AT&T; Wins $1.4-Billion Treasury Pact

In one of the largest awards of its kind, American Telephone & Telegraph said Monday that it has won a contract to supply the Treasury Department with an estimated $1.4 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 Transportation Department.

James Leto, vice president of AT&T;’s federal systems computer division, said the contract will be turned over to the new, NCR-led computer group once the merger is final and the Treasury Department approves the transfer.

Despite just a one-year guaranteed run on the contract, Leto said Treasury Department officials have projected spending as much as $1.4 billion 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. “This contract represents a major opportunity to demonstrate the full potential of the merged company.”