the contract in the past three years, assigning thousands of employees to the job.

All four carriers formed teams with technology and defense companies to meet the program's requirements. Sprint had planned to work with a group that includes Lockheed Martin Corp., while New York-based Verizon teamed up with Hewlett-Packard Co., General Dynamics Corp. and Computer Sciences Corp.

Northrop Grumman Corp. and Electronic Data Systems Corp. are on AT&T's team, and Qwest's team includes BearingPoint Inc. and SAIC Inc.

[bobolito]

Wow! even the government is dumping Sprint and going with AT&T and Verizon. That's what they get for talking trash about other carriers. Although, this contract is not exactly for wireless.

[Fire14]

Originally Posted by bobolito

Wow! even the government is dumping Sprint and going with AT&T and Verizon. That's what they get for talking trash about other carriers. Although, this contract is not exactly for wireless.

I guess the wireless part is small compared to the Internet & future technologies that require landline companies to be a part of.
It is amazing to see Sprint shut out of a Goverment contract though, guess they shouldn't have gotten rid of their landline business (I know it was part of the cable companies requirements).

[jones]

What Did Sprint Lose?
Dan Frommer, 03.29.07, 6:33 PM ET


Three of the largest U.S. telcos -- AT&T, Verizon Communications and Qwest Communications International -- won the right Thursday to compete for billions of dollars worth of government telecommunications contracts over the next ten years. But rival Sprint Nextel, a long-time government telecom service supplier, didn't make the cut.

It's another black eye for Gary Forsee's wireless giant. But it's not a disaster.

On Thursday, the U.S. General Services Administration said that AT&T , Verizon and Qwest will be the only three U.S. telcos that could bid on up to $48 billion worth of government telecom work over the next ten years, as part of its "Networx Universal" program.

The services range from phone calls to satellite and wireless service for 135 federal agencies across 191 countries.

Sprint Nextel , an incumbent supplier to the government, was a surprise cut -- the latest in a series of bad news for Forsee and Sprint investors.

"If the company was doing fine otherwise, it wouldn't be a blip," says Joseph Bonner, analyst with Argus Research. "But add it to everything else, and it's another negative for Sprint."

Still, it's not a total wash. The Networx Universal contracts could add up to $48 billion over ten years, but could easily total only half that amount. Because the telcos must compete on pricing to win, the service contracts may not be as profitable as many other lines of business, Bonner says.

Last year, Sprint did $324.6 million worth of business through existing government telecom deals. But that's not even 1% of Sprint's overall revenue: the company's 2005 sales topped $41 billion. And its actual revenue loss could be much smaller: the GSA boasts that contract prices will be better -- as in, cheaper -- for comparable services than existing contracts.

Sprint shares traded up 2.7% Thursday, closing at $19.

In May, the government will announce winners of a second contract pool, called Networx Enterprise, to which Sprint could win access. These telecom contracts include high-capacity fiber optic infrastructure and services like voice-over-Internet Protocol and Internet Protocol television.

Sprint could potentially use these contracts to show off some of their newer network services, according to Jessica Zufolo, analyst with Medley Global Advisors. For example, the telco could showcase the next-generation, super-fast wireless network it is spending $2.5 billion to $3 billion to build using a nascent technology called mobile WiMax.

"For plain-old phone services, it may not be as lucrative," Zufolo says. "But when you get into the more data-centric services, it may end up being more lucrative if they are successful in convincing government procurement officials that their agency is better served by using these more expensive services."

Some of Sprint's biggest challenges -- which could have impacted their standing with the government -- relate to integrating its two networks. The Nextel walkie-talkie system has been popular with government workers. But Sprint has had problems getting the Nextel network to play nice with its own cellular system, following their $35 billion merger in 2005. Nextel's call quality deteriorated, and customers have left the company.

Last quarter, 306,000 high-profit, "post-paid" customers that sign annual contracts and receive their bills each month, left Sprint. Most of them were Nextel subscribers.

As a temporary fix, the company has issued new phones to more than 200,000 Nextel subscribers that use Sprint's cellular network for phone calls and mobile Web browsing and Nextel's network only for walkie-talkie bursts. This clears up space on Nextel's network and will ideally improve quality.

Sprint is also upgrading its network to a new calling technology developed by Qualcomm called QChat that will let the two networks interoperate. But evidently Sprint hasn't worked out its kinks fast enough to please the government.
http://www.forbes.com/2007/03/29/spr...rtner=yahootix

[larry]

I don't see this as any big deal. There was someone on every forum today who couldn't wait to post this news even though it doesn't have much to do with wireless. It's hardly the end of the world for Sprint even though there are clearly some people who are hoping to see Sprint fail. Will anyone even remember this 2 or 3 months from now when it becomes old news?

[bobolito]

Here is what the government did to Sprint:

[larry]

Originally Posted by bobolito

Here is what the government did to Sprint:

I wonder if this is a temporary ban or a permanent ban?

[bobolito]

I think it was a temporary ban, unlike someone I know.

[Fire14]

Sprint Nextel Will Not Protest Rivals' Government Telecom Contract

Sprint Nextel, the only losing bidder among four companies vying for a government telecommunications contract worth up to US$48 billion, said Friday it has decided not to protest last week's decision.

The company met with the General Service Administration on Wednesday for a "debriefing" on why they weren't chosen for the 10-year "Network Universal" contract.

Sprint Nextel informed the agency Thursday that it would not protest the decision, said company spokeswoman Sukhi Sahni, who did not offer any more details.

"After a thorough discussion, Sprint has decided to move forward and focus on the future and continue to aggressively pursue the forthcoming Network Enterprise contract," according to an official statement by the company.

Enterprise is a second government contract worth up to $20 billion, expected to be awarded in May. It has fewer requirements than the Universal contract and covers a smaller geographic area.

The Universal contract covers voice, video and data services and technologies domestically and internationally for at least six federal agencies, but is available to as many as 135 agencies operating in more than 190 countries.

Several analysts had said that Sprint Nextel would have a difficult time proving the GSA did something wrong in rejecting the company's proposal.

Sprint, which has been supplying telecom services to the government for the last 18 years, lost out to Verizon Communications, AT&T and Qwest Communications International for the Universal contract. As a result, Sprint will not be able to compete for individual agency business for the next decade.

www.cellular-news.com/story/23040.php

[RadioFoneGuy]

Sprint could have used the money to help dig themselves out of the hole their in. It takes alot of Money to put a square peg in a round hole (IDEN/CDMA network).