Assessing Networx at midlife: Are we there yet?

General Services Administration officials rolled out the massive Networx telecommunications program in 2007 with great fanfare. But the transition from the FTS 2001 contracts that Networx was intended to replace has turned out to be slower and more difficult than earlier transitions.

In the 1980s, the government moved from a telephone system it owned to a system owned and operated by one of the two companies that won the FTS 2000 contract. The systems were generally the same — basic telephone services and switches. The handoff from government to industry was not without its challenges, but it happened relatively smoothly. Going from FTS 2000 to FTS 2001 was another exercise in changing carriers — in this case, from one set of private-sector providers to another — without much change to the technology.

With Networx, however, the government has faced a much wider transformation. GSA sought to maximize flexibility and savings and incorporate a long list of new technologies. It divided the program into two contracts: Networx Universal, which offers a broad range of communications and network services governmentwide, and Networx Enterprise, which has a more limited range of niche offerings in specific geographic areas.

In 2007, John Johnson, who was GSA’s assistant commissioner of Integrated Technology Services at the time, said, “While FTS 2001 focused on pennies per minute [for long-distance calls], Networx will focus on securing vast amounts of information around the world.”

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What comes after Networx?

FTS 2001 and Networx had some similar services, but other things had changed, including agencies’ IT demands and companies’ offerings. Internet services, in particular, were a major consideration for the first time.

"GSA's focus is on making sure that we use our expertise and buying power to deliver savings, provide the most innovative solutions, and make it easy for agencies to get what they need to meet their missions," said Mary Davie, assistant commissioner of GSA’s Integrated Technology Services.

Since FTS 2001, the telecom industry had diversified and become much more detailed, so the transition was no longer simply about tubes and switches. In addition, agencies needed mandates for standard enterprise architecture structures, and they needed to take advantage of economies of scale to get lower prices through bulk buying. Therefore, procurement officials had to incorporate more styles of contracting as the types of services and solutions expanded. Contract terms were no longer primarily about the duration and distance of telephone calls.

“We’ve gone from physics to nuclear physics,” said Bob Woods, president of Topside Consulting Group and former commissioner of GSA’s Federal Technology Service. FTS merged with the Federal Supply Service to become the Federal Acquisition Service in 2005.

The deadline conundrum

Another factor that slowed the transition to Networx was the time it took GSA to choose the prime contractors. The agency had planned to award the contracts in 2006 and delayed them by eight months. Agencies had to make sure that their services under the existing contracts would continue while waiting to find out which vendors would have places on the new program.

When GSA named the Networx awardees in 2007, agencies had until Sept. 30, 2008, to complete fair-opportunity decisions — that is, select their vendors — for all services to be transitioned from the FTS 2001 contracts. That deadline proved to be overly optimistic. The fair-opportunity decisions weren’t completed until early June 2012. The Social Security Administration was the last agency to finish the process, said Diana Gowen, senior vice president and general manager of CenturyLink, one of the Networx prime contractors.

According to GSA, as of June 30, 254 of the 266 agencies — or 95 percent — had moved off FTS 2001, leaving 12 agencies that had yet to make the transition. Those agencies are now in an option period on their FTS 2001 contracts, which will allow them until late 2012 to complete the transition.

One key reason agencies have dawdled is that they've been allowed to, Gowen said. During the transition from FTS 2000 to FTS 2001, the Office of Management and Budget oversaw the process and kept it on track. But OMB has not taken a leadership role in the Networx transition, she said.

“So you had OMB that was AWOL, and the inspector general and the Government Accountability Office weren’t involved — both of whom were involved in the past in their oversight role,” she said. “You basically had a lot of complexity, different language and nobody doing oversight, seemingly, allowing them a lot more time to do things. All of that created the perfect storm.”

OMB was not absent when it came to Networx, spokeswoman Moira Mack said. In 2008, OMB officials directed agencies to consider Networx for other technology and network services, and in 2009, it promoted Networx as a means to fulfill the Trusted Internet Connections initiative and protect other national security systems, she added.

"OMB has been supportive of Networx and of GSA’s efforts to execute this initiative," she said.

When GSA officials realized agencies might not transition to Networx in the designated two-year period after the contract awards, they extended the FTS 2001 contract for another 42 months, which Gowen said was a big mistake.

“All of a sudden, you had agencies and GSA, OMB and everybody thinking, ‘The pressure’s off; we’ve got lots of time,’” she said. “But as you’ve probably heard before, work or contracts expand to fill the time allowed. If you give someone 42 months, they’re going to use every single bit of it. And they did, and they still didn’t get it done.”

Furthermore, a newly added clause in the fiscal 2008 Defense Appropriations bill required a full statement of work for task-order contracts that exceeded a certain dollar amount. Consequently, some agency managers believed that transitions that hadn't already been planned through the fair-opportunity process now required complex requests for proposals, Gowen said.

“That was the notion people got in their heads: ‘Statement of work, oh my God!’” she said. “It wasn’t easy for people to figure out. There wasn’t a precedent, so the contracting folks went to the worst extreme and said, ‘We have to go through a huge RFP process.’ They weren’t equipped to do that. They didn’t understand all the nuances of Networx.”

