In one of the largest awards of its kind, American Telephone & Telegraph said that it has won a contract to supply the Department of the Treasury with as much as $1.8 billion worth of computers and related services over as many as the next seven years.
The contract, part of Treasury's long-awaited overhaul and modernization of the nation's tax collection system, was hotly contested among three bidders: AT&T, International Business Machines and Lockheed.
The contract, which will run for one year and can be renewed for six additional years, is a major boost for AT&T's computer division, a floundering operation that will get a major infusion of new life later this year when AT&T's acquisition of NCR Corp. is completed and the two units are merged.
By winning this contract, AT&T is now the supplier for three of the largest computer contracts ever awarded by the federal government. In 1988, AT&T won a contract valued at more than $1 billion to supply the Air Force with desktop computers. A year later, it won a contract worth an estimated $850 million to supply computers and networks to the Department of Transportation.
James Leto, vice president of AT&T's federal systems computer division, said that the contract would be turned over to the new, NCR-led computer group once the merger is final and the Department of Treasury approves the transfer.
Despite just a one-year guaranteed run on the contract, Leto said that Department of Treasury officials had projected spending as much as $1.4 billion of their authorization over the life of the award.
"We're delighted the Treasury Department has awarded this significant contract to AT&T," said NCR President Gilbert P. Williamson, who will become NCR's chief executive when the merger with AT&T's computer business is completed this fall.