GSA weighing tiered fee structure for telecom contracts

The General Services Administration may charge agencies using new telecommunications service contracts varying fees depending on the level of support they need, a GSA official said Thursday.

John Johnson, assistant commissioner for integrated technology services at GSA's Federal Acquisition Service, said he started looking at the fee structure for the so-called Networx contracts about a year ago. Officials are weighing whether they should move from the across-the-board fee used under the existing telecommunications contracts to a tiered structure, he said. A 7 percent management fee arrangement has rankled many agencies using the current FTS 2001 contracts.

Johnson compared the possible tiered fee structure to varying rates that cable companies charge customers, depending on the number of channels received. He said GSA is not attempting to make money from Networx contracts.

"We're looking at recovering our costs," he said at the Federal Networks 2007 conference in McLean, Va. "To transition 135 agencies and 1,600 sub-bureaus in this environment with all the contract complexities -- it is not going to happen overnight."

Warren Suss, president of Suss Consulting Inc. in Jenkintown, Pa., which hosted the conference, said that a deal GSA offered to lure the Treasury Department to cancel a solo telecommunications procurement in favor of using Networx "opened up a can of worms."

The deal will give Treasury a 50 percent reduction in the service fee on Networx for a decade. Johnson has said that in exchange for the lower overhead, Treasury will receive far less support from GSA.

Agencies have always sought lower overhead fees from GSA, but Suss said he believed they had come to accept the flat, across-the-board structure. GSA uses tiered fee structures for many of its other contract vehicles so the arrangement would not be unique, but the rules must be very clear, he said.

"If you don't set out the rules of the road very clearly and if you don't have a clear relationship between the value provided and the pricing levels, you're going to get into a lot of squabbles with the agencies," Suss said.

Jim Dolezal, a former telecommunications director at the Interior Department and lead telecommunications consultant at Suss Consulting, said agencies are supportive of the fee structure review because some have very little need for GSA assistance and do not want to pay the full fee.

Johnson said GSA officials are "working tirelessly" to award contracts for Networx Universal, the largest part of the telecom procurement, in March. The second, smaller portion of the procurement, known as Networx Enterprise, is on track for awards in May, Johnson said. He emphasized that agencies, the industry and GSA all have roles to play in the transition from FTS 2001 to Networx.

GSA also is in the early stages of setting up an office to manage a transition to the next generation of the Internet, which is known as Internet Protocol version 6, or IPv6, Johnson said at the conference. The agency needs "some kind of champion" for IPv6 across GSA's IT portfolio, Johnson said.

The office would support an August 2005 Office of Management and Budget mandate that requires all federal agencies to switch the backbone of their networks from the current Internet Protocol version 4 to IPv6 by June 2008, Johnson said.

"I think OMB is supportive of anything that will help further the policy," he said. "If they send out a policy mandate that says 'thou shall,' we're trying to make it real."

Members of Congress have pushed the Bush administration to appoint an IPv6 czar in OMB, but officials argue that Karen Evans, the administrator of OMB's Office of E-Government and Information Technology, already has the authority and is providing the oversight, policies and framework needed for the transition.

In August, the Government Accountability Office found that several agencies had failed to meet critical OMB deadlines for making the transition.