Networx gets nasty on Capitol Hill

Congress is impatient with agencies’ slowness to transition services to the General Services Administration’s Networx telecommunications acquisition from FTS 2001. At a hearing May 20, members of the House Oversight and Government Reform Committee were scathing in their criticism and threatened to pass legislation to grab millions of dollars from agencies that do not meet the June 2011 deadline.

Three years into Networx, agencies have failed to meet deadline after deadline in the transition. While stoutly opining that most agencies will meet the June 2011 deadline, Steven Kempf, acting commissioner of GSA's Federal Acquisition Service, also said the agency is working on sole-source, continuity-of-service contracts for those that do not.

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And as the pages fly off the calendar, the pressure on Networx vendors increases to ensure that agencies make the deadline. Top managers from the five Networx contract holders agreed on one thing: Agencies should concentrate on just getting it done — go for like-for-like transition and deal with transformation later.

“We are now in the ridiculous position of being three years into a 10-year contract that we haven’t even implemented,” said committee chairman Rep. Edolphus Towns (D-N.Y.), at the hearing, titled “Running Out of Time: Telecommunications Transition Delays Wasting Millions of Federal Dollars.”

The latest GSA estimates put unrealized savings from agencies’ failure to transition to Networx at $22.4 million monthly. “By that estimate, we may lose between $300 million and half a billion dollars in unrealized cost savings by next year,” Towns said.

With the promise of such substantial savings, it would be reasonable to expect the transition to Networx to be quickly implemented, said the committee's ranking member, Rep. Darrell Issa (R-Calif.). Instead, “opportunities are being squandered.”

This not a failure of the Obama administration or even the Bush administration, he said, but of “the unseen, seldom known by name [people] who [are responsible for implementing the change] and don’t care enough.”

Given the extensive delays in the transition, “why wasn’t it flagged by the Office of Management and Budget for formal review?” Towns demanded.

Someone must be responsible for Networx’s failure, Issa said, adding, “OMB’s absence speaks loudly.”

GSA got off more easily. Although it is helping agencies, even to the extent of doing their inventories and helping them write requests for proposals and make fair-opportunity decisions, it should have offered such help sooner, Issa said.

However, agencies’ failure to meet transition deadlines seemed to evoke the greatest frustration. Perhaps agencies that have missed transition milestones would be motivated by legislation that would take back funds representing cost savings missed by their failure to transition to the lower-priced Networx, Issa said.

“Chairman Towns and I can certainly use that $22.4 million a month for our projects,” Issa said. Any agency unable to transition by June 2011 and forced to negotiate a bridge contract would have to do so at the lower Networx price, he said. Agencies would forfeit funds equaling the difference between the lower Networx price and the higher FTS 2001 price. Would that help motivate agencies? Issa asked.

“That would help,” said Sanjeev Bhagowalia, chief information officer at the Interior Department and chairman of the Interagency Management Council’s Executive Steering Committee. But it would also create havoc as agencies decided what operations to shut down, he added.

The approach would not be unprecedented, Diana Gowen, senior vice president and general manager of Networx contract holder Qwest Government Services, said later. The Defense Department used similar funding-cut threats in creating the Defense Information Systems Network, she added.

But it wouldn’t be as simple as it might appear, said Susan Zeleniak, group president of Networx contract holder Verizon Federal. For example, one reason Networx prices are lower than those of FTS 2001 for some services is the automation built into the Networx model, she said. Those streamlining mechanisms are new for Networx and don’t work on FTS 2001.

More useful have been the Interagency Management Council’s efforts as a liaison between federal CIOs and GSA, Bhagowalia said. Also, “OMB has been a great help in moving the transition forward,” he said, praising the support from Vivek Kundra, federal CIO and administrator for e-government and IT at OMB and director of the CIO Council.

GSA explains slowness

Responding to the committee’s questions about why agencies aren’t further along in the transition, GSA’s Kempf conceded that they waited too long to get started on transitioning.

However, some agencies had difficulty dealing with the flexible (and therefore complex) Networx contracts, and had further complicated (and therefore slowed) the process when they opted for tailored rather than off-the-rack solutions, he added.

