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Summary

The US General Services Administration (GSA) has announced 10 winners for its new Enterprise Infrastructure Solutions (EIS) federal contract vehicle, which is the successor to GSA's Networx contracts. EIS covers a range of networking services and extends up to 15 years, with a potential value up to $50bn.

Enter new operators, integrators, and IT service providers

For the past 10 years, federal agencies have used the US government's Networx contract vehicle to purchase networking and related services. Networx had just five contractors. Only three of them – AT&T, Verizon, and CenturyLink – were qualified for the biggest bids. The other two participants were Level 3 and Sprint.

Times are changing. GSA announced its EIS awards on August 1, listing 10 winners. Four are carried forward from Networx: AT&T, Verizon, CenturyLink, and Level 3. Another three are integrators and IT services providers: Harris, MicroTech, and Core Technologies. The final three awardees are BT Federal, through a US branch of the UK-based global services provider, and managed services providers MetTel and Granite Telecommunications.

Will the six new awardees fundamentally change the nature of US government networking contracts? Yes and no. Networx serves 53 agencies, representing many thousands of accounts. In theory, all accounts served by the incumbent network providers are up for grabs as they transition to EIS, putting contract renewals at risk. In practice, new challengers will need to pursue contracts selectively, focusing on those that play to their strengths. BT Federal's strengths are global networks, some IT services, and cybersecurity. MetTel has a broad portfolio of domestic managed network and mobility services, while Granite Telecommunications' narrower portfolio leverages national service aggregation and competitive pricing.

The EIS awardees providing integration and IT services can play a key role helping agencies fulfill GSA's directive to modernize their network and IT infrastructure. Harris is a large government contractor; MicroTech and Core Technologies are midsize and smaller businesses with service-disabled, veteran-owned, minority-owned, and woman-owned business status, which many agencies need for diversity requirements in procurement.

The new EIS contract awardees are at the starting line. GSA insists the transition to EIS will be brisk, but back when Networx started, it took many years to take off. The contract awardees will need to make early investments to get the business going, and then they are in for a wait. All the winners hold is a hunting license, and the providers will have to hunt to find and win business. Much of the Networx business will probably transition to EIS without switching service providers, and competition from new entrants is likely to squeeze pricing for everybody. But for new competitors that bid selectively to their sweet spots, EIS promises a long-term revenue tailwind driving new business growth and success.

Appendix

Further reading

"US public sector spend grows as Networx is slated to sunset," TE0005-000981 (July 2017)

Author

Brian Washburn, Practice Leader, Network Transformation and Cloud

brian.washburn@ovum.com

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