Georgia to WorldCom: Keep out
Revised telecom plan excludes financially troubled firms
Larry Singer, executive director, Georgia Technology Authority
The state of Georgia issued new requirements this month for its convergent telecommunications outsourcing project that would preclude WorldCom Inc. from competing as a prime contractor or key member of a bidding team.
The state canceled the bids of teams led by Electronic Data Systems Corp. of Plano, Texas, and WorldCom of Clinton, Miss., July 12 on the grounds that the financial information submitted by WorldCom was not valid.
Both contractors had submitted bids June 17 for the state's massive 10-year, $1.8 billion Convergent Communications Outsourcing Project that would provide services such as local, long-distance and wireless phone service; high-speed online access; personal computing equipment and network support to state agencies. State officials said they did not want to move forward with a major project in which only one team, the EDS-led ConnectGA, could effectively compete.
"A competitive environment is essential for [the procurement] to be successful," said Larry Singer, executive director of the Georgia Technology Authority and state chief information officer.
Georgia issued Aug. 8 a new re-quest for proposals designed to ensure the financial stability of those companies that bid as prime contractors or as a single "bid team." To compete for the contract, the prime must have a minimum of $1 billion annual revenue and $250 million cash or cash equivalent. In addition, no prime or team member may have filed for bankruptcy in the last five years or currently be under the protection of U.S. bankruptcy laws.
Under the these requirements, WorldCom, which filed for Chapter 11 bankruptcy protection July 21, cannot participate as a prime contractor or as a bid team member.
Tom Davies, a senior vice president with Current Analysis Inc. of Sterling, Va., said it is not unusual for customers to include a revenue and cash requirement for large outsourcing deals.
"It's a way to ensure only financially sound companies are considered as primes," he said. "It communicates an expectation to the vendors and keeps frivolous bidders on the sidelines."
Ray Bjorklund, a vice president with the market research firm Federal Sources Inc., McLean, Va., said government agencies seeking to outsource large, complex integrated solutions such as the Georgia project "can't accommodate the risk of contractors that might fail. There's too much state funding to lose," he said.
Proposals are due Nov. 15, the state will award the contract in April 2003, and the contractor will assume operations in July 2003, state officials said.
In an effort to boost the response to the new RFP, state officials removed three components they say are not essential to creating a converged telecommunications infrastructure. These are the acquisition of a new data center, digital broadcast capabilities for Georgia Public Broadcasting and the Navigator highway camera system.
Navigator is a transportation management system whose components include a network of cameras along interstate highways in metropolitan Atlanta that feed real-time images of traffic conditions to the Internet.
Michael Clark, a GTA spokesman, said an RFP is not needed for the acquisition of a new data center facility because real estate is not subject to competitive bids.
State officials will issue an addendum to the outsourcing contract covering two-way interoperable radio pending decisions about homeland security issues, GTA said. This requirement was included in the original RFP.
Davies said the state's strategy to re-energize competition is "a sound one," but wondered whether it would have the intended effect or whether the state would get any additional competitors besides the already established ConnectGA team led by EDS.
Bjorklund was more optimistic. "[Georgia] has some time to get this program on the right track," he said.
He noted, however, that the new criteria for competing probably will limit the procurement to a handful of large systems integrators that can handle the job.
The RFP changes have resulted in a reorganization of the EDS ConnectGA team. Once a key player on the team, systems integrator Lockheed Martin Corp., Bethesda, Md., now is playing a smaller role.
The ConnectGA team that bid for the original RFP in June included AT&T Corp., Bell South Telecommunications Inc., Convergent Media Systems Corp., Lockheed Martin, Motorola Inc. and Science Applications International Corp.
The leaders of the ConnectGA team are now AT&T, Bell South and EDS, said Bill Ritz, a spokesman for EDS.
"Due to changes in the RFP, Lockheed Martin is not taking an active role in the response at this time," Ritz said.
The Georgia Advantage team, led by WorldCom, included Accenture Ltd., Alltell Corp., Bell South, IBM Corp. and Motorola.