Verizon snares $678 million federal network deal

Verizon Business has captured one of the largest federal network deals of 2008: a 10-year contract to provide managed network and security services to the U.S. Department of Homeland Security that is valued at US$678.5 million.

Losing bidders on this much-anticipated deal were AT&T and Qwest. 

Verizon Business will create a consolidated backbone network for the 5-year-old DHS to replace separate wide-area networks used by its 22 agencies, including Customs Service, Immigration and Naturalization Service, Coast Guard, Secret Service and the Federal Emergency Management Agency.

OneNet will be a common, secure Internet Protocol-based network that supports more than 5,000 DHS offices worldwide. Verizon Business says it is building a special security operations center for OneNet. Verizon also is providing DHS with a new offering dubbed Emergency Communications Services, which helps agencies respond to man-made and natural disasters with mobile communications equipment.

"The Department of Homeland Security is looking for a partner to help them build, manage and secure their global network for these 22 agencies," says Marlin Forbes, regional vice president for Verizon Business' Federal Defense & International Services. "There's a huge legacy...from what they were doing in the past as separate agencies before they were part of DHS. We think this deal goes right to Verizon's sweet spot."

Verizon Business is the prime contractor for OneNet. Subcontractors include Accenture, General Dynamics and Computer Sciences Corp.

"We were told that we were superior in both management and technical and that we represented the best value to the government," Forbes said of his OneNet team. He added that the bid was "heavily weighted on how you would manage the network and provide security around the network."

Verizon Business won the deal as a task order under the massive Networx program, which will provide voice, data, video and wireless services to the entire U.S. federal government for the next decade. The General Services Administration (GSA) runs the Networx program.

Networx is divided into two parts: Universal and Enterprise. Networx Universal provides comprehensive telecommunications services globally, and it is shared by AT&T, Verizon and Qwest. Networx Universal was awarded in March 2007.

Networx Enterprise is geared toward emerging IP and wireless services nationally and is shared by AT&T, Verizon, Qwest, Sprint and Level 3. Networx Enterprise was awarded in May 2007.

OneNet was awarded under Networx Universal. Only four large deals have been awarded under Networx so far, and all of them were from Networx Universal.

While OneNet is valued at $678.5 million, industry analysts say the program could top $1 billion over the 10-year life of the contract.

"This is the biggest Networx deal in play...that we're aware of," Forbes says.

The biggest loser on the OneNet deal was the incumbent carrier that was shut out from bidding: Sprint Nextel. Sprint provides roughly 45% of the telecommunications capacity at DHS agencies under the expiring FTS 2001 program, while Verizon Business provides the other 55%. Sprint Nextel lost the Networx Universal program, so it couldn't bid on OneNet.

"For AT&T and Qwest, it's not a great, big deal that they lost. If one of them had won, there would have been a lot of upside," Forbes says. "For us, a loss would have meant greater exposure."

Spokesmen for AT&T and Qwest declined to comment on Verizon Business' OneNet award.