DISN late; DISA, AT&T cut deal

The Defense Information Systems Agency confirmed last week that AT&T was unable to meet its schedule for installation of the Defense Information Systems Network (DISN) Transmission Services-Continental United States (DTS-C) a long-haul wide-band communications network designed to satisfy the bandwidth needs of all three services.

DISA said due to this delay it had asked for and received from AT&T an unspecified "consideration in the amount necessary to cover additional transition and operational costs." Neither DISA nor AT&T would specify the "consideration " but sources put the amount between $50 million and $80 million. AT&T won the contract in January with a bid of $970 million a half billion dollars below its competitors.

Until AT&T completes installation of DISN in June 1998 the company will provide service through its DISN Transition Contract an extension of a 12-year-old Defense Department contract with AT&T.

In its statement DISA said "An industrywide shortage of emerging technology transmission media [Synchronous Optical Network] has caused a delay in the installation of the [continental U.S.] backbone."

As reported last month [FCW July 7] AT&T's problems with the DTS-C contract stem from its agreement to provide DOD with a Sonet network by this November. Although the AT&T Government Markets unit pledged to meet the deadline public statements from the AT&T parent company in New Jersey issued before DISA signed the DTS-C contract indicated that the company will not complete building such a network for use by commercial or military customers until 1998.

DISA specified Sonet technology for its domestic backbone because of its quick restorative capabilities. Sonet networks are built in rings and if a cable is cut - by backhoe or bomb - Sonet circuits must find a path back around the circle and away from the break in 50 milliseconds. It takes minutes - or in some cases hours - to restore a non-Sonet circuit.

"It's awfully hard to fault the industry for AT&T's failure to deliver on a contract it won in competition with the rest of the industry " said Warren Suss a telecommunications analyst specializing in the federal market.

According to DOD sources once AT&T realized it could not satisfy DOD's Sonet requirements from its own network the company approached other carriers to purchase spare capacity. These carriers - AT&T's competitors - could not or would not furnish AT&T with the Sonet circuits it needed this source said. But Diana Gowen director of DOD networks at MCI Government Markets said that to her knowledge "AT&T did not come to us." If AT&T did try to lease Sonet capacity from MCI Gowen said it could have been through the company's leasing division or at very low levels.

If Richard Lombardi president of AT&T Government Markets had approached Gowen or Jerry Edgerton president of MCI Government Markets "we would have tried to work with him to take care of a mutual customer [DISA]." However Gowen quickly added that MCI could not have afforded to supply Sonet circuits to AT&T at the prices that company bid on DISN "but we would have tried to accommodate them." MCI holds the DISN Bandwidth Manager contract.

Web Cuts Sonet Short

The long-haul telecommunications industry does face a shortage of Sonet circuits today due to the explosive and unanticipated growth of traffic from the Internet and the World Wide Web Gowen said. But she added if MCI had won the DISN contract it would have already received a "large capital outlay from our chief financial officer to build the capacity for DISN. I don't think AT&T did that. I don't see how it's MCI's responsibility if AT&T can't supply DOD with Sonet."

Though it will take AT&T an extra year to build the DISN network government sources said the company will deliver a "predominately Sonet backbone as it is installed though in a few instances they will initially provide T-155 service which has a restoral time measured in minutes rather than milliseconds."

Although few details of the DISA/AT&T deal have emerged sources familiar with the talks said DISA director Lt. Gen. David Kelley has bargained hard with AT&T since the company first detailed the extent of its problems in May. "Termination was always an option " said a source familiar with the talks. Another source added that this is why DISA was able to extract what he called a "sizable" financial settlement from AT&T.

Kelley has repeatedly declined requests for comments on the DTS-C situation as has Anthony Valletta acting assistant secretary of Defense for command control communications and intelligence (ASD/C3I). AT&T declined to provide specifics of its agreement with DISA except to say it was glad to resolve the situation.

But Emmett Paige Jr. who recently retired as ASD/C3I said he believed "AT&T promised what they expected they would be able to deliver...based on all their planning for the commercial sector. I believe they really expected to be able to `spend' the dollars to build the capacity within the time frame that they promised [but] there are some times when money will not buy what you are prepared to pay even premium prices for."

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