GSA boosts Networx revenue guarantee

The General Services Administration today increased the minimum revenue guarantee to $50 million from $25 million for the Enterprise part of the 10-year Networx contract for telecommunications and data services.

The $50 million will be equally divided among Enterprise awardees, GSA said. The revenue guarantee for Universal remains at $525 million.

"We are confident that doubling the Enterprise MRGs from $25 million to $50 million will promote greater competition among our industry partners, resulting in lower prices and better service for our customers," said John C. Johnson, the FTS assistant commissioner for service development and delivery.

The Networx procurement, the largest telecommunications contract in the history of the U.S. government, is estimated to be worth $10 billion-$20 billion. Networx is divided into two parts ? a Universal portion that will provide all government locations with a wide range of telecom services nationwide and an Enterprise part that will offer a mix of specialized Internet protocol or wireless services in specific geographical areas. GSA plans to issue the request for proposals for the two parts this April. The contracts are expected to be awarded a year later, in April 2006.

Some of the comments on Networx's draft RFP reflected concerns over the procurement's minimum revenue guarantees. [See story.]

Also, Rep. Tom Davis (R- Va.), chairman of the House Government Reform Committee, last December called for GSA to set the minimum revenue guarantees for Networx at a level high enough to encourage a broad range of contractors. Davis' committee will hold its third hearing on the Networx procurement on March 3.

FTS officials originally proposed a minimum revenue guarantee of $525 million to be shared among companies that win a place on the Universal contract and $25 million for companies on the Enterprise contract. This was considerably less than the $750 million guaranteed to the two companies - MCI Inc. and Sprint Corp. ? that are the incumbents on the current FTS2001 governmentwide telecom services contract, which Networx will replace when it expires in 2006.