DISA Deal D-Day Approaches

On Friday, a long-awaited request for proposal (RFP) from the U.S. Defense Information Systems Agency went public -- and vendors everywhere went into high gear, eager for a piece of what's arguably the most important government networking contract in twenty years.

"People are on this. The RFI [request for information] went out a year ago and the vendor day was packed. It's major," says one hopeful participant, who spoke on condition of anonymity.

Friday's RFP relates to the much-discussed Global Information Grid Bandwidth Expansion (GIG BE) project, DISA's vision of a global telecom network for the U.S. Department of Defense, which DISA exists to serve (see Dreams of the DISA Deal).

The RFP has two parts: The first relates to a dark fiber network that will form the basic infrastructure for the project. That RFP has been circulated, and bidding closed on May 16, with a range of carriers and fiber suppliers responding. The second portion calls for specific hardware to run on the network. Documentation for it was finally published late Friday, but vendors have waited months for it.

Industry eyes are glued to the hardware RFP for a number of reasons. First, there's the money. The GIG BE hardware RFP represents a key opportunity for equipment vendors suffering from the carrier spending drought -- for some, it may be a chance at staying alive.

Estimates of the project's value varies. In a note to investors this morning, analysts Steven Levy and Tim Luke of Lehman Brothers wrote they expect the RFP to result in $800 million to $900 million in spending over the next two years for "initial deployment."

Others differ. "It's a tad open-ended," says Tom Nolle, president of the CIMI Corp. consultancy. "But I think it's about a three-year commitment worth between $500 or $600 million or so." He says he's not comfortable making estimates beyond that but thinks it likely the project could wind up being twice that amount.

DISA had not gotten back to us at press time with answers to questions on specifics of the RFP. But Levy and Luke say they think the full contract covers 72 nodes to be rolled out over a seven-year period.

DISA is asking for equipment in four major categories: "core and edge Internet Protocol Routers; Multi-Service Provisioning Platforms; Optical Transport System; and Optical Digital Cross Connect Switch." Network management and service assurance products are also being called for.

The RFP process is being overseen for DISA by Science Applications International Corp. (SAIC) (which owns Telcordia Technologies Inc.) -- and it's strict. Vendors have just 12 days from May 23 to ask questions about the RFP documents. Final responses must be in within four weeks. No extensions are permitted. Trials are expected to start this year.

Observers say the network schedule is ambitious and the government will only consider equipment that can be demonstrated to work today. This could make the RFP a kind of proving ground for next-generation networking gear -- as well as a bellwether for other networking projects.

"It's very similar to some carrier RFPs. It's kind of a preview of what service providers might do," Nolle says. RBOCs such as Verizon Communications Inc. (NYSE: VZ) and SBC Communications Inc. (NYSE: SBC) are readying nationwide packet-based networks (see How Will Verizon Go National?). IXCs like AT&T Corp. (NYSE: T) and Sprint Corp. (NYSE: FON) are moving that way, too. The GIG BE could provide a lot of information about what to expect.

Who's up to win? That's the question everyone will ask over the next weeks. Levy and Luke have already handicapped their picks, including Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Ciena Corp. (Nasdaq: CIEN), Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (Nasdaq: JNPR), Lucent Technologies Inc. (NYSE: LU), Nortel Networks Corp. (NYSE/Toronto: NT), Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), and Sycamore Networks Inc. (Nasdaq: SCMR).

Nothing's guaranteed, the Lehman analysts say. Cisco, for instance, may be the world's biggest routing vendor, but unless it gets its next-generation core router to market, and fast, it may fall behind. "Specifically, the RFP suggests that the core routers in the GIG BE network need to support at least an aggregated 640Gbps throughput and Cisco's current GSR core routers can only support an aggregated 320Gbps," Levy and Luke write. "We believe it is critical for Cisco to bring HFR (huge fast router) to the market in a timely fashion."

Cisco wouldn't comment on the analysts' speculation that it may release HFR at next week's Supercomm 2003 tradeshow in Atlanta.

Lehman's list may not include key contenders, say some observers. The list of public companies likely to answer the call is apt to contain quite a few more. CIMI's Nolle says partnerships could come into play with this RFP, like the one between Juniper and Lucent (see Lucent Partners With Juniper), as vendors seek to fill in gaps in their responses. Mergers could also be a factor: Nolle thinks this RFP has been the catalyst for talk surrounding Laurel Networks Inc. (see Laurel: Startup Holdout? and Marconi and Laurel in Talks ).

There's also room for dark horses. Marconi Corp. plc (Nasdaq/London: MONI), for instance, has a long history of U.S. government contracts and could have some surprises in store, Nolle says.

At least one analyst says that whichever way this RFP goes, it won't be the end of the story. "This is the first RFP of many, some of which we know about and some of which we don't," says Frank Dzubeck, president of Communications Network Architects. The government's been working to overhaul its network since Sept. 11, 2001, he says, and since national security's involved, there's a level of secrecy that's lacking in other arenas.

But Dzubeck says the level of excitement surrounding the project points to the amount of technology activity in Washington these days. "There's tremendous sales activity," he says.

— Mary Jander, Senior Editor, Light Reading

For extensive and up-to-date coverage of Supercomm – before, during, and after the show – visit Light Reading's Supercomm Preview Site.

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Kumite 12/4/2012 | 11:59:56 PM
re: DISA Deal D-Day Approaches You named the big players for DoD, true. But now name one of those that have built a global optical backbone. Narrows the list down to zero.

