Networx's gravity field

Companies with niche services seek opportunities at the fringes of the huge telecom awards

Scott Gregory, director at CXtec's government business unit, sees the company's hardware skills as its opening to Networx.

James Rajotte/WPN

The recent award of the Networx contracts came as good news to the prime contractors and some of their team members, but there are other companies hoping to score new business as well. Agencies will be moving their services from expiring contracts to the new ones, and telecommunications is in the forefront of agency planning and thinking. The iron may be hot for some companies.

The shape of the opportunities depends on the type of company contemplating the market. CXtec, a Syracuse, N.Y., reseller that specializes in used equipment, thinks it might be able to buy some of the hardware that agencies will jettison as they upgrade. Telecom expense management firms believe agencies will be especially attuned to network costs.

Market observers, however, warn that the opportunities may not be as plentiful for companies that are not already on the prime contractors' teams.

AT&T Inc., Verizon Communications Inc. and Qwest Communications International Inc. won spots on both Networx Universal and Networx Enterprise. Sprint Nextel and Level 3 Communications LLC earned a place on Enterprise. Sprint failed in its bid for Universal, while Level 3 tried only for Enterprise.

"I think there are going to be a lot of companies who are disappointed who are coming in with things like telecom expense management," said Warren Suss, president of Suss Consulting. "Agencies' first priorities will be on figuring out their transition strategies and weathering the storm. Anything that's peripheral is going to be placed at the bottom of the pile."

"This is going to be very much on an agency-by-agency basis," said John Okay, a partner at Topside Consulting.

What makes the difference is whether an agency is looking for a like-for-like transition, where it simply takes stock of the services it now has under the General Services Administration's FTS 2001 contract and purchases equivalents through Networx, Suss said. For those agencies, the opportunities are likely to all be for the prime contractors and their close team members.

Agencies using the transition period to make significant changes, however, may need services they can't get directly through the contract, he said. For example, agencies can't purchase most equipment through Networx, he said. The contract offers lease-for-purchase plans, but if an agency has funds to spend and wants to buy hardware rather than paying a monthly fee to lease, it would most likely go directly to an equipment provider.

"When you come down to the hardware level, that's where we play extremely well," said Scott Gregory, director of CXtec's government business unit. However, he noted that many agencies will want the newest equipment for the transition, and his firm's equal2new brand of guaranteed used equipment might not fit. The program is designed more for organizations trying to resist upgrades and stay with older technologies.

GTSI Corp. is part of AT&T Inc.'s Networx team, and Jim Leto, GTSI's president and chief executive officer, said the company stands ready to provide hardware. AT&T has a place on both the expansive Networx Universal and the more narrowly focused Enterprise.

"We're more excited about Enterprise than Universal," Leto said. "Universal is a global contract, and we're not a global company. Enterprise deals with the federal agencies' need to integrate [information technology] with telecom. I look at the Enterprise award as the IT-intensive part of Networx."

Leto added that GTSI can provide the same products and services through Universal as well.

TnT Expense Management LLC of Sandy Hook, Conn., one of dozens of telecom expense management firms in the government arena, said the chaos inherent in making the transition will make expense management an attractive service.

"The key opportunity for us is that whenever you're making any significant changes within a large organization, it causes all types of billing issues, billing errors, coordination problems," said Michael Bodetti, TnT's president and CEO. "It causes all kinds of issues that have to be addressed. If they're not addressed, it winds up costing you more money."

Telecom expense management companies such as TnT typically audit telecom expenditures, make sure the billed costs match the contracted costs and that the organization is not paying for services it isn't getting.

However, Okay said the prime time for these companies might already have passed. "In preparing for the Networx transition, every agency should have scoped out their current inventory and know what products they're buying," he said.

After the transition period ends, new opportunities may emerge, he added.

"Even though there's some talk about transformation in the scope of the contracts, some agencies may fall back to more of a like-for-like posture just to get the job done. After a couple of years when the smoke clears and they can catch their breaths, that's when agencies may be able to say, 'Here's some places where we can optimize,' " he said. "I think four or five years into the contract there's still going to be some opportunities."

Associate Editor Michael Hardy can be reached at mhard[email protected]

About the Author

Technology journalist Michael Hardy is a former FCW editor.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here


contracts DB

Washington Technology Daily

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.