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Managing Risk

Postal Service switches to Lockheed to save money and get partner to absorb problems

The U.S. Postal Service has hired government contractor Lockheed Martin Corp. to deliver the next phase of a project to create an organizationwide network that ties together voice, data, video, and other services, saving the government money and providing high-speed data access to 15,000 field offices. The 18-year contract is valued at as much as $3 billion.

Moving from networking company MCI--which has provided the Postal Service with network services since 1997 and will continue its service through 2008--to Lockheed Martin will take the Postal Service at least two years, says Bob Otto, chief technology officer. The Postal Service spends as much as $200 million each year on a variety of telecommunications services, including data, LAN, voice, and wireless functions, and Otto says it can save 20% to 30% of those costs by using Lockheed Martin.

"MCI has done a really great job for us," Otto says. But the telecom market is going through changes, he adds. "With Lockheed, if they lose a partner, they have the expertise and bandwidth to replace that partner."

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