GSA says Networx to reach $20 billion

GSA says Networx to reach $20 billion

FTS Networx, the 10-year telecommunications and network services contract to be awarded in April 2006, has a potential value of $20 billion, the General Services Administration's Federal Technology Service announced today.

Speaking to an audience of hundreds of executives from dozens of telecommunications and integration companies, GSA officials gave an in-depth briefing on the provisions of the two draft requests for proposals released Oct. 29.

The two RFPs'Universal and Enterprise'are going to replace the agency's FTS 2001 governmentwide acquisition contract, currently held by Sprint Corp. and MCI Inc., which expires in 2006. FTS plans on making multiple awards in both categories, and the contracts are expected to have a four-year base period and three, two-year options.

The Universal RFP is for companies offering nationwide service, and the bulk of the service requirements are mandatory.

The Enterprise RFP is for companies that offer specialized telecommunications or network services but do not have nationwide coverage. There are a handful of mandatory service requirements, but the bulk of the services a bidder can include are optional, allowing more targeted responses.

Previously estimated to be worth $10 billion over a decade, the contract's total value was boosted based on the longer contract term (FTS 2001 is an eight-year contract), wider portfolio of service requirements, customer buying patterns and growth prospects in the field, said John Johnson, assistant commissioner for service development and delivery.

FTS 2001 made use of 'minimum revenue guarantees,' a promise that the two contract holders would earn at least $750 million each over the life of that contract.

Networx also includes minimum revenue guarantees, but the values are far lower. In the Universal RFP, the MRG is set at a cumulative $525 million; that amount will be divided among awardees, however many there are. The MRG for the Enterprise contract is $25 million; it, too, will be split among all awardees.

One executive who attended the briefing said the amounts are so low because the agency and the industry are both confident the volume of business will far exceed the minimums, but they were included in the RFPs because some companies had wanted them.

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