GSA announces five Networx telecom awardees

Five companies have been selected to provide up to $20 billion in telecommunications services to federal agencies through the General Services Administration's Networx Enterprise contract.

AT&T, Level 3 Communications, Verizon Business Services, Qwest Government Services and Sprint Solutions were awarded slots on the contract and will have the opportunity to bid for voice, wireless, Internet protocol and satellite service contracts under the program, GSA announced Thursday.

"We at GSA are committed to our customers, and award of the Networx Enterprise contracts today provides them superior telecommunications services from the best American companies at the best prices available in the marketplace," said Lurita Doan, GSA's administrator.

Three of the awardees -- AT&T, Verizon and Qwest -- are also providers on the complementary Networx Universal contract, which offers comprehensive telecom services. The Enterprise contract, in contrast, is a boutique-style award that lets companies offer smaller or more selective service packages at potentially lower prices.

The awardees will offer nine mandatory services and up to 41 optional services, and John Johnson, GSA's assistant commissioner for integrated technology services, said "most if not all" of the 135 federal agencies that currently buy telecom services through GSA likely will become Networx customers. Transition to the new contracts will take about three months as companies must first certify the systems they intend to offer.

Sprint was not included in the Universal contract award announced in March, leaving many government customers to wonder whether their existing provider would be available through GSA's new contract. The announcement that Sprint won a place on the Enterprise contract means that some agencies could avoid a choice between GSA's procurement services and their incumbent telecom provider.

Sprint currently supplies about 30 percent of all government telecom services through its place on FTS2001, the predecessor to Networx, and serves the Defense, Homeland Security, Transportation, Veterans Affairs and Interior departments among other federal customers.

On Wednesday a Defense official told Government Executive that the department was committed to using the Networx contracts. Defense will be the largest federal customer and is a demanding user in terms of the reliability and global scope of services required, making it likely that the agency would rely heavily on the larger Universal contract, of which Sprint is not a part.

The five companies on the Enterprise contract are each guaranteed a minimum of $10 million in revenue over 10 years, and the contract as a whole has a ceiling of $20 billion for that period, GSA officials said. Universal has a much larger $525 million minimum guarantee and can range up to $48 billion. Johnson said GSA does not expect purchasing under either contract to push up against the ceiling.

Agencies will initially pay a 7 percent fee to GSA to buy through Networx, but Johnson said that after the transition period, GSA would propose a new tiered fee structure. Agencies that rely heavily on GSA for services like contract billing would pay the most, while direct-bill, direct-pay agencies will be offered a lower rate.

A tiered system could smooth feathers ruffled by GSA's decision to offer the Treasury Department a steep rate cut in exchange for dropping a competing telecom contract. Under the agreement, Treasury will pay half the service fee and receive less purchasing support -- an offer not extended to other agencies. Johnson said he could not predict the reduced rates that will be offered under the tiered system.