GSA telecom proposal gets mixed reviews

The General Service Administration's proposal for a new governmentwide telecommunications contract was both criticized and applauded on Capitol Hill Thursday, with some lawmakers expressing skepticism about the particulars of the deal and a number of vendors divided on whether GSA should delay issuing a final request for proposals.

Senior GSA officials, including Administrator Stephen Perry, told the House Government Reform Committee that the agency intends to release a final request for proposals on April 1 for the Networx contract, which will offer an array of telecom and data services to government agencies.

Perry said GSA spent months listening to potential agency customers and bidders to create a draft RFP that would broadly reflect the government's needs and account for the rapidly evolving nature of communications technology. He said Networx would offer three times the number of services that are available with GSA's current contract, FTS 2001. Networx is "by no means merely an extension" of that contract, Perry emphasized.

The Networx draft RFP, the subject of Thursday's hearing, drew guarded support from committee chairman Tom Davis, R-Va. Davis said he favored a "centrally managed communications infrastructure" for the government, and he wanted Networx "to be the backbone of that infrastructure."

Davis noted that GSA officials spent several months "listening to industry, customer agencies and congressional and other stakeholders" to prepare the draft, which elicited approximately 2,500 comments from potential vendors. GSA estimates that about 40 percent of those will be incorporated into the final version.

Davis said he was unsure whether the draft, as it stands now, would "ensure that Networx will become the 'best choice' for customer agencies as they design telecom plans."

The companies that favor releasing a second draft are concerned that some technical and management requirements for Networx would be unduly burdensome, and that the contract might not be lucrative enough to entice companies to bid or smaller firms would be shut out of the competition.

The draft RFP would require potential contractors to prepare detailed billing statements and to provide frequent reports on each agency customer. Some vendors said in their testimony those requirements would force them to build new back-office systems that they don't use now for their commercial customers.

One telecom executive said these extra costs would amount to "tens of millions of dollars," with no guarantee they'd be recouped. Shelly Murphy, vice president of federal markets for Verizon, urged GSA to abandon what she called the "artificial deadline" of April 1 for the final RFP and to address vendors' complaints. A representative from the Government Accountability Office also encouraged the agency to consider postponing the RFP's release.

"The draft [RFP] simply asks too much," said Anthony D'Agata, vice president and general manager of Sprint's government services division. D'Agata said to meet the requirements, Sprint would have to produce 75,000 reports per month, a figure that GSA officials did not dispute in testimony.

It also drew a sharp response from Rep. Dan Burton, R-Ind., who questioned why GSA was requiring its vendors to produce reports that those companies didn't normally create for their commercial clients. He also asked to see the criteria upon which bidders will be evaluated prior to the April 1 RFP release. "We're trying to make government more business-friendly," Burton said. Then he added, "I hope GSA is listening," apparently referring to the fact that several senior GSA officials had left after their testimony and were not present to hear the industry executives speak. One GSA official did, however, remain in the audience.

Perry told the committee that GSA was lowering the number of administrative and other management requirements in the contract and some of these changes were not known to potential bidders. When they're announced, Perry said, "I think it will be good news."

Another topic that drew criticism at the hearing was setting minimum revenue guarantees. The Networx contract is divided into two segments-Universal, which would offer a full package of services, and Enterprise, which would let agencies choose. Companies that win slots on the Enterprise portion would split a minimum revenue guarantee from the government of $50 million. That figure is double the previous guarantee, but one executive said it still wasn't sufficient.

Jerry Hogge, senior vice president of Level 3 Communications, said his company favored a guarantee of $25 million to each Enterprise vendor. Under the current arrangement, Perry said the $50 million would be divided equally among all Enterprise vendors, and he estimated there could be five of them.

Vendors also complained about a price control mechanism, by which GSA could reduce the prices agencies pay, under certain circumstances if they're not as low as those paid by commercial clients. A senior GSA official testified that the agency has not used the mechanism to date. The draft RFP, however, includes this contingency because it's in the government's best interest to ensure it continues paying low rates, explained John Johnson, the assistant commissioner for service deployment and delivery with GSA's Federal Technology Service, which is managing the Networx procurement.

Networx received kudos from two large telecom companies, each with sizeable stakes in the federal market. Robert Collet, vice president of engineering for AT&T Government Solutions, and the company's lead executive on the Networx bid, said GSA "got it right" with the RFP, and he urged the agency not to delay its release. Jerry Edgerton, senior vice president of government markets for MCI, echoed those sentiments.