Transition Woes: Networx structure remains a sticking point

EDITOR'S NOTE: This is part one of a three-part series that explores the transition from FTS 2001 to Networx.

Barring some cataclysmic intervention, agencies will not have transitioned their telecommunications services to the General Services Administration’s Networx vehicle from FTS 2001 by June 2010.

There are those who fault the Networx contracts’ “needless complexity” as contributing to that failure. Others concede the program has flaws, and at least one staunch supporter maintains that the acquisition itself is virtually complete as initially envisioned.

The one thing they all agree on is that the transition is going too slowly.

GSA has said that, although it will not grant further extensions of FTS2001 continuity of operations contracts, it will exercise its option for an already-provided-for extension of the deadline until June 2011.

But don’t bet the farm on agencies making that deadline either.

Although GSA, Networx carriers, the agencies, and even industry analysts go to great lengths to avoid pointing fingers, the bottom line on transition remains largely blank.

“GSA had a particular strategy in mind when it announced the two different contract platforms,” said Bill White, vice president of Sprint Nextel Federal Programs. Networx Universal was to be the big à la carte menu of services, and Networx Enterprise was to offer customized special services, but it didn’t play out that way, he said.

“As it turns out, even Universal needs a certain level of customization, so you have the same challenges on that contract platform as you do on Enterprise,” White said. “So why make it so confusing for customers? Why not just collapse the two contracts and compete the business to the five companies that have been awarded a seat at the table, and let the best man win? I think it would make transitioning go faster.”

DUAL CONTRACTS

Not only is there no precedent for such a move, said Karl Krumbholz, GSA deputy assistant commissioner for network services, it would be the antithesis of what the federal agencies that are Networx customers requested.

“When we developed the strategy for the Networx program,” Krumbholz said, agencies wanted a contract that would let them get all the services provided at all locations available on FTS2001. That provided the requirements for Universal, “the continuity of operations contract.”

However, GSA also wanted to be able to expand the offerings to make new technologies and services available, and to open opportunities for smaller or niche telecommunications providers and emerging and innovative technologies. Thus, Enterprise, “the innovation contract.”

Most, though not all, potential bidders at the time objected strongly to the separation of the two contracts. In a March 2005 hearing before the House Government Reform Committee, AT&T Inc., MCI Communications Inc. and Sprint Government Systems backed GSA while Broadwing Communications LLC, Level 3 Communications Inc. and Verizon Federal Business pushed for a unified approach for the contracts.

“With no direct way to compete for Universal business, the Enterprise contract does not provide the government with sufficient options,” said Shelley Murphy, then president of Verizon federal markets. Linking the two or creating a path for Enterprise contract holders to “graduate” to Universal “would benefit the government by providing a large expanding pool of companies that could compete for Universal business over the term of the Networx contracts,” Murphy said.

“Ample precedent exists” for multiple ways to link the two, Level 3’s Jerry Hogge told the committee, chaired by former Rep. Tom Davis (R-Va). “The need for a formal direct linkage is essential, particularly for purposes of transition-related fair opportunity bidding,” Hogge said.

During Networx’s planning phase, interest in the opportunities it would afford was broad as well as deep. At the same 2005 committee hearing, John Johnson, then assistant commissioner for GSA’s Integrated Technology Services, reported that 40 large and small carriers, as well as systems integrators had responded to a draft request for proposals, creating a large pool of companies that could compete for Networx.

Then the competitive landscape changed. Systems integrators took a hard look at Networx and bowed out of the running. A slew of mergers and acquisitions reduced the number of carriers. By 2007 when GSA made Enterprise awards to AT&T, Level 3 Communications, Qwest, Sprint and Verizon, “there really weren’t any others in the game,” GSA’s Krumbholz said.

But that doesn’t diminish the offering, he said. “We have five on Enterprise, and we feel that all five of them have great value to offer to our customers.”

But not as great a variety as planned. “What didn’t turn out the way we expected,” Krumbholz said, “is we don’t have quite as many contract holders as we might have anticipated — that is it; everything else is precisely the way we set it up and has worked out exactly the way we intended.”