GSA says Networx to reach $20 billion

FTS Networx, the 10-year telecommunications and network services contract to be awarded in April 2006, has a potential value of $20 billion, the General Services Administration's Federal Technology Service announced today.

Speaking to an audience of hundreds of executives from dozens of telecommunications and integration companies, GSA officials gave an in-depth briefing on the provisions of the two draft requests for proposal that were released Oct. 29.

The Universal and Enterprise RFPs will replace the agency's FTS 2001 governmentwide acquisition contract, currently held by Sprint Corp. and MCI Inc. and which expires in 2006. FTS plans to make multiple awards in both categories. The contracts are expected to be for four years with three two-year options.

The Universal RFP is for companies that offer nationwide service. The bulk of the service requirements are mandatory. The Enterprise RFP is for companies that offer specialized telecommunications or network services but do not have nationwide coverage. There is a handful of mandatory service requirements, but most of the services a bidder can include are optional, allowing for more targeted responses.

Previously estimated to be worth $10 billion over a decade, the contract's total value was boosted based on the longer contract term (FTS 2001 is an eight-year contract), wider portfolio of service requirements, customer buying patterns, and growth prospects in the field, said John Johnson, assistant commissioner for service development and delivery.

FTS 2001 made use of "minimum revenue guarantees," a promise that the two contract holders would earn at least $750 million each over the life of that contract.

Networx also includes a minimum revenue guarantee, but the dollar values are far lower. In the Universal RFP, the minimum revenue guarantee is set at $525 million; that amount will be divided among all the awardees. The minimum revenue guarantee for the Enterprise contract is $25 million and also will be split among all awardees.

An executive who attended the briefing said the amounts are so low because the agency and the industry are both confident the volume of business will far exceed the minimums, but they were included in the RFPs because some companies had wanted them.