Contract Watch

Connections II lures bidders with $35B ceiling

But huge contract also comes with risks

At a value of about $35 billion, the General Services Administration’s Connections II telecommunications contract has a lot of curb appeal.

A follow-on to GSA’s eight-year Connections telecom acquisition awarded in January 2003, Connections II took the No. 3 spot on Washington Technology’s November list of 20 must-follow contracts. GSA issued a draft request for proposals March 5. Comments were due by March 29.

The new acquisition “offers a unique hybrid contracting approach that provides prepriced equipment and prepriced labor on one contract,” said Karl Krumbholz, GSA's deputy assistant commissioner of network services at the office of service development. Connections II will “provide fixed-priced services not offered as stand-alone services on FTS 2001 or Networx in support of the building/campus environment.”

If that sounds oddly familiar to you, you might be thinking of another GSA acquisition vehicle, Alliant. The two are different, GSA officials said. “Alliant’s scope covers the broad spectrum of all integrated technology. [Connections] is focused on telecommunications in a building or campus.”

However, the rationale for the new contract strikes some in the industry as tenuous, with Alliant’s overlapping scope arguing against a need for Connections.

The contract “might be better suited to small businesses that aren’t strong enough to operate under Networx and Alliant,” said Ray Bjorklund, senior vice president and chief knowledge officer of McLean, Va.-based Federal Sources Inc. However, GSA has more than 1,000 indefinite-delivery, indefinite-quantity contracts, he said. “Why not just modify Alliant?”

Flagship Vehicle

GSA regards the $50 billion, 10-year Alliant as its flagship acquisition vehicle. It is the follow-on to the Applications ‘N Support for Widely-diverse End-user Requirements contract, and it includes offerings available on the Millennia governmentwide acquisition contract, which expired in October 2009.

The agency has been trimming the number of GWACs it’s running. “We are rationalizing our portfolio of services so we will have the minimum number of GWACs that can accomplish all the goals,” said Ed O’Hare, assistant commissioner of Integrated Technology Services at GSA's Federal Acquisition Service.

But the customer intimacy that GSA Administrator Martha Johnson has championed also must be reflected in that decision-making, O’Hare said.

“Our customers are our lifeblood,” Johnson said. “Our mission is to support their mission. That requires us to deeply understand and resonate with our customers.”

And Connections' predecessor has resonated to the tune of $35 billion. It “has proven very popular with agencies,” Krumbholz said. It lets them rapidly and cost-effectively craft solutions for their telecom needs.

Also, he said, “the acquisition will focus on obtaining the best and most experienced contractors who have a demonstrated core competency in only the telecom and network services area.”

However, that would almost certainly create an overlap with some of the 59 winning bidders on Alliant. Connections awards went to 17 contractors. Of the 15 remaining, 10 are also Alliant winners. Dual winners must run nearly completely parallel support operations, including accounting, program management, business development and sales operations, a costly proposition, Bjorklund said.

The costs will be a substantial — and unknown — factor, starting with the proposals. Having worked on the industry side, O’Hare said earlier this year, “I can tell you, preparing proposals is expensive. And sooner or later, one way or another, the taxpayer ends up paying for it.”

The potential cost of protests, which have been on the rise, must also be considered, Bjorklund said. “Think how long the Alliant [award process] went on,” and bidders had to dedicate resources to the bid and proposal process for the entire time. “When there are delays in making awards, there are costs to be paid. Contractors may eat them initially, but downstream, government will be paying.”

In addition to the draw of $35 billion, contractors might have other, tactical reasons to bid on Connections II, Bjorklund said. “Some will feel they need a large portfolio of contracts to create flexibility for customers. If particular customers have used Connections, they may intend to use Connections II. [Contractors] may just want to cover their bases — so anybody can get to me any way they want to. Or they may want to pursue it to unseat a competitor.”

