GAO: Networx contracts not as effective as they might have been

Although GSA officials say the agency's Networx contracting vehicles have put significant dents in the federal government's telecommunications bills, a GAO study says the road to those savings wasn't nearly as smooth as it could have been.

The Government Accountability Office said complex acquisition processes and weaknesses in project planning contributed to delays transitioning to Networx from the GSA's old FTS2001 contracts, resulting in cost increases and missed savings for federal users.

According to the GAO study, under Networx, federal agencies tended to transition easier items first to demonstrate progress, before they turned to work on items such as data networks and international services that needed longer lead times. As a result of the delays, it said, GSA's estimated cost to complete the transition increased by $66.4 million, 44 percent over the baseline estimate.  

In a Nov. 20 post on GSA's website, Bill Lewis, the Federal Acquisition Service Integrated Technology Service's Networx program manager, said with the program firmly in place, the government has saved an average of 35 percent off regular prices by using Networx contracting vehicles that consolidate purchases and leverage the combined buying power of federal agencies.

GSA launched the program in 2007, but ran into a number of difficulties, including larger demand among federal users for more complex and diverse telecommunications services. Those problems resulted in a three-year implementation delay and millions of dollars in lost savings.

The GAO report comes as GSA is developing Network Service 2020, or NS 2020, intended to refine plans for the next generation of telecommunications and IT infrastructure portfolio. According to the GAO report, GSA plans to begin the next transition when it awards new contracts in February 2017 as the last of the Networx contracts expire.

The current Networx contracting vehicles -- Networx Universal and Networx Enterprise -- are used to buy all manner of telecommunications services, from toll-free numbers to complex agency-wide networks for voice, data and video services. Lewis said Networx contracts support the government's ability to conduct day-to-day operations, provide access for citizen services and continue operations during emergencies.

Among the problems cited by the GAO study were duplicative contract vehicles, a large number of service options and changes related to the process for ensuring fair competition among service providers. Declines in contracting and technical expertise within agencies, it said, compounded those problems. "GAO has identified skills gaps in the federal workforce as a government-wide high-risk area and highlighted the need for agencies to work with the Office of Personnel Management (OPM) to close them," the study said.

"The rocky transition to the Networx contracts was, unfortunately, a lesson in lost opportunities,” said Senate Homeland Security and Governmental Affairs Committee Chairman Tom Carper (D-Del.) in a joint statement on Jan. 6 with ranking member Tom Coburn (R-Okla.), Financial and Contracting Oversight Subcommittee Chairman Claire McCaskill (D-Mo.) and Sen. Susan Collins (R-Maine).

“As this report shows, dozens of agencies missed out on hundreds of millions of dollars in savings under the new contracts, and instead accrued tens of millions in increased costs in contract management. Given that we are trying to do more with fewer resources in every part of the government, it is essential that programs like Networx reach their full potential and garner all possible savings," said Carper. He added GSA should use the lessons learned on Networx to inform its next telecommunications contract transition.

The joint statement added the GAO reported "there is a high risk that GSA will not meet its goal of awarding the next set of contracts in 2017, and that GSA expects to extend the Networx contracts for at least three years."

In addition to the extra transition costs with Networx, agencies may have paid more for similar services by staying on the FTS2001 contracts longer than planned. Specifically, the study noted that in April 2010, GSA estimated agencies could have saved 28.4 percent of their spending on FTS2001 by using Networx contracts instead. Based on this rate of savings, GAO said it estimated agencies could have saved about $329 million if they had transitioned to Networx on time.

GAO recommended that in preparing for the next transition, GSA, in coordination with the White House's Office of Personnel Management, examine potential government-wide expertise shortfalls, and that it provide agencies guidance on project planning and fully archive, share, and prioritize lessons learned. GAO said GSA and OPM agreed with its recommendations.