Treasury and GSA collaborating on telecom contracts, document shows

The Treasury Department and the General Services Administration have agreed to cooperate closely on the development of two large telecommunications contracts, sharing such information as pricing and technical requirements, in an apparent effort to make the contracts more closely resemble each other, according to an official document. In an unusual arrangement, the Office of Management and Budget also signed off on the agreement.

Under the terms of a memorandum of understanding, a copy of which was obtained by Government Executive, Treasury and GSA agreed to begin a months-long process of comparing the Treasury Communications Enterprise contract to GSA's Networx pact to determine which vehicle Treasury should use. While officials have said Treasury will make a decision when TCE's base period expires in 2008, the memo lays out a timetable for Treasury and GSA to share information well in advance of that time.

According to the memorandum, Treasury and GSA will conduct a "best value analysis," comparing TCE to Networx based on a variety of factors, including the cost and quality of services provided, contract administration expenses, ease of use, and delivery time for services and products. Treasury was required to provide GSA "with a complete briefing of TCE" by early January. And no later than one year prior to the expiration of TCE's base period, GSA and Treasury must "reach agreement on common performance metrics and the methodology for defining 'total cost of ownership' " of Treasury's networks, according to the memo.

If the agencies cannot agree to whether Treasury should migrate to Networx, which GSA plans to award next year, then the Office of Management and Budget will decide the matter. "Treasury and GSA will jointly present the business case [for each option] to OMB for adjudication," the memo states. According to an administration official, employees from OMB's Office of Federal Procurement Policy worked closely with Treasury and GSA on the memorandum's details. OFPP Administrator David Safavian signed the memorandum. The official said his action did not violate the statutory prohibition on OFPP chiefs being directly involved with individual procurements.

The memorandum adds more detail to the behind-the-scenes maneuvering over TCE and Networx. GSA and congressional committee staff have sought to keep the contracts from conflicting with each other and undermining the Bush administration's efforts to make agencies use common information networks, and, when possible, to pool their purchasing power. A Treasury spokeswoman declined to comment on the memorandum, but said, "Like any contract, at the end of the base period it will be prudent to reexamine the communications needs of the department and make an informed decision on how best to continue meeting those needs."

It's not clear, however, that agreements like this are common. Treasury has declined to say whether the memorandum materially affected the TCE procurement, an issue that could become the subject of litigation. Several losing bidders have protested Treasury's award of the TCE contract in December to AT&T Corp. Some of those companies said Treasury officials never told them of the memorandum. It was signed one day before the TCE award was publicly announced. Had company officials known about the agreement, they might have altered their proposals in light of the possibility that Treasury wouldn't renew TCE. The contract has seven one-year renewal options.

According to the memorandum, GSA's Federal Technology Service, which manages Networx, will "utilize Department of Treasury-provided pricing data to ascertain like-for-like cost effectiveness of FTS 2001/Crossover and Networx contracts." FTS 2001 is the contract that Networx will replace. GSA also will review information from Treasury about any TCE modifications "to ensure that FTS governmentwide telecommunications programs meet emerging TCE requirements."

While GSA has requested input from a number of federal agencies to fashion Networx to their needs, it's not clear if the agency has signed detailed agreements with any of them. A GSA spokeswoman had no comment on the memorandum.

For its part, Treasury secured provisions that could influence how it and other agencies use Networx. The department will provide GSA with the "pricing data and proposal evaluation data/methodology information" used for TCE, according to the memorandum. Also, Treasury will "identify requirements and priorities relevant to current and future TCE needs to be included in the Networx [requests for proposals]," the final versions of which haven't yet been released, and will "validate that TCE requirements are included in the Networx RFPs."

The memorandum is signed by Sandra Bates, commissioner of GSA's Federal Technology Service; Ira Hobbs, Treasury's chief information officer; OMB purchasing chief Safavian; and Karen Evans, OMB's administrator for electronic government.

The memorandum was first publicly acknowledged by House Government Reform Committee Chairman Tom Davis, R-Va, at an industry breakfast in December. Davis has expressed frustration with agencies, including Treasury, that award their own telecom procurements, rather than using the central buying power of GSA.

Warren Suss, a federal telecom analyst, said Davis' preference for centrally purchased telecom services most likely prompted the memorandum. "This has Tom Davis' fingerprints all over it," Suss said. A Government Reform Committee spokesman, however, said Davis wasn't involved in crafting the document.

The memorandum, Suss says, reflects an overall trend in government, whereby OMB will look for ways to leverage the government's massive buying power and reign in agencies that would prefer to go it alone. "This hints that the pendulum may be swinging back toward the decision-making based upon what's good for the government as a whole," he said.