AT&T Cost and Price Cost and Price Essay

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AT&T Cost and Price

Cost and Price Analysis -- AT&T

Company Overview

The AT&T Government Solutions business is currently headquartered in Oakton, VA and is composed of over four thousand scientists, engineers, and analysts; many of which have already obtained the needed security clearance to work more sensitive projects (AT&T Government, 2012). The company's niche is focused on providing a range of IT managed solutions that include network leadership in voice, data, video, and managed services. The company previously operated under the name GRC International which was originally founded in 1961 (Bloomberg Business, 2012). However the name was changed to AT&T Government Solutions, Inc. In March of 2000 and operates as a subsidiary of AT&T Inc.

AT&T Government Solutions received a majority of its work from the defense industry in 2011 which represented close to three hundred eighty million dollars' worth of revenue. By contrast, the civilian sector represented nearly one hundred eighty million dollars' worth of revenue for the company. Although these figures represent a small fragment of the total revenue stream generated by the parent company, AT&T Inc., the division still represents a significant contribution to the company. Furthermore, the industry has the potential for growth in the future and AT&T Government Solutions is also poised to increase its market share.

Figure 1 - AT&T Government Solutions 2011 Revenues (Washington Technology, 2012)

AT&T Government Solutions ONE Contract

AT&T Government Solutions has been recently awarded an Omnibus Network Enterprise (ONE) contract from the United States Government (Telecom News, 2012). The U.S. Government Omnibus Network Enterprise (USG ONE) contract vehicle provides the Defense Information Systems Agency (DISA), the Department of Defense (DoD), and all other Government agencies with a convenient way to purchase the full range of superior, integrated, technologically leading-edge telecommunications and information technology (IT) solutions -- from IT engineering and integration to hardware and software procurements and IT and telecommunications support services -- that provide the greatest set of economically feasible options for the highest possible operational mission readiness (Booz Allen, 2012).

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The contract was structure in a way that represents a multiple award which allows the company to compete against other contract holders with a team of partners such as Raytheon, Henkels & McCoy Networks, Daston Corporation, Zavda Technologies, Consulting Services Inc., SSC, and Interferometrics (iStock Analyst, 2012). The contract has the potential to be worth approximately four hundred seventy six million dollars over the next five years however the contract period is only one year with the option to renew it with one year options. AT&T was chosen for this contract based on their experience, price, and especially their ability to provide a comprehensive solution to the IT needs.

AT&T Government Solutions will incur a range of indirect costs when performing the duties required in the contract. Since the company is a provider of telecommunication services, one substantial fixed cost will be the infrastructure required to provide these services. This could any number of items ranging from cellular towers to fiber optic lines. Furthermore, AT&T Government Solutions will also have to build or purchase several facilities devoted to managing its contract as well as the equipment need for employees to service the infrastructure built that in turn services the government.

Since the contract is incredibly comprehensive and covers so many different facets of IT related goods and services, there will also be a broad range of direct costs. For example,….....

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