Treasury kills solo telecom contract

The Treasury Department on Thursday canceled its much-criticized solo telecommunications procurement effort, saying it will use the General Services Administration's upcoming Networx governmentwide telecom contract vehicle instead.

In a terse statement posted online Thursday, Treasury officials laid to rest the Treasury Communications Enterprise procurement by stating that it "is hereby canceled."

As recently as late August, Treasury officials appeared to still be pursuing the voice, data and video procurement by requesting another round of bids.

The August requests were the latest turn in a years-long saga in which the contract vehicle was awarded to AT&T in late 2004, canceled in the spring of 2005 following a Government Accountability Office bid protest decision, unexpectedly resurrected in the summer of 2005, criticized by the Treasury inspector general and now, ended.

Treasury spokeswoman Eileen Gilligan offered no details on when the department began to consider ending TCE in favor of Networx. GSA says it will award the first set of Networx contracts in March, and another set in May.

Gilligan also could not say whether bidders will be reimbursed for what they spent developing proposals, which amounts to about $1 million per TCE bidder, according to industry sources.

"I'm not surprised," said John Okay, a former GSA telecom executive who is now a partner with Topside Consulting Group in Vienna, Va. "The longer this thing dragged out, any justification that was tied to [Treasury's] desire to move out at a faster pace than Networx kept slipping away day by day, week by week."

Treasury's decision to eschew GSA contract vehicles was the subject of intense criticism on Capitol Hill, particularly from Rep. Tom Davis, R-Va., the outgoing chairman of the House Government Reform Committee.

"Davis is feeling pretty vindicated today," said David Marin, the committee's staff director. "TCE was a flawed acquisition, and he's glad that there's now consensus that Networx should be the vehicle of choice for all agencies."

GSA Administrator Lurita Doan also publicly urged Treasury to use Networx, saying the department's participation would lower overall government telecom costs. Whether GSA will be able to take advantage of Treasury's decision to use Networx is an open question, however.

Bidding companies already have submitted their final price proposals for the largest part of Networx, meaning GSA officials would have to call for yet another round of bids if they want to take into account possible economies of scale created by Treasury's participation.

In a statement, Doan said she was "pleased" with Treasury's decision, adding that it demonstrates "that when GSA presents a solid business case … federal agencies will make the right decision."

"Treasury basically thumbed its nose to the Hill and the Hill won," said a former government official. "It's as simple as that."

The official defended Treasury for pursuing its own telecom contract, arguing that GSA should not be the only telecom-procuring authority for the civilian government. The agency can create economies of scale with commodities, "but you can't possibly expect a central authority with limited knowledge across the entire government to get all of the features and functionalities that are innovating and changing," the official said.

A GSA spokesman could not be reached for comment.

Okay, however, defended Networx, saying it should be able to satisfy evolving demands, although GSA does need to improve its contract modification process. "Making it easier for agencies to customize the offerings under Networx is one of GSA's big goals," he said.

Treasury's decision to revoke TCE could be a setback for some companies within the telecom industry, mostly for AT&T, which was widely seen as the front-runner to win the reincarnated TCE. An AT&T spokesman declined to comment.

Treasury's decision on the telecommunications procurement comes on the heels of its chief information officer's decision to retire. Ira Hobbs, who has supported TCE, will leave government Jan. 3.