Networx score card

After years of preparation, the transition from FTS 2001 to Networx is finally beginning in earnest; hold onto your hats

SEPTEMBER 2007

AT&T wins $270 million Universal network services
award from the Treasury Department.

OCTOBER 2007

Qwest Communications International wins $3.5 million
Universal network services award from the U.S.
Railroad Retirement Board.

FEBRUARY 2008

Qwest wins Universal network services award from
the National Labor Relations Board (value
unknown).

MARCH 2008

AT&T wins $20 million Universal award from
Customs and Border Protection.

MAY 2008

Verizon wins $678 million Universal award for
OneNet, the Homeland Security Department's
secure IP network.

MAY 2008

AT&T wins $292 million Universal award for
OneNet.

TOTAL VALUE: $1.26 BILLION

UNIVERSAL:

  • AT&T Inc., of San Antonio
    Qwest Communications International
    Inc., of Denver
  • Verizon Communications Inc.,
    of New York

ENTERPRISE:
  • AT&T
  • Level 3 Communications Inc., of
    Broomfield, Colo.
  • Qwest
  • Sprint Nextel Corp., of Reston, Va.
  • Verizon

It's over ? the
endless preparations
and
enforced idleness,
the anticipation
and
worry, the calm before
the $68.2 billion
storm. Now comes a
punishing two-year
race to the 2010
deadline for transitioning
all government
agencies from FTS
2001 to Networx.

The General Services
Administration can't
mandate that all
agencies buy voice,
IP, wireless, satellite,
and other telecommunications
and network
services through
Networx. But agencies
will be cruising the
aisles of GSA's
Networx warehouse
for most of their telecom
needs for the
next 10 years.

Actually, there are
two virtual warehouses:
the $48.1 billion
Universal with 37
mandatory and 11
optional services, and
the $20.1 billion
Enterprise with newer
and more specialized
offerings, including 10
mandatory and 42
optional services.

So far, agencies have made more than
$1.3 billion in Networx awards. In September
2007, the first of 33 task orders GSA says it
has processed went to AT&T Inc. for work at
the Treasury Department. Treasury had
awarded $270 million worth of work to AT&T
in 2006 under the Treasury Communications
Enterprise contract but withdrew the contract
under pressure from GSA.

A few new awards have made headlines ?
notably, the Homeland Security Department's
award last month of the $970 million OneNet
program to Verizon Communications Inc. and
AT&T. But there have been others: AT&T won
a Universal order in May from the
Transportation Department, and Qwest
Communications International Inc. won
Networx awards from the Environmental
Protection Agency and the Social Security
Administration.

As the transition deadline approaches,
more than 200 of the estimated 250 task
orders remain to be awarded.

"Since February, pretty much all of the
voice awards, except the recent DHS award,
have been by former Sprint customers," said
Diana Gowen, senior vice president and general
manager of Qwest Government Services.
"We're still seeing the wave building. We
haven't gotten to the point where it's curling
and getting ready to crash down on us."

OPPORTUNITIES KNOCK

GSA officials had expected to receive most
agency transition plans by March. But David
Bibb, GSA's acting administrator, said, "We're
not disappointed. It's a complicated contract."

Deciding which services are needed is no
small task, said Bill Gormley, president and
chief executive officer of the Washington
Management Group. "From a priority standpoint,
it's a huge commitment of resources."

Staffing shortages and challenges presented
by the Office of Management and Budget's
Trusted Internet Connections and IPv6 initiatives
have further slowed agencies, said
Warren Suss, president of Suss Consulting Inc.

GSA can help agencies clear those hurdles,
said Karl Krumbholz, GSA's deputy assistant
commissioner for network services. It set aside
about $150 million to help agencies compare
prices, identify inventory, plan transitions and
take advantage of modifications to the contract
vehicle. For example, an agency might
have added a new office in a location that
wasn't listed on the original Networx contract
but has been added by another agency, thus
making it available to all agencies.

And not every agency will need to create
complex statements of work. The largest 21 agencies will make the greatest use of Universal,
tailoring services to fit their missions, then submit
statements of work to GSA for review, Krumbholz
said. Smaller agencies will likely buy packaged
contract offerings.

But agencies should do it soon, said Gormley, a
former assistant commissioner at GSA's Federal
Supply Service. "You can't jam the door then
expect GSA to take care of all [the plans] at once."

FLY ME

Each contract holder's approach is also different
and shaped by its current position, Suss said.
Verizon, as a provider on FTS 2001 and both
the Universal and Enterprise components of
Networx, "is in a good position," he said.
Additionally, "it already has a very substantial revenue
stream, while Qwest and AT&T are both
looking to increase their federal revenue streams
through this new contract."

Susan Zeleniak, group president of Verizon
Federal, has the relaxed confidence of an experienced
front-runner. Agencies decide what they
need, and as with the recent DHS award, Verizon
creates a proposal that balances mission, service
and price, she said.

"There's still plenty of time for agencies to make
a graceful transition," she added.

Jeff Mohan, AT&T's Networx program director,
talks instead about his army of transition experts.
The company has about 3,000 service employees
in the Washington area, and half of the 1,300 people
at AT&T's operations center are in Vienna, Va.,
in the government group. If necessary, he said, "I
can call an all-hands-on-deck exercise."

"With such a large number of users [as agencies
have], something is going to go wrong," Mohan
said. "If anyone tells you life will be perfect and a
transition this size will go off without a hitch, it
just means they've never done one."

"We're no neophytes," Gowen said. "We know how
to move the roadblocks and get the job done." Qwest
has already snatched Social Security's voice business
from Verizon, she added.

"But once that tsunami crashes and we have 20
or 30 requests for proposals to respond to in 30
days or so, it's going to be tough," she said. "That's
a heavy load for anyone, no matter how many people you've got on it."

One significant difference in this transition,
Zeleniak said, "is we're not seeing one mammoth
contract for all services."

However, Krumbholz said, that potential was
written into Networx because "it was something
we knew agencies wanted."

A single contract offers administrative simplicity
and efficiency, and "Universal is the complete
Sears catalog of services," Suss said.

Just don't say that to Level 3 Communications
Inc. or Sprint Nextel Corp.

"Last week, we were talking with one of our
customers, and they still believed they had to go
to Universal," said Karen King, Networx program
director at Sprint. "The constant message points in the media and to some extent from GSA
and Universal winners have been that
Enterprise, as the smaller contract, is limited
to niche services, and that's not the case."

There are few services that agencies can
get only through Universal, said Ed Morché,
general manager of Level 3's federal markets
group.

It's no surprise that Enterprise-only contractors
would extol the virtues of Enterprise
to clients, Gormley said. "But it's a good story
to tell," he added. "Agencies should be asking
themselves: 'Do I need Universal?' What you
want to do here is try not to buy futures. No
matter how much depth a company may
have, with the compressed period of time
left, the sooner an agency makes a decision,
the better."

You'll get no argument from Networx vendors,
who are eager to get past this stage of
writing proposals, making bids and waiting
with bated breath.

"A sweet prize would be to pull off the
[Internal Revenue Service] 800-number
business," Gowen said. "But we'll see."

Sami Lais (slais@1105govinfo.com) is a
contributing editor at Washington Technology.

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