Part 1: Business on FTS 2001 grows despite GSA's push for Networx

The General Services Administration has any number of people “in the trenches” guiding and helping and prodding agencies to make the transition from GSA’s FTS2001 contract to its Networx contract. But none is more relentlessly focused on getting the job done than the Federal Acquisition Service’s director of network services, Karl Krumbholz.

Universally respected, even liked, by agencies and carriers, the lanky, soft-spoken Krumbholz is an encyclopedia of institutional knowledge on GSA’s huge telecommunications contracts and current events surrounding the agency’s schedule-challenged Networx transition.

Washington Technology contributing editor Sami Lais talked with him recently at his Virginia office about all things Networx, including what the transition delay is costing the federal government and why services on FTS2001 are growing as fast as Networx services.

Q: With the faltering economy coloring everything these days; costs are on everyone’s mind. This past spring, you estimated that for every month agencies delay transitioning from FTS 2001 to Networx, it’s costing taxpayers between $18 million and $20 million. Has that been recalculated?

KARL KRUMBHOLZ: The prices on Networx are all preset; the offerers were required to bid prices out to the end, so the prices are not going to vary.

Now, they could vary if an agency put out a statement of work and rebid. Then prices could be competed again.

Q: But don’t the carriers often, even usually, set the pricing on those individually negotiated contracts to get a little cheaper every year? And we’re in fiscal year four of Networx now.

KRUMBHOLZ: It was a big deal on FTS2001 because one of the winning carriers bid prices down over the 10 years. We knew that was the case on FTS2001; we don’t know what the price structure is going forward on Networx because that’s proprietary information. So the extent to which prices go up or down or wherever they go is a function of information predetermined but not publicly known.

Q: So the $18 million monthly estimate stands?

KRUMBHOLZ: So far. It can change, and we can recompute it any time, but so far, the change has not been significant. We just haven’t gotten enough service off the old contract to make a significant change.

Q: How did you come up with the $18 million figure?

KRUMBHOLZ: The way we computed it was to simply take the services remaining — and because the service keeps growing, that’s a problem, too — and just say: "What services are on FTS2001, what would they cost if they were priced on Networx and what’s the difference?"

And since as we increase the amount of service on Networx we’re also increasing the services on FTS2001, it really hasn’t changed much.

Q: So FTS2001 income is still rising for carriers because agencies are still buying new services off the bridge contracts...

KRUMBHOLZ: So why are they doing that?

Q: Yes. Why hasn’t GSA turned off FTS2001? Will you do it?

KRUMBHOLZ: Well, a lot [38 percent] of statements of work still aren’t in progress; 52 percent [of large and small agencies] haven’t even chosen their new carrier so they can’t put the service on Networx.

Even if you’ve chosen a carrier, if you’re building out a new network, you need to build it out [before you can transition to it] on the new contract and cut off old service on FTS2001.

So if you just wanted to add some connectivity on your current FTS2001 network, you would probably just add it to FTS2001. And that would be true even if you had selected a carrier for Networx but hadn’t transitioned to the new contract yet.

Q: Yes, but if you really want agencies to transition over...

KRUMBHOLZ: Why don’t we tell them that they can’t order off FTS2001?

Q: Yes.

KRUMBHOLZ: What we told them is they can’t modify the new contract unless they have a compelling need, which they have to tell us about. Then we have to give approval to modify any new service on FTS2001.

But because of the way that agencies order service, we don’t have any visibility into ordering activity on FTS2001 or any way to prevent them from ordering service on that contract.

Service is ordered by designated agency representatives (DARs) dispersed throughout all the agencies. These ordering elements can order services anytime they need them.

Administering the exceptions to such a policy would be very, very burdensome. All we can do is tell them not to do it.

Then they’d have to get that information all the way down through their entire agency to the DARs, and we’d have to depend on everybody following the rules. There’s no way we could monitor it, so we just decided not to go there.

Next in Washington Technology’s conversation with GSA Networx guru Karl Krumbholz: The transition is A) 30 percent complete; B) 4 percent complete; or C) both are true, neither is true, and no one knows what’s true.