GSA eases burden of Networx protests

Networx awards are exempt from an Acquisition Improvement and Accountability Act rule that requires agencies to provide statements of work for acquisitions of $5 million or more or face a possible award protest, a new General Services Administration bulletin says.

“We issued the bulletin because there were protests of Fair Opportunity decisions based on what we believe is misinformation or misinterpretation of the AIAA,” said Karl Krumbholz, director of the GSA Network Services Program. “And we wanted to amplify our interpretation of it and how agencies could respond in event of a protest.”

Last May, “we looked at the provisions of the AIAA and what the requirements of the Federal Acquisition Regulations were and at the Networx contract,” he said. It was then that Krumbholtz wrote to agency CIOs and met in person with carrier representatives to explain how GSA interpreted the new law, he said. “Our lawyers here at GSA assure us that we are correct in our interpretation.”

The point around which the controversies swirl is a rule in the AIA Act of May 28, 2008, that says that, for acquisitions of more than $5 million, contractors have not been given a “fair opportunity” to bid unless they get, among other considerations, “a clear statement of the agency’s requirements” and “disclosure of the significant factors and subfactors, including cost or price.”

The widespread interpretation among Networx contractors and agencies has been that failure to issue a statement of work is grounds for an award protest.

“Our interpretation was that, if a [procurement] was for more than $5 million, a statement of work was required,” said Susan Zeleniak, president of Verizon Federal Business, a unit of Verizon Communications Inc. Verizon holds both Networx Universal and Enterprise contracts.

Recent protests of agencies’ Fair Opportunity decisions on that basis prompted the bulletin from Krumbholz. “Just because an award is over $5 million and an agency hasn’t done a [statement of work], that doesn’t constitute grounds for a protest,” he said.

Agencies may, instead of writing a statement of work and soliciting responses from Networx contractors, use the GSA Networx Hosting Center Pricer, a Web-based decision tool GSA developed to let agencies compare 10-year pricing from all Networx contractors.

Trip to the bottom line

“We developed the Networx pricer to aid agencies in making award decisions,” Krumbholz said. “We also offer some overall guidance and other help” in using the tool.

But, with transition deadlines little more than a year away, it is the speed of transition to Networx from FTS 2001 that use of the Networx pricer that may offer the best explanation of Bulletin 7.

“I’m sure my contemporaries are all against” the use of the pricer, but it could be the best way to accelerate the transition and to get awards out the door, said Bill White, vice president of federal programs at Networx Enterprise contract holder Sprint Nextel Corp.

In mid-December, after months of working through the Fair Opportunity process, two agencies made awards to Sprint, White said. “We had services up and running and cut over to Networx, effective Jan. 1,” he said.

“The agencies were flabbergasted at the difference between the months it took to complete the FO process and the two weeks it took to transition the services,” White said.

The question of price, vis à vis AIAA’s required disclosure of the relative importance of price for the award, is a non-starter, Krumbholz said. “Networx prices were pre-negotiated and are published, so agencies have access to them, including any contract modifications affecting price.”

But even pricing for simple, typically smaller, service or product contracts can be less than straightforward, critics said.

“We think that GSA put together a great pricing tool,” Zeleniak said, “but because there are constant contract modifications, which often reduce prices, it’s really to an agency’s benefit to seek [additional] information from vendors.”

Promoting face-to-face negotiation in addition to using the pricing tool has been a strategy from the beginning for Networx contracts holder Qwest Communications International Inc. On the company’s Web site, a document called “Attention: How to Ensure You Receive The Lowest Price From Qwest Under Networx,” points out that the GSA Networx Pricer offers half a dozen paths for calculating dedicated access costs. “In many cases our exception pricing can save you over 50 percent, compared to the other pricing alternatives,” it says.

The company was the only one of the three Universal vendors that opted to have special access pricing written into GSA’s pricer, said Diana Gowen, senior vice president and general manager of Qwest Government Services. “We did it because it gave us the ability, when we or one of our partners knew the location or agency or we’d worked with them before or for whatever other reason, we could offer very [competitive] rates.” But, she added, “if agencies don’t know about it and how it works, they may not get the best possible prices.”

Depending on the pricing tool alone may not yield the best deal, Zeleniak agreed. Agencies should “take the results they get back to each vendor and ask them to confirm those prices,” she said. “We’re staffed to be able to turn that kind of information around very quickly.” 

A hammer isn’t a toolbox

Specifying relatively simple procurements such as for long-distance service is generally a good use of GSA’s pricer, said Warren Suss, president of government communications consultancy Suss Consulting Inc. But agencies may be stretching the abilities of the pricing tool, he said.

“It’s not a question of whether the pricing tool is a good or bad tool,” Suss said. “It’s what the appropriate time and application is for using it, and the difficulty of using it to develop cost estimates for complex network solutions.

“If an agency is using it to compare the cost of running circuits from Point A to Point B, then that’s probably a good use of it,” he said.

For Networx buys that are straight off the contract with little or no customization, the pricing tool will be of great use, Zeleniak said.

Additionally, White said, “to the extent that agencies are doing a like-for-like transition, [using the pricer] could be the best way, the fastest way.”

But agencies also can take a middle ground and simply ask vendors to price an acquisition for them, Zeleniak said. “If you’re doing something without a statement of work, give us a spreadsheet of what you want and we’ll put the prices on it and give it back to you,” she said.

However, Suss said, “if you’re trying to put together a next-generation IP environment, the pricing tool probably doesn’t tell enough of the story to give a complete answer. It would be like going into a car dealership and instead of going to the showroom, going to the parts department to assemble the car yourself.”

“Price alone should never be the sole criteria” for acquisition decisions, Krumbholz said. But for many straightforward implementations, GSA’s pricing tool can help accelerate the transition process, he said.

With “Networx awards way behind schedule,” it’s not an unreasonable goal, Suss said.

It’s also a goal that Networx contractors support. “Even before the bulletin, we’ve had a number of direct awards that were done this way, where agencies went to the tool to do an assessment for voice services and then made a direct award to Qwest,” Gowen said. “Anything that helps agencies come to quicker decisions, I’m in favor of, believe me.”