GSA to share costs with Treasury from dropped TCE contract

The day before the Treasury Department dropped its Treasury Communications Enterprise contract, the General Services Administration and Treasury signed an agreement under which GSA would defend the cancellation of the controversial TCE departmentwide procurement.

GSA administrator Lurita Doan and Treasury's acting chief financial officer Richard Holcomb signed the agreement, which GCN obtained.

Among the provisions, GSA will share in costs due the bidders related to Treasury canceling the RFP, reduce by half Treasury's Networx service fee and give Treasury the ability to place orders under Networx within 30 days of the contract being awarded. GSA and Treasury signed the agreement on Dec. 20.

Treasury pulled the plug on its controversial $1 billion TCE contract on Dec. 21, after years of contention with the Bush administration and Congress over going it alone. AT&T originally won the TCE contract in 2004, but bidders protested the decision. TCE was being re-competed when Treasury dropped it last month.

Treasury and GSA have been secretive about this agreement. In fact, some say that officials did not vet the MOU with the Hill.

"It's a compromise end to a bad situation," said Bob Woods, president of Topside Consulting and a former commissioner of GSA's Federal Technology Service.

"The situation didn't have a good outcome, so they were working to achieve an outcome. GSA and Treasury deserve some credit for the work they put into it," he said.

GSA will reduce Treasury's service fee to 50 percent of the current fee upon Treasury's transition to Networx, which is expected in the spring. The reduction by half is a lot, Woods said.

"It brings into question how many times they will face the same issue as they move forward," he said.

Woods also questioned use of GSA's revenue from agency fees to offset costs Treasury may incur as result of protests by vendors over TCE's cancellation.

"I'm not sure you can take money collected from other agencies' fees and use it to defend another agency," Woods said. "I believe the oversight groups, the inspectors general and Government Accountability Office will have a hard time seeing this as an appropriate use of money."

GSA's offer to allow Treasury to place orders within 30 days also seems to be questionable, Woods said. It usually takes about 60 days after a contract award because of administrative requirements.

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