Agency in Charge of Networx Assailed for Requirements, Slowness

GSA’s last telecom transition took 3 years, which committee members repeatedly reminded the agency in the hearing. With the RFP’s April release date looking uncertain, “I'm concerned we're beginning to eat into valuable transition time,” said Rep. Maloney (D-N.Y.). Stephen Perry, GSA administrator, said the transition this time would be finished in 18 months but that “obviously not all the issues will be resolved” by the stated April RFP deadline. He said GSA has “a strong track record” of getting solid telecom services for limited taxpayer money, a point echoed by Rep. Waxman (D-Cal.), who praised GSA for saving the govt. $2 billion in long-distance charges through Networx.

GSA released its draft RFP but is still debating the minimum revenue guarantee (MRG) for the contracts, the criteria required to compete and other factors, Perry said. The program is split in 2 parts: (1) Universal, which offers a full range of domestic and international network services. (2) Enterprise, tailored to providers with a narrow range of specialized services and less extensive geographic coverage. Universal receives the lion’s share of funding. Universal will make 2 awards and Enterprise will make 5, Perry said, but under questioning from Davis, he allowed that the number might change based on govt. need and markets. Proposals are due this July and awards will be made in April 2006.

Maloney worried the 4-year base period for Networx, followed by 3 two-year options, would lock the govt. into obsolete technology or needless expensive contracts for up to 10 years: “Is that wise?” John Johnson, Federal Technology Service assistant comr.-service development & delivery, said the govt. could always negotiate a new contract with providers later. D.C. Delegate Eleanor Holmes asked the officials to improve oversight over contractors, and Perry said “the measures are beginning to be developed” to track provider’s compliance. Perry assured Rep. Cannon (R-Utah) that GSA was prodding agencies to cooperate with each other to lower shared costs, as was the Office of Management & Budget (OMB), which forced agencies to justify deviating from govt.-wide acquisition requests.

Perry said GSA was working to reduce govt.-specific requirements for participation under both Networx parts, which besides satisfying industry would also lower pressure to raise the MRG ever higher. Rep. Burton (R- Ind.), former reform committee chmn., told Perry not to give participants an “economic trick bag” by suddenly lowering MRG, and Perry clarified that GSA could not “unilaterally” do that and actually hoped to raise MRG to create more competition in Networx.

Though GSA officials said a 2nd-draft RFP was unnecessary, most telecom panelists disagreed, saying “we prefer to get it right” than on schedule. Robert Collet, AT&T Govt. Solutions vp-engineering, dissented: “GSA did it right” in its draft RFP and further delays would lead incumbents to seek price increases.

The mandatory requirements in both parts came under harsh questioning by committee members and telecom panelists. Sprint Vp-Govt. Systems Div. Anthony D'Agata shocked Burton by saying his company would have to file up to 240 reports per month for each agency it dealt with, for a total of 75,000 reports per month. No panel member thought the reporting requirements, which exceed those in the private sector, were fair. In response to WilTel Communications CEO Jeff Storey’s claim that small firms couldn’t afford to even bid under the proposed rules, Burton said Storey and others had effectively been “priced out of the market.” Burton: “It’s like shooting craps in Vegas, only high stakes.” Burton also criticized incumbents’ advantage in knowing how much traffic the contracts are likely to generate, figures that GSA hasn’t released.

Telecom panelists had several suggestions for how to help them compete in Networx. All of them said MRG should be higher, although Jerry Edgerton, MCI senior vp-govt. markets, added the govt. should limit the number of awards so as not to dilute purchasing power. Shelley Murphy, Verizon vp-federal markets, said Enterprise participants should be able to “graduate” to the Universal category when they can meet the requirements, and she criticized making “major mission critical” programs off-limits to Enterprise. She said GSA should at least relieve companies of expensive billing procedures if it keeps requirements for participation unchanged. Storey asked for Enterprise funding to increase to 20-25% of Networx because small firms drive technology advancements, and he criticized requirements in Enterprise that he said had nothing to do with his firm’s ability to provide select services.