Vendors fret over Networx

Many telecom industry officials are still worried about Networx, the sweeping telecommunications acquisition that General Services Administration officials are developing.

The final requests for proposal for the two Networx contracts — Universal and Enterprise — are still scheduled to come out April 1. Vendors will then submit bids, and officials at GSA's Federal Technology Service will award the contracts next year.

GSA officials told the House Government Reform Committee today that they expect to award the Networx Universal contract to two companies, and the Networx Enterprise to five, although those numbers could change. Once the contracts are awarded, companies that hold them will be able to compete for individual task orders that agency officials will issue through the contracts.

However, after more than a year of dialogue between industry and government officials, many in the industry still worry that the contracts are going to pose problems. They base their fears on two draft RFPs that FTS officials put out late last year. Many company officials testified at the Government Reform Committee hearing today. Among their concerns:

n Creating the necessary back-end systems to comply with the billing and reporting requirements outlined in the draft RFPs could cost millions, and companies would have to make that investment before knowing whether they will have a place on either of the contracts.

n The minimum revenue guarantees — $525 million for Networx Universal and $50 million for Networx Enterprise — are too low to encourage some companies to take the financial risk. FTS officials also plan to divide those minimums between the contract holders, making it difficult to predict the actual number until after the contracts are awarded and the number of contract holders is finally certain.

n Once an agency chooses to use either Networx Universal or Networx Enterprise for a particular task, companies that are on the other contract will be shut out of competition for that engagement. Several industry officials suggested creating some sort of mechanism to allow cross-contract competition, or even doing away with the two-contract strategy.

GSA Administrator Stephen Perry told the committee that some of the concerns industry officials have raised in response to the draft RFPs have already been solved. Agency officials are trying to reduce some of the billing and reporting requirements, he said.

"That takes some of the pressure off of the minimum revenue guarantees, if we take off some of the onerous things off that are driving up their costs," he said.