The only people who stand to make a lot of money on GIGBE are SAIC (Defense contractor) and AT&T (builder of global optial networks) and whatever equipment vendor(s) they choose to deploy.

So the only unknown is who will be the equipment vendor. After reading the RFP, all bets are off. It could be anyone.

whyiswhy 12/4/2012 | 11:59:44 PM
re: DISA Deal D-Day Approaches You are simply ignorant. But I mean that in a nice way. If you think the government contracting / RFP game is open to all comers, you are truly living a fantasy.

This is not some SBIR phase 1 science welfare doodle. This is hard core, corporate "business" (aka lobby) office in Virginia, Senators X,Y,Z,P,D,Q personally donated to by the chairman or CEO, Congress persons in the hundreds onboard via PAC money, their staffers talked to then-you-win sort of stuff.

DISA is an enhancement of a major government communications backbone already existing.

The lucky prime contractor for that backbone did the overall system architecture, awarded construction subcontracts, etc. Lucky company X (who got the major subcontract) provided rights of way, some existing equipment, construction, operation and maintenance support.

Yea, it's aging and showing it.

This is not a project left to some commercial company with dubious accounting practices, and a questionable financial position.

It takes company with a major (DCAS audited) bank account to financially back up their technical promises; someone who depends on the government for a majority of its livelihood: a DoD prime contractor.


PS: Attention all VCs; if you think your favorite start-up equipment vendor will see dime one out of this...sorry, NOT!

rjmcmahon 12/4/2012 | 11:59:33 PM
re: DISA Deal D-Day Approaches Pretty amusing seeing all the rugged individualists, alleged entrepreneurs and opponents of big govt. with their hats out looking for govt. money ;-)

It is sad. Unfortunately, debt obligations can turn people into slaves to those who control discretionary funds.

Along these lines, Dubya and the gang are true missionaries for the Feds, using the US government for their handout (or bribe?) programs. Their economic plan seems to require converting everybody into federal contractors. (Maybe we'll need to reclassify ethnic groups so the entire SV can be considered a small minority owned business?) Give Dubya a promise of some electoral votes and, hell, he'll print some dough for CA's budget problems.

Sad to think that we're trending to a society where central planners, all living in DC, think they have the rights to decide what we watch, who receives stock options, how much we'll get paid, who we sleep with, which web sites we browse, what constitutes patient/doctor privilege, what criminal behavior requires imprisonment, the price of bandwidth, etc. etc. etc.

PS. When did we hire a CTO for the entire country? And how do we fire this guy? I say, get these crooks out of here and let their companies, all full of pork, go the way of Robespierre.

OMB, Unisys recruit in Silicon Valley
BY Michael Hardy

The chief technology officer of the United States shared a podium May 28 with a major contractor to speak to California technology businesses about the federal market.

Norman Lorentz, CTO at the Office of Management and Budget, played up the President's Management Agenda, the e-government initiatives, enterprise architecture and the creation of new federal agencies.

Greg Baroni, president of Unisys Corp.'s global public sector division, spoke of opportunities for subcontractors, while James Kane, president and chief executive officer of Federal Sources Inc., shared information about the value of the federal market.

Lorentz and Baroni planned closed-door meetings with Silicon Valley companies for today. The purpose of the trip, which follows similar excursions by Dan Chenok, OMB's branch chief for information policy and technology, and Mark Forman, administrator of the Office of E-Government and Information Technology, is to recruit new viewpoints and talent for the federal contracting world, Lorentz said.

dave77777 12/4/2012 | 11:59:29 PM
re: DISA Deal D-Day Approaches she expects it to go to CSCO and Corv, with Corv getting about $50M.
lowbandwit 12/4/2012 | 11:59:16 PM
re: DISA Deal D-Day Approaches Just curious: how is "DISA an enhancement of a major government communications backbone" when DISA is an agency? What did you mean to say?

Also, are you implying that performance isn't a factor in selection, just how much somebody manages to bribe key decision makers?
BobbyMax 12/4/2012 | 11:59:02 PM
re: DISA Deal D-Day Approaches The collection of knowledge on core router by DISA is an example of corruption and tells how far the corruption in government can hold. It is equally bad policy to put vendors against each without any regard to intelllectual property.

The government has no reason to issue RFP on router. I think that the government wants to sell these high priced gear to Iraq.

The US Government want to empty the tresusre of Iraq through various crooked and dishonest deals. One of the deals that the US government is in the process upgrading the equipment. This would mean stealing billions of dollars under a false pretext of repair.

Since tremendous damage was caused by the Occupation of Iraq, the US bear all cost of restoration. The US troops should immediately be withdrawn and the government functions be turned to Iraqis. This is a fair thing to do.

It is not clear why the government did not invite Prcket Networks and Chiaro Networks ( spelling, located in Texas). These two companies have the largest of large routers.
Accelerated Photon 12/4/2012 | 11:59:01 PM
re: DISA Deal D-Day Approaches Bobby,
Sometimes when I read your posts I think to myself that you should be tied but, by some stroke of luck you find yourself living in America where you can say what you want. Unlike Iraq before the war when the simple act of speaking your mind could end up with a knock at your door and things being done to you that even most Light Reading message board posters would not wish on you.
gea 12/4/2012 | 11:59:00 PM
re: DISA Deal D-Day Approaches BobbyMax:

All your base are belong to us.
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