$1B TCE contract has plug pulled by Treasury

After years of contention with the Bush administration and Congress, the plug has been pulled by the Treasury Department on its controversial $1 billion Treasury Communications Enterprise contract.

As a result, Treasury will use the General Services Administration's Networx contract, when it becomes available, for its next-generation data, video and voice communications integrated into a single network infrastructure. AT&T won the initial $1 billion award in December 2004.

"The department believes that, given where we stand today, utilizing Networx to meet our telecommunications needs makes the most sense for the taxpayer and the department when considered over the 10-year contract period," Treasury spokeswoman Eileen Gilligan said today.

The contract process has been contentious and charged with intrigue as the administration and Congress exerted their authority to block Treasury from pursuing a departmentwide contract instead of participating in the governmentwide Networx.

The Office of Management and Budget, GSA and Congress had criticized Treasury for bucking the trend to move to governmentwide contracts.

Outgoing House Government Reform chairman Tom Davis (R-Va.), a vehement opponent of the TCE deal, thinks there are lessons here for all agencies said committee spokesman Dave Marin.

Treasury had been in the process of recompeting the contract as the result of an award protest that the Government Accountability Office upheld last year. Treasury did not inform bidders of a separate agreement that would affect the contract, GAO said then. Unknown to the bidders at the time, Treasury had signed an agreement with GSA and OMB to pave the way for a move Networx when TCE's base period expired.

OMB made it clear during the original contracting process that it would steer agencies toward Networx instead of letting them strike their own deals to overhaul their networks.

While Treasury was evaluating contract proposals, Davis earlier this year had threatened to cut department funds for TCE. He found support in a Treasury inspector general's report earlier this year that said Treasury's handling of the procurement was disorganized and poorly executed.

Davis was pleased with Treasury's decision to move to Networx and that there is consensus behind the approach he's been pushing for years, said committee spokesman Dave Marin.

"But more importantly because this is a big win for good government, for all those who care about getting the biggest bang for the taxpayers buck," he said.

Treasury had extended its current contract with incumbent Northrop Grumman Corp., which Treasury awarded its Treasury Communications Services contract in 1995. That contract now expires in September 2007.

Mary Mosquera is a staff writer for Washington Technology's affiliate publication, Government Computer News.