Contractors answer long-distance call
GSA reveals strategy for new Networx program
- By Patience Wait
- Oct 23, 2003
The General Services Administration's next-generation long-distance contract, called Networx, is being designed with two major components: one to offer opportunities for large telecommunications companies, and the other to give integrators, wireless companies, small businesses and other networking companies a piece of the action.
The GSA released the request for information Oct. 17 for the multibillion-dollar Networx, with a 30-day deadline for responses. Interested companies are still digesting the RFI, but executives and analysts said the program will cater to both traditional carriers and new players moving into the telecom space.
Networx is the successor contract to FTS2001, the current long-distance program served by WorldCom Inc. and Sprint Corp. that will expire in December 2006. At this stage, GSA has not set a value for the contract or the number of years Networx will run, though market research firm Input Inc. of Chantilly, Va., estimates it to be worth up to $10 billion.
The new contract will incorporate the services included in FTS2001, primarily long-distance and related services, as well as take over for expiring contracts that provide wireless and satellite services.
National telecommunications firms AT&T Corp. of Bedminster, N.J., Sprint of Overland Park, Kan., and WorldCom of Ashburn, Va., and the largest of the regional Bell operating companies, such as Verizon Communications Inc. of New York and SBC Communications Inc. of San Antonio, are likely to pursue Networx.
But the proposed structure of the contract makes it feasible for major integrators, such as Electronic Data Systems Corp. of Plano, Texas, Computer Sciences Corp. of El Segundo, Calif., and General Dynamics Corp. of Falls Church, Va., to provide a range of services in areas such as managed networks, security and applications.
Austin Yerks, president of business development for CSC's federal sector, said the company wants to have a position on the contract in case it develops into the primary vehicle for providing a wide range of network services to federal agencies.
GSA's current thinking is that Networx will be divided into two phases.
Bidders on Networx Universal, the first phase, will be required to provide all the services spelled out in the RFI to all government offices nationwide, to all locations where the government has offices and all of their commercial locations.
According to the RFI, GSA anticipates "limited awards" in this phase because of these stringent service requirements.
The request for proposal for this phase is expected in the spring, the RFI states, with contract awards "well before the expiration of the FTS2001 contracts."
"By and large, this [phase] is a carrier deal," said Warren Suss, president of IT consulting company Suss Consulting Inc., Jenkintown, Pa. "There are definitely roles for integrators as a part of a carrier-led team. But for the Universal contract, it's so dominated by transport and transport-related requirements, it's difficult to see how an integrator could play as a prime while still managing [its] risks."
In Networx Select, the contract's second phase, contractors can bid on selected services in specific geographic areas. The idea is to provide a vehicle for small, minority-owned and 8(a) businesses and those who have specialized offerings, said John Johnson, assistant commissioner of the FTS office of service development.
Awards under Networx Select are expected approximately nine months after the Universal phase, he said.
While he did not identify how many contracts would be awarded under Networx Select, Johnson said the agency expects multiple awards, far more numerous than in the Universal phase.
Tony D'Agata, vice president and general manager of Sprint's government systems division, said he expects integrators to vie for a spot on the Select phase.
"I think it will be more competitive on the boutique-type procurement as opposed to the larger, nationwide procurement," he said.
Networx is larger in scope than FTS2001 because it incorporates other contracts and extends the breadth of services to be included, Johnson said. It also is different because companies on one phase won't be able to move to the other phase.
With FTS2001, companies that won Metropolitan Area Acquisition contracts to provide telecom services in specific cities could apply to "cross over" to FTS2001 to offer their services nationally.
One important similarity is the likely incorporation of minimum revenue guarantees into Networx. Under FTS2001, Sprint and WorldCom both were guaranteed revenue of at least $750 million each. That promise made it possible for the companies to plan investments needed to provide national services. The amount of the guarantee for Networx has not yet been determined.
One party interested in the eventual shape of Networx is Rep. Tom Davis, R-Va., chairman of the House Government Reform Committee.
Early in October, the committee called representatives of GSA to a hearing to discuss a variety of issues surrounding the agency, including how the Networx program should be structured.
Dave Marin, a spokesman for Davis, said the committee believes Networx needs to be more performance-oriented and more commercial, rather than customized, in nature.
"Davis thinks there is room for both a big FTS contract for agencies that do not want to manage their telecom, and a schedules alternative for those agencies that can manage their own telecom," Marin said.
The Networx RFI is important mostly for getting a discussion under way about how best to structure an FTS2001 replacement contract, he said. "[We] believe we have a long way to go in developing an innovative telecom acquisition strategy that recognizes how rapidly the telecom and tech marketplace changes," he said.
Staff Writer Patience Wait can be reached at email@example.com.