Neal Fox | Contracting in perspective: GSA Networx ' Will it connect with users?

Neal Fox is a former assistant commissioner for commercial acquisition at GSA's Federal Supply Service, and is principal at Neal Fox Consulting (e-mail: nfox@usa.com). This is the third in an ongoing series of 'Contracting in Perspective' articles written exclusively for GCN. His other articles are available at GCN.com's Commentary archive.


For another point of view about Networx and GSA's future, see Warren Suss' "Another View" commentary.

GSA Networx, the next-generation telecom and networking contract from the General Services Administration, has garnered its share of news. That's good for magazine sales but bad for GSA, which announced a surprising eight-month delay in the contract award shortly after proposals were received in October 2005. That is more than 16 long months from receipt of proposals to anticipated award. What gives?

Networx is another in a series of governmentwide telecom contracts from GSA. Its predecessors, including the current FTS 2001, were very successful and are credited with bringing down the cost of phone service for the federal government. For example, the cost of a long-distance call on GSA contracts has fallen from over 25 cents per minute to about a penny per minute during the life of these contracts. That is a good definition of success.

But times have changed. Telecom is fast becoming just another component of IT. Indeed, most telecom is already within the scope of GSA's IT Schedule and GWACs. Over the next few years, much of telecom, such as VOIP and other Internet-based networking, will become IT-based, as customers focus on IT services integrated with their telecom. So with the price of long-distance service hovering at that penny-per-minute level, plus the convergence of telecom into IT, a new approach to telecom contracting is in order.

Despite this, Networx took the worn path of least resistance, attempting to keep GSA telecom and IT contracts separate for another 10 years. Although one can find IT services embedded in Networx, it is not a GWAC, which would have made it truly IT. In this isolated state, Networx became an eclectic mix of old-government-style offerings on two contracts, called Universal and Enterprise. Universal was for the big telecom companies, and Enterprise was supposed to bring integrators and small businesses into the game.

GSA also approved, and then unapproved, putting switched voice telecom on the GSA IT Schedule, where customers could have bought routine telecom services as a commodity, which they have certainly become. This was an unusual decision, given that wireless phone service, VOIP and many other forms of telecom are already on the IT Schedule.

But the larger question is, why all the Networx contract delays? The key is found in the complexity of the RFP put out for bid by GSA, which led to vendor proposals that rival NSA-type encryption. The Statement of Work for Networx Universal was 621 pages long'attempting to tell vendors how to do everything in excruciating detail. Apparently, acquisition reform and performance-based contracting have not reached GSA telecom. Vendors were unable to decipher what GSA wanted.

Interestingly, GSA was actually surprised by the complexity of the proposals it received. Agency officials publicly stated that they needed to delay Networx award dates due to the overwhelming number of responses from vendors. According to industry polls regarding who submitted proposals, it appears that GSA only received four proposals for Networx Universal and maybe seven proposals for Networx Enterprise. Hmmm.

Integrators and small players found Enterprise unworkable and high risk, and refused to bid. The RFP was too complicated, required huge investments in a burdensome government billing process, and the requirement to compete with Universal chased many away. All this makes the effectiveness of Enterprise highly questionable. In fact, Enterprise is shaping up to be a colossal failure. IT integrators and small businesses were supposed to be able to bid on it. Apparently none did. So GSA will end up with two contracts having virtually the same large telecom vendors. GSA need only look as far as their complicated RFP to understand why this happened.

GSA also took the unusual step of making significant modifications to the Networx Universal solicitation on three occasions after vendor proposals had already been submitted, and after GSA had reviewed those proposals. Hundreds of significant changes were made, including addition of new scope. The protest issue comes into play, too, since the government first read the proposals, then changed the solicitation, and some vendors are likely to benefit from those changes more than others.

Confusion spreads

So will Networx be successful? Some major issues loom, including confusion among vendors regarding what the RFP said, and confusion at GSA over what the vendors proposed. There is also the specter of financial jeopardy caused by large revenue guarantees to Networx vendors. Those revenue guarantees mean GSA would be obligated to pay the vendors big bucks if the contract is a bust. In fact, the Enterprise contract may not work in view of the limited number of bidders, its significant overlap with Universal, and those minimum revenue guarantees.

Also, GSA may have tainted the source selection by making major solicitation changes after officials had already read through the proposals. As a result, the answer regarding Networx success is not a slam-dunk. If Networx contracts can be awarded, they will aggregate government telecom buying to some extent. However, bring in the issue of GSA's loss of customers, and that aggregation argument slips a few notches. And GSA missed the opportunity to truly embrace the convergence of telecom with IT, which is what customers will be looking for.

Networx will probably be useful for about half the contract award period before customers decide that telecom has become just another part of IT, and either develop their own contract or use a GSA GWAC where they can ensure total solutions that integrate telecom with their IT infrastructure. As a result of Networx's failure to embrace telecom convergence with IT and GSA's insistence that customers cannot order telecom without paying GSA's extra fees, we could easily see an increase in the number of agency-specific telecom contracts and further erosion of business from GSA.

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