Davis rips Treasury, defends Networx

Rep. Tom Davis (R-Va.) criticized Treasury Department officials last week for choosing not to use the FTS 2001 contract for the department's $1.5 billion Treasury Communications Enterprise project.

Davis, chairman of the House Government Reform Committee, deviated from his written opening statements at a hearing on the new Networx contract to make the charge.

Networx, which General Services Administration officials plan to award in 2006, will take over when FTS 2001 expires. Davis said that if agencies continue to use their own competitions and contracts for large procurements, the effectiveness of such governmentwide vehicles will decrease.

"Davis is concerned generally that Networx could be undermined before it begins if agencies go out now and make long-term commitments for telecom investments," said David Marin, committee spokesman. "Treasury is just one example of that."

Treasury officials have ignored Davis' entreaties to put the contract onto FTS 2001 and also declined his request to appear at the hearing and explain their decision. Ira Hobbs, Treasury's chief information officer, declined to comment for this story.

"Treasury has dissed [GSA's Federal Technology Service] for the last year or so," said Warren Suss, president of Suss Consulting Inc. "They have really refused to take any offers of putting the solution onto FTS 2001 seriously. Now, it seems like Davis is mad, and Davis is someone you don't want to fool with. He's got tremendous standing in the Republican party."

Bob Woods, president of Topside Consulting Group LLC, said Congress and Office of Management and Budget officials have begun to look less favorably on agencies eschewing available contract vehicles in favor of doing their own competitions.

"The view is that you should be rolling up these requirements together, going out and getting the world's best price," he said.

Officials who opt to conduct their own competitions often rationalize the decision by saying they have unique requirements that only they understand well enough to make an informed purchasing choice.

"What's wrong with that is that these contracts tend to be for the kinds of services everybody uses," Woods said. "It's one thing to say that you've got unique requirements, but I personally have not believed that to be true."

The consequence is that everyone's buying power is diminished, he said.

"The lower your volume, the higher the price," Woods said. "When somebody opts out, they're taking volume off the table. It's the same reason we don't allow agencies to go out and cut their own airline deals. You would take that volume off the table and the airlines would not compete as aggressively."

Consultants said the Networx strategy, which FTS officials have revised significantly during the past few months, looks like it will go forward, despite lingering concerns from industry officials who testified at the committee hearing last week. FTS officials said they expect to release a draft request for proposals Nov. 1.

Industry officials who testified were largely supportive, with a few reservations. Some questioned FTS officials' decision to offer only small minimum revenue guarantees for vendors on the contract.

"Minimum business commitments, expressed through minimum revenue guarantees, serve as basic consideration for the competitive process," said Jerry Hogge, senior vice president of Level 3 Communications LLC.

Shelley Murphy, president of Verizon Federal Markets, said the proposed Networx Universal, which provides nationwide services, still demands too much of vendors. She pointed to the requirement that Universal contractors provide high-speed data services to thousands of "wire center" locations nationwide. Only about 300 of the locations use such services today, she said.

"Many of the sites may never need these services," so requiring them at all locations is excessive, she said. "It also presents a high barrier for companies attempting to bid on the Universal contract, effectively limiting competition to the traditional long-distance carriers."

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Major changes in Networx strategy

The General Services Administration's Networx contract will replace FTS 2001. The Networx procurement strategy has developed over time. The current provisions include:

Two contracts, Universal and Enterprise, will be awarded at the same time, instead of nine months apart.

The requirement that Networx Universal contractors provide service to 29,000 wire centers was lowered to 5,900, as a minimum.

The number of billing elements, which had taken about 60 pages in the original request for information, dropped by about 60 percent, from 513 to 196.