GSA ponders big changes to Networx

The federal government's proposed $10 billion Networx telecommunications and networking program could get a dramatic makeover following a General Services Administration review of industry complaints and suggestions.GSA officials are considering issuing just one multiple-award Networx contract instead of two as originally proposed, said Sandra Bates, commissioner of GSA's Federal Technology Service. If two contracts are used, they could be awarded at the same time, she said.GSA also may eliminate minimum revenue guarantees for the winners, because such guarantees aren't needed to hold down prices, officials said.GSA received more than 700 comments on the proposed Networx acquisition strategy, which was published last October in a request for information. Industry officials also lobbied for change before GSA officials and members of Congress at a Feb. 26 hearing of the House Government Reform Committee. Also in response to industry concerns, GSA may loosen the requirement for continuity, or ubiquity, of service at all customer locations nationally and internationally, Bates said. In addition, GSA may simplify billing procedures so that vendors could use their commercial billing systems. GSA still plans to publish the draft request for proposals for Networx in spring or early summer, said John Johnson, assistant commissioner for service development in GSA's Federal Technology Service. The draft RFP will be refined significantly over the request for information "so industry can understand exactly what we want," he said. Networx, a governmentwide, multiple-award contract vehicle, is the follow-on to FTS 2001, which expires in 2006. FTS 2001 will have been worth $5 billion to $8 billion over eight years, according to Input Inc., a Reston, Va., information technology market research firm. Sprint Corp. of Overland Park, Kan., and WorldCom Inc. of Ashburn, Va., which conducts business as MCI, hold the FTS 2001 contract.The Networx contract will run eight to 10 years, beginning in 2006, Bates said.Under Networx, contractors will offer some or all of these services: circuit switched network, frame and cell switched network, Internet, dedicated network, combined network, virtual private network, conferencing, managed networking, security, applications and business operations, remote and mobile user services, access and wireless and satellite services.At the House hearing, some telecommunications executives said they could compete for Networx without any changes, but others said it would be extremely difficult to do so.It's no surprise that potential bidders are pressing for changes to Networx, said Warren Suss, president of Suss Consulting Inc., a Jenkintown, Pa., government IT consulting firm."Networx is an enormous prize. There is no way to please everybody," Suss said. "The government has to create a fair and open [contracting] environment, but they also have to look toward what is important to the agencies."In its request for information, GSA proposed two multiple-award contracts, Universal and Select. The agency also proposed to award Universal nine months before Select.Universal favors large telecommunications firms that have infrastructure nationwide, industry executives said. For example, Universal requires ubiquitous service, meaning that all services under Networx must be offered at all locations where agency employees work.Select is tailored for smaller telecommunications companies and systems integrators, executives said. It allows contractors to offer fewer services and those services in limited geographical areas. Several industry executives asked GSA to abandon the two-phase acquisition strategy, saying that only the largest telecommunications providers, such as Sprint and WorldCom, could provide ubiquity of service to all government locations nationally and internationally. Other firms would have to subcontract to other companies in order to provide all services everywhere. They would incur higher administrative costs, which would be passed on to the government customer, said Quinten Johnson, regional vice president of San Antonio-based SBC Communications Inc.Allowing contractors that can offer some services to compete with contractors that can offer all services will allow more companies to compete and result in lower prices to the government, he said.Moreover, many industry executives said awarding Select nine months after Universal would put the Select vendors at a competitive disadvantage. If two contracts are awarded, they should be awarded concurrently, the executives said. "Under this [current] scenario, the Networx Universal awardees will have established themselves as vendors of choice for almost a year before the Networx Select awardees are able to begin," said David Page, vice president of federal government sales for Atlanta-based BellSouth Corp.[IMGCAP(2)]Shelley Murphy, president of Verizon Federal Inc. in Washington, recommended that GSA create one vehicle with multiple service tiers, such as GSA's Connections. Under Connections, agencies match their telecommunications needs to vendors' capabilities in one of the three categories: equipment and services, support services and solutions. They then hold a task-order competition. Verizon competes in all three Connections categories, while some firms compete only in one, Murphy said. The Connections contract structure would be effective for Networx, said Jay Nelson, vice president of strategic initiatives for Computer Sciences Corp. of El Segundo, Calif."If an agency needs services that are all things to all people, it can go to Sprint or AT&T," Nelson said. "If it requires a data network, a niche player can step up cost effectively. The agency now has a plethora of options." Bates said GSA staff members are studying whether agencies need continuity of all services or just a few under Networx, and how agency needs match up with vendor capabilities. Their findings may show that the continuity requirement can be relaxed, she said. If GSA's research reveals that continuity of all services is not essential for many agencies, two contracts may not be needed, Bates said. GSA staff members will discuss procurement alternatives with vendors in the coming weeks, Bates said. In response to vendors' complaints that the Networx billing requirements were too complex, Bates said GSA would review commercial billing practices and government billing requirements to see if the vendors' systems could provide the billing information the government requires. Most important, Murphy said, is that vendors can bill their agency customers directly, rather than sending bills to GSA for reformatting before delivery to the customer. "The more times people have to touch the data, the more opportunity for errors," Murphy said. "We always make sure that the billing unit [GSA] gets a copy of the bill, so they have oversight ability without the systems role."Vendors' comments on the RFI also revealed that minimum revenue guarantees might not be necessary on Networx, Bates said. "In the past, we've used those to drive behavior, to drive prices down. Now vendors are saying they don't need that enticement to perform," she said.Under FTS 2001, the government committed to spend $750 million with each vendor, or $1.5 billion. At the time, vendors had to customize their commercial services, such as billing systems, to meet government needs. Vendors were willing to offer lower prices and customize their systems in exchange for minimum revenue guarantees, said Jerry Edgerton, senior vice president of government markets at WorldCom. "It was appropriate at the time," he said. "Now agencies do not want to see minimum revenue guarantees, because they force agencies to contract with a vendor to fulfill a guarantee, not because the vendor offers the best price or solution," Edgerton said. *Staff Writer Gail Repsher Emery can be reached at gemery@postnewsweektech.com.