Level 3 Communications, Inc.
(NASDAQ:LVLT) today announced that it has selected Peter Kiewit Sons', Inc.,
to build a 15,000 mile national communications network, which will serve as
the intercity or long distance portion of the Level 3 Network. This network
will be interconnected with Level 3's local networks in cities across the
United States. Overall cost of the project is estimated at approximately $2
billion.
The contract calls for construction to commence immediately. Construction
will take place in phases, with network completion expected in the first
quarter of 2001.
"Kiewit's national presence and experience in managing projects of this
scope and magnitude were clearly factors that were considered as we went
through the process of selecting a construction program manager from among
several firms," said James Q. Crowe, president and CEO of Level 3. "Another
key factor was Kiewit's willingness to tie its compensation directly to
performance."
"We have great respect for the Kiewit organization and its ability to
complete projects on time and within budget," said Crowe. "Kiewit is
recognized as one of the leaders in building communications networks, having
built networks for a number of providers including MFS Communications. "
Innovative Contract Ties Compensation to Performance
The significant size and complexity of the project made it important to
align the interests of the selected program manager and Level 3. The
negotiation produced a contract that provides for Kiewit to be reimbursed for
its auditable cost relating to all direct and indirect project level costs
such as payroll, materials, subcontracts, equipment, rent and supplies. Above
that, Kiewit will have the opportunity to earn an award fee that will be tied
to performance results as measured and determined by Level 3.
Award Fee Contract
To determine the fee to be awarded, Level 3 will evaluate Kiewit's
performance in five areas, with cost and speed of construction receiving the
greatest weight. Kiewit will also be evaluated on its performance in the
areas of quality, safety and program management. The award fee received by
Kiewit will be determined by Level 3's assessment of Kiewit's performance in
each of these areas.
Level 3 Network To Be Continuously Upgradeable
Level 3's network is designed to be continuously upgradeable, so that the
network can evolve to accommodate changes in both technology and customer
demand. Unlike the networks of most other competitors, which were constructed
with no spare conduits, Level 3 will install six to eight conduits along its
network. Initially, fiber cable will be installed in only one of the
conduits. The remaining conduits will be available for use as fiber
technology and customer demands change.
Network To Be Optimized For IP Technology
Level 3's network will utilize Internet Protocol (IP) technology, rather
than older circuit switching technology predominantly used by major telephone
companies. In addition to the intercity network, Level 3 is also building
IP-based local networks in cities across the U.S. Development of these
networks is currently underway in 15 cities and construction contracts are
being negotiated independently from the intercity portion to be built by
Kiewit.
A majority of the intercity network will be constructed along railroad
rights of way. Level 3 recently announced an agreement with the Union Pacific
Railroad Company granting Level 3 rights of way along nearly 7,800 miles of
Union Pacific rail routes, primarily west of the Mississippi River.
Negotiations for the balance of required rights of way are ongoing.
About Kiewit
Founded in 1884, Peter Kiewit Sons', Inc. is one of North America's
largest and most respected construction organizations. In 1997, revenues were
$2.8 billion. The company is the largest firm in the construction industry
owned entirely by its active employees. Headquartered in Omaha, Kiewit serves
clients through a network of Kiewit and affiliate locations across the United
States, Canada and several international locations. The firm's World Wide Web
address is www.kiewit.com.
About Level 3 Communications
Level 3 is a communications and information services company that is
building the first national Internet Protocol (IP) based network. The Level 3
Network will combine both local and long distance networks, connecting
customers end-to-end across the U.S. Plans also call for the company to
expand internationally. In the interim, Level 3 has signed an agreement to
lease a national network over which it will be able to offer advanced IP-based
services beginning in 1998. Level 3 will provide a full range of
communications services -- including local, long distance and data
transmission as well as other enhanced services and Internet access services.
Level 3's common stock is traded on The Nasdaq National Market under the
symbol LVLT. Its World Wide Web address is www.L3.com. |
