DOD mulls yanking AT&T DISN pact

AT&T has failed to meet the technology mandates and time schedules for the Defense Department's critical long-haul domestic telecommunications network that serves as the keystone of the Pentagon's command and control systems FCW has learned.

Faced with the inability of AT&T to deliver the Defense Information Systems Agency quietly issued last month a stern warning to AT&T for its failure to perform up to standards according to sources familiar with the program. The agency has now started to examine its options including terminating the contract - a drastic step that could result in a sizable financial hit against the nation's largest long-distance communications company.

"It is unusual in a program of this size for a show-cause to be issued " said one legal expert. "This is not something to be undertaken it has to be construed as showing a very serious concern about how AT&T is performing."

AT&T Government Markets won the 10-year Defense Information Systems Network Transmission-Continental United States (DTC) contract in January with a bold low-priced bid of $970 million - more than a half-billion dollars less than its competitors' bids.

DISA and AT&T officials declined to comment on the show-cause order or any problems with DISN.The contract calls for the company to provide nationwide high-speed fiber-optic Sonet service - a technology needed to meet demands of command and control systems - by November of this year. However AT&T said in March of this year that it will not complete installation of its Sonet network until the end of 1998.

A Sonet-based network consists of fiber built in rings. If a back hoe cuts a cable - or a bomb or missile takes one out - Sonet circuits use software to find a path around the circle and away from the break within 50 milliseconds - the industry standard for restoring service. However it takes minutes - or in some cases hours - to restore a non-Sonet circuit.

Last month AT&T Government Markets management in response to the show-cause order told top DISA officials - including Lt. Gen. David Kelley who took over as director of the agency last week - that they could not meet the Sonet requirements by this November and instead proposed an interim non-Sonet solution.

That proposal according to knowledgeable sources put the agency into "an uproar" because only Sonet can meet the military's requirements for high availability and reliability.

With AT&T proposing a non-Sonet service sources said DISA faces another serious problem in that the rest of DOD's network such as switches and bandwidth managers installed by MCI is designed for Sonet standards. A non-Sonet transmission system would require extensive network redesign.According to one telecommunications analyst AT&T's difficulties stem from its plans to install a Sonet network using the industry's latest technology.

Frank Dzubeck president of Communications Network Architects Washington D.C. said AT&T has opted for technology that will provide extremely high capacity which the company believes is needed because of the large amount of data DOD would send over the system. However the equipment for new high-capacity networks has been slow to come to market pushing back AT&T's ability to provide nationwide coverage."They changed strategies in order to get higher capacity and there's a geography problem because of a delay with equipment vendors " Dzubeck said.

Even if DISA does decide to terminate the contract with AT&T the agency and DOD would face a difficult task to find other carriers with the Sonet capacity to satisfy the nationwide high-bandwidth demands of DISN. "There is very little fiber or Sonet capacity " said one industry expert. "The Internet has eaten up a lot of it and what's left would carry a stiff premium."

If DISA terminates the contract AT&T would be required to pay the difference between what it bid and what DISA would have to pay a new carrier to take over the contract - possibly hundreds of millions of dollars. That requirement one source said is why the company is scrambling to come up with an interim solution until it completes construction of its advanced nationwide fiber network designed to serve commercial customers as well as the Pentagon.

- John Stein Monroe contributed to this story.

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