For agencies, Connections II will be a little easier to use than its predecessor. Agencies will create a set of requirements, such as a statement of work, statement of objective or bill of materials. Fair opportunity will be used to make an award to one of a pool of GSA-selected contractors.

During the solicitation, as part of the vetting process, Connections II requires contractors to understand Networx, Krumbholz said. Verizon Federal Business is the only Networx contract holder that also holds a spot on Connections.

Connections II also “will require adherence to criteria for supply chain risk management,” he said.

Bidding on individual contracts will be easier, too. Unlike with Connections, Connections II contractors won’t have to select a category under which to bid. Instead, they can draw from four solution sets to compete for task orders.

GSA also is trying to standardize pricing, ensuring an apples-to-apples comparison for agencies. The wide range — as much as 300 percent — in prices for seemingly identical services has drawn grumbles from agency IT officials on other contracts. “Although the prices on Networx have been prenegotiated, some of them are so different for the same thing that we have to do our due diligence as though they hadn’t been prenegotiated,” one federal IT manager said.

Weighing Options

It’s that kind of criticism that GSA seems bent on avoiding with Connections II. The agency is researching options “to achieve a best possible pricing structure that will offer transparency in pricing and assist agencies in negotiating task orders while making it easier for industry to price task orders, as well,” Krumbholz said.

Running the acquisition on its own would have another possible advantage, Bjorklund said. “The larger and longer you make a contract program, the more you increase the scope, the more complex you make it. You can create a monster acquisition that has little flexibility.”

Connections II could turn into another kind of monster. The Defense Information Services Agency is partnering with GSA on the upcoming ComSatCom acquisition. The Defense Department, which has used other GSA vehicles, “indicated an interest in using Connections II as well,” Krumbholz said.

An RFP could come as early as this month. Awards will be made nationally and across three regional groups of states.

BOX

Connections II

Agency: General Services Administration

Type: Indefinite-quantity, indefinite-delivery, governmentwide acquisition contract.

Lifetime: A four-year base, plus six one-year options.

Value: Estimated $35 billion.

Small-business subcontract goal: 42 percent.

Reader Comments

Tue, Apr 13, 2010 Q. Martin China Town

Interested Party should read up on markets and competition. Maybe Congress would do well to do the same. If your organization has a long tradition of not taking competition seriously and letting your contractor run the show, then you ask questions like yours. The key is competition solves the price problem for you. It's really a beautiful thing. No bureaucratic machinations necessary.

Tue, Apr 13, 2010 Interested Party

I'm wondering if this acquisition represents a significant departure from GSA philosophy of the past. We have all come to view GSA pricing as a point of departure for the real negotiations needed to get to fair and resonable market pricing. The quote, “offers a unique hybrid contracting approach that provides prepriced equipment and prepriced labor on one contract,” said Karl Krumbholz, seems to imply that he expects to negotiate hard to get "real" prices, even for labor. It would be helpful if we all could believe that GSA pricing was the best pricing going, but I don't think anybody, including GSA thinks that now. As support for that statement, I would offer the whole Lorita Doan debacle and GSA's contention that no one just accepts GSA pricing. I guess it's unreasonable to think GSA would get the best pricing as you're most likely to negotiate the best price when you're spending you own money.

Tue, Apr 13, 2010 M Reston, VA

Question for Mr Bjokland: If the small businesses aren't "strong enough" to compete under Alliant" they shouold have bid to win a spot on Alliant Small Business like 72 of their small business brethren. Also: If they can;t compete, can they be trusted to wire a campus? This contract should have been put down before GSA started wasting Industry money on it? You know who will ultimately get the bill.

Tue, Apr 13, 2010 Steve Chantilly

Funny. Even GSA is in the IDIQ proliferation mode. Wasn't Connections II rendered irrelevant by Alliant which can also do telecom? I know that it was. I guess Mr. K gets to keep his castle. Score one for Mr. K, and zero for the taxpayer.

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