OMB will require agencies to use Networx

A memorandum released by the Office of Management and Budget on Thursday effectively requires agencies to make use of the General Services Administration's new Networx telecommunications contract. Agencies deciding not to use Networx must conduct extensive analysis to justify their decision.

Comment on this article in The Forum.The memo, signed by Karen Evans, administrator for e-government and information technology at OMB, stated: "Agencies shall use the General Service Administration Networx contract to satisfy requirements currently being met via the FTS2001 contract." According to the memo, the decision to require Networx was based on a cost-benefit analysis OMB and the Federal Chief Information Officers Council conducted.

Networx is the government's largest telecommunications contract, with a ceiling of $68 billion for10 years. It has two components, Networx Universal and Networx Enterprise. Its predecessor, the now-expired FTS2001 contract, was not mandatory.

Agencies have until April 1, 2010, to switch to the new contract and be reimbursed for one-time transition costs. In July, the Government Accountability Office reported that agencies were mostly on track in planning the transition.

The memo stated that agencies must use cost-benefit analysis to justify their decision to not use Networx to fulfill future requirements, including requirements that currently can be satisfied by Networx.

"They're sort of saying it's a mandatory source," said Ray Bjorklund, senior vice president and chief knowledge officer for FedSources Inc., a market research firm in McLean, Va. "They are not explicitly declaring it to be mandatory, but this is as close as I've seen. [They're saying] you've got to prove to us or your CIO why it makes better business sense to migrate away from this path."

Bjorklund said the analysis referenced in the memo showed that Networx made good business sense and was attractive economically for FTS2001 customers. "This is good for the Networx program, there will be more customers in the Networx family, more customers for this service which should help stabilize prices more quickly," he said.

Neither OMB nor GSA responded to requests for comment, so it is unclear why they felt it was necessary to make Networx mandatory. Bjorklund speculated that it could be because some FTS2001 agencies have expressed reluctance to embrace Networx, particularly the Defense Department. In 2006, the Treasury Department attempted to set up its own telecom vehicle, but was persuaded by Congress and GSA to use Networx. Defense was the largest user base under FTS2001, but the department now has its own telecom networks for national security reasons.

"DoD is not using GSA vehicles as often as they used to," Bjorklund said. "It's only a guess, but it may be possible because Networx was fairly long in coming as a program. Treasury for one was inclined to do its own thing."

Agencies creating their own vehicles "might consequently create a higher priced environment under Networx," he added.