It was enough to leave many agency managers longing for the good old days before Networx, when there were fewer choices and much less complexity — when “it was just pipes and bandwidth,” said Ray Bjorklund, vice president and chief knowledge officer at Deltek.

“Networx was far more complex than FTS 2001,” Gowen said. “It changed the nomenclature. You had complexity, plus you had to get familiar with what you call things that we’ve been [using] for 20 years because now they’re different. The structure was different in how you took the building blocks and constructed this, so you had another learning curve going on.”

The lure of rival contracts

At the same time, GSA was offering many Networx services through other contract vehicles. For instance, agencies could buy some services through GSA’s IT Schedule 70 and the Mission Oriented Business Integrated Services contract or through the Applications ’N' Support for Widely-Diverse End-user Requirements and Millennia Lite governmentwide acquisition contracts, both of which have now ended.

It's not only other GSA contracts that rival Networx. Some agencies also offer contracts that can provide many of the same services. So GSA and Networx faced competition from the many multiple-award contracts and GWACs that are available to nearly all government agencies. And companies are happy to work directly with a department or agency and bypass GSA altogether.

“This dynamic not only provides one-stop shopping for buyers but allows contractors to be innovative in how they price and provide service for each component,” said Larry Allen, president of Allen Federal Business Partners. He added that there isn’t much in telecom today that necessarily demands a unique, governmentwide contract.

Bjorklund said the overlap and duplication in contracts caused confusion for GSA's customers, who began to realize that GSA was no longer the procurement monolith it had been for decades. Agencies had options, and they didn’t need a note from GSA saying they were allowed to take another avenue.

However, Frank Baitman, CIO at the Department of Health and Human Services, said the rival contracts lack the comprehensive capabilities and the breadth of services and features offered by Networx.

Nevertheless, “GSA would do well to consider best practices for managing similar contracts outside of government,” he said. “For example, what added value can GSA offer to help ensure accurate billing? We spend quite a bit of effort doing this, and I imagine that a coordinated effort by GSA would be more efficient and would help agencies see the value in [paying] GSA's management fee.”

Davie said GSA works closely with its customers throughout all aspects of the Networx program, including resolving issues related to billing and services.

"We are the only agency that is solely focused on using our expertise to help the federal government be more efficient while saving taxpayer dollars," she added.

A lack of mandates

Woods said GSA offered little guidance to help agencies make the transition to Networx. It provided some information but left agencies to pursue the transition on their own with the understanding that they would use GSA as a conduit for products and services.

The attitude was “we buy it, they figure out how to use it,” he said. However, GSA’s decision to leave every agency to do its own contracting for technical support delayed the transition by months.

Agencies that successfully made a quick transition were those that managed to get their statements of work together fast. The Department of Veterans Affairs produced a statement of work and an RFP early on, but instead of providing every detail about its voice and data networks, the agency gave a sufficient rendition of a miniature version, Gowen said.

“It made life for us a lot simpler,” she said. “It made evaluations for [VA] a lot simpler. Their rounds back and forth and Q&As and modifications were few, and they got an award done, I think, in about six months.”

At the other end of the spectrum is SSA, “which had a massive RFP, two protests — both sustained — and had to go back to the drawing board because by then four years had elapsed,” Gowen said. “What they thought they were going to purchase four years previously really wasn’t what they needed today.”

GSA did lay some groundwork for the transition in the years before it awarded Networx. As recounted in a 2008 GAO report, GSA pulled together integrated groups and set up meetings for agencies to get Networx checkups. In 2004, three years before the contracts were awarded, GSA formed a Transition Working Group that included representatives from various agencies to address the problems common to the transition process.

GSA officials also offered agencies individual assistance related to the various telecom contracts, including FTS 2001 and Networx. Along with GSA’s technology service managers, its director of network services programs met individually with agency CIOs and other executives to explain the benefits of Networx and help them prepare for the transition.

GSA officials also went directly to vendors, holding regular — sometimes weekly — meetings to share updates and address problems. They asked for reports, initiated requests for information and arranged for the outgoing companies to cooperate in the transition, a requirement that wasn’t part of FTS 2001. In 2011, GSA launched the Transition Loving Care project and assigned a program manager to each agency to help find creative ways to make the transition to Networx before the FTS 2001 bridge contracts expired.

However, none of those activities came in the form of a mandate from GSA, and it remained up to the individual agencies to plan and carry out the transition.

GSA’s initial plan was to have all agencies complete the transition by June 2012. When that didn’t happen, the agency set March 2013 as the final extension. If agencies are unable to meet that deadline, they will have to make a sole-source justification and it must be “urgent and compelling because we’ve waited so long we’re in a crisis now,” Gowen said. “Now we have agencies that feel very, very compelled to make things happen by March 2013.”

Workforce woes and lost opportunities

Some of the problems with the Networx transition can also be attributed to the fact that the number of employees in place to manage such transitions had eroded somewhat, and agencies had not hired new, more technically proficient employees to replace them. In other words, “the workforce was a shadow of its former self,” Woods said.

During the FTS 2001 contract, agencies had large staffs running their networks and telecom operations. They did a significant part of the engineering themselves, and personnel at different locations were responsible for management activities.

When the government decided to use its buying power to get industry to pick up many of those responsibilities, the federal sector was able to significantly reduce its staff, said Warren Suss, president of Suss Consulