Letter to the Editor: Bungled bundling

The July 15 article, "WorldCom's troubles jeopardize contracts," provides an excellent overview of why "nervous [federal] agencies are eyeing alternatives" if WorldCom's situation worsens. A related online article July 9, "DREN contract continues to haunt DISA," describes how the problems at WorldCom, as well as those at Global Crossing, have led to "the never-ending saga" of the efforts to re-award the $450 million Defense Research and Engineering Network contract.

Together, these stories provide both the larger picture and an example of why, as an industry experts states in the July 16 article, "Telephone services are something you don't want to buy all from one player." Yet, the DREN procurement and most other federal telecommunications contracts do exactly that: limit the market to a select few oligopolists.

The DREN re-compete and the problems at WorldCom and Global Crossing reveal the folly of a procurement strategy that dictates such a highly restricted marketplace. The strategy's central principle is contract bundling: the practice of consolidating products and services into contracts that are so large (e.g., DREN), they can only be pursued by and awarded to the largest companies.
This practice, which is the norm in federal telecommunications contracting, stifles competition, hurts small business, inconveniences government agencies, complicates and delays procurements and is often costly for taxpayers.

Despite legislation and regulations to limit bundling, the Office of Management and Budget has recently expressed concern that unnecessary contract bundling may be negatively impacting small business. OMB has initiated a review of agency competition practices and contract bundling. In addition, both the House Small Business Committee and the Senate Committee on Small Business and Entrepreneurship are considering at least three new pieces of legislation to limit contract bundling.

To date, the federal government has reasoned that consolidating products and services into omnibus, bundled procurements saves time and money. It is further reasoned that this acquisition strategy results in low-risk contract awards to large, financially sound companies. The experience with DREN, WorldCom and Global Crossing demonstrates the fallacy of this approach.

Craig Brooks

President, Electra Ltd. Inc., Bethesda, Md.

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