Level 3 (Nasdaq: LVLT) and Sprint (NYSE: S) may be two large players in the General Service Administration's (GSA) Networx telecom contract, but due to ongoing migration challenges, they are continually being edged out of opportunities by AT&T (NYSE: T), CenturyLink (NYSE: CTL) (formerly Qwest Government Services), and Verizon (NYSE: VZ).
Although U.S. government agencies were required to migrate over to Networx by last June from the former FTS2001 contract, they have instead spent $290 million on "bridge" and "crossover" contracts since the GSA named the primary Networx contractors in 2007 to maintain service during the transition process.
With the majority (83 percent) of the crossover contract work going to Verizon and AT&T, there aren't as many opportunities for Level 3, a holder of the Networx Enterprise contract, to pursue since they weren't a holder of the former FTS2001 contract.
What's been keeping out Level 3 and Sprint out of the Networx wining circle is that unlike AT&T, CenturyLink and Verizon, is they won a seat on the smaller Networx Enterprise contract, which shares 48 of the 50 services offered on Universal.
Still, Monica Martinez, a spokeswoman for Level 3 told FierceTelecom that sales in the federal government division continue to rise. "We've been growing our overall federal sales substantially," she said in an e-mail.
While the Networx Universal was intended to focus on both legacy and next-gen services and Networx Enterprise focused on next-gen, Level 3 points out both contracts were essentially the same from the very moment they were awarded through modifications.
However, there are an additional four services that are available on the Enterprise contract that are not available on Universal, so there are actually 53 services available on Enterprise--including Managed Trusted IP Services (MTIPS) has been added to both contracts. This means that the Enterprise contract actually offer more services than Universal.
In the near-term, agencies have been using the broader Universal contract.
Under the terms of the two contracts, Universal provides a larger set of services, including legacy long-distance and local voice, while Enterprise mainly focuses on next-gen services such as cloud and VoIP.
While the Networx Universal was intended to focus on both legacy and next-gen services and Networx Enterprise focused on next-gen, Level 3 points out both contracts were essentially the same from the very moment they were awarded through modifications.
Despite what contract segment the carriers sit on, the overall problem with transitioning to Networx, argues Bill White, Sprint's senior vice president of federal sales, is its sheer complexity. To move any service from FTS 2001 to Networx, a government agency has to go through "tens of thousands" of line items.
While the GSA and the government obviously remain committed to the transition, one that's cost taxpayer dollars, they'll likely look for ways to simplify the process in the next transition after Networx expires.
For more:
- The Washington Post has this article
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