Further slowing the process, agencies often did not have accurate inventories for making fair-opportunity awards or a sufficient number of skilled program managers.

Unforeseeable events also hobbled transition efforts, Kempf said. Contractor ordering systems have been problematic for some agencies; the regulatory environment has changed — for example, Section 843 of the Defense Authorization Act of 2008 opened up the protest environment — and the Networx transition failed to capture strong support from agencies’ senior managers.

Despite such hindrances, he said, “agencies are now highly engaged [and] are doing everything possible to meet transition schedule deadlines, and transition progress is accelerating.”

Most agencies will meet the June 2011 deadline, Kempf said, but “there is significant risk that some will not. Large data networks that are still awaiting fair-opportunity decisions may not be transitioned for two years or more, necessitating follow-on sole-source contracts to FTS 2001 contractors.”

But in the past six months, the efforts of Kundra, the CIO Council, the Interagency Management Council and GSA have been crucial in speeding the transition, which recently passed the halfway mark, Bhagowalia said.

Gowen challenged that metric. “They’re measuring the wrong thing — disconnects instead of spending,” she said.

Officials measure transition progress by the number of FTS 2001 services that are disconnected. But not all disconnected services are transitioned to Networx; some are merely discontinued. And the number includes many small, simple services, such as calling cards, while leaving out more complex services, such as large data networks.

The dollar value of new FTS 2001 services has been growing at a faster rate than that of Networx, GSA said. During the transition, annual FTS 2001 spending went from $1.1 billion to $1.2 billion and is only now down to $1 billion, Gowen said.

However, agencies are advancing. “Their progress even seems to be accelerating,” Bhagowalia said. “Ironically, this acceleration is now affecting the ability of vendors to respond to that large volume of agency procurements that have recently been released.”

Carriers to carry the ball

Although all of the contract holders have spent millions of dollars ensuring they have the resources to handle the transition, they did so with the intent of spending years, not months, transitioning federal agencies’ telecommunications services.

Completing the volume of work that must be done to transition agencies by June 2011 will be difficult for all of the carriers, Zeleniak said.

A further irony is that Networx’s flexibility is at the root of its complexity. Agencies have been encouraged to take advantage of the transformative properties of new technologies. That time is — temporarily — past, vendors said.

Instead, agencies should concentrate on transitioning to services that are similar to what they have now. That does not mean opting for 10-year-old technology, but more like three-year-old technology, said Edward Morche, senior vice president and general manager of Level 3’s federal business.

Even in nontransition times, Moore’s law operates to create a lag in technology use, Bhagowalia said. Technology might change every 18 months, “but it can take us that long to get through the procurement cycle.”

Additionally, many agencies had begun moving to new technologies toward the end of FTS 2001 and wanted to finish the transfer before switching to Networx, Gowen said.

The timing for a like-for-like transition might not be bad. “Many agencies have already gone to next-generation technology,” to Multiprotocol Label Switching, Gowen said. “And they’re not really in frame relay anymore, but they’re not ready for [virtual private LAN service] yet.”

Agencies also should not wait for a 100 percent inventory, Morche said. “Rather than spend a lot of time trying to do comprehensive inventories before issuing statements of work, agencies should focus on gathering information that’s easily available and use that subset of information to perform fair-opportunity [decisions],” he said. “This incremental approach to transition will also build necessary scale for every step of the process.”

With so many aspects, such as security, mandated by law or built into Networx contract language, agencies can afford to make what amount to small leaps of faith and talk to vendors, Gowen said. “They should just say to all the vendors, ‘Here’s my inventory — how would you do this?’ Then pick one, start moving and worry about security, etc., later in the process.” Vendors are bound to supply those features and have experience implementing them with other agencies, she added.

Breaking up acquisitions can also help. In many cases, agencies have been trying to make a single fair-opportunity decision to get everything they’ll need on one contract and avoid having to go through the process more than once, Zeleniak said. But doing it in increments will put less pressure on agencies and vendors alike, she added.

The House committee had far from exhausted its list of questions, but time constraints intervened. Bhagowalia, Kempf and the telecom carriers will answer further questions in writing and submit them to the committee in the coming weeks.