Will integrators embrace the $50B Networx replacement?

The General Services Administration is committed to their belief that the $50 billion follow-on to the Networx telecommunications contract will attract bidders beyond traditional telecom players.

Among the primary goals of the Enterprise Infrastructure Solutions contract is increasing flexibility and competition. To drive those two goals, there needs to be a pool of prime contractors that includes the current telecom contractors and new entrants from the systems integration community. That’s GSA’s pitch.

To draw those new primes in, GSA unveiled some significant changes in its recently released draft solicitation.

There are now only four mandatory services: virtual private network services, Ethernet service, voice, and managed network services. GSA also has dropped the requirement of providing services to any location in the United States. Instead, bidders must provide services in 25 of the top 100 core-based statistical areas or CBSAs. Here is a link to a list of all 917 CBSAs.

The 12 other optional services include things such as data center services, contact centers, and cloud services. These would seem to be aimed directly at systems integrators.

But while the mandatory services may be smaller in number, they are aimed at the strengths of telecom companies. And that could be a challenge for systems integrators as primes.

During a press briefing, GSA officials were repeatedly asked about how they would convince more non-traditional players to bid on the contract.

Fred Haines, EIS program manager in GSA's Office of Network Services Programs, and Amando Gavino, director of GSA's Office of Network Services Programs, said they have had numerous conversations with systems integrators who have expressed interest in the contract. One is most likely a definite bidder, Haines said.

At its heart, this will still be a telecom contract, and GSA officials seem to be OK with that. “We aren’t trying to build another GWAC,” said Mary Davie, assistant commissioner of GSA's Office of Integrated Technology Services.

The goal is build a contract that brings more commercial buying practices to the government as well as the ability to change and evolve as new offerings come online during the 15-year life of the contract. The contract will have a $50 billion ceiling.

A final RFP is expected in July and companies will have less than five months to respond, GSA officials said. [This is updated information as I misunderstood the time frame for awards during the press breifing.] Awards will likely be made by the end of fiscal 2016, which will allow the winners of the contract to start offering services in January 2017.

GSA’s approach seems to be gaining favor with its potential clients. DISA has told GSA that it looks at EIS as its telecom contract of the future, and will use it instead of its own vehicles.

Those kinds of moves will help GSA capture more of a percentage of the government’s telecom spend. Currently, GSA has about $1.5 billion of the $6 billion spent annually. The goal for EIS is 30 percent or $2 billion, Haines said.

Getting more than one or two systems integrators to bid as primes on the contract might be a challenge, and part of that challenge has little to do with how GSA structures the contract.

As one executive told me, the traditional telecom companies are the only ones who have the scale to offer the mandatory services. The optional services are just add-ons.

But on top of that, many of the telecom players are adding services and capabilities to their portfolios that put them in direct competition with traditional systems integrators.

When asked how many companies they want to see as primes on the contract in order for there to be healthy competition, Haines joked that you need at least two. But right now, GSA doesn’t have a pre-conceived notion of a number, he added more seriously.

Networx has five primes on its two parts – AT&T, Sprint, Verizon, CenturyLink and Level 3. You have to expect all five to bid just to hang onto their incumbent work.

Beyond that, it’s pure speculation on who else might bid as a prime. Several systems integrators have told me that they are looking at it. But that is far from a definitive "yes, we are bidding."

Right now, many are busy reading the draft and preparing comments, which are due March 31. Beyond the formal comments, GSA officials emphasized that they want to keep talking to industry. Gavino said he keeps his calendar free on Mondays and Fridays to speak with companies.

EIS, which GSA is pronouncing as “Eyes,” will have a three-year overlap with Networx if EIS comes online as scheduled in 2017. The Networx contracts have been extended to 2020.

GSA has learned a lot since the protracted transition from FTS-2001 to Networx, so a repeat of those troubles is not expected. Agencies have more experience ordering telecom services via task orders, Davie said. And EIS will have simpler ordering and provisioning requirements.

“We’ve seen a lot of high level engagement [during the development of EIS] from the agencies,” she said. “They understand the challenges we had before but they are very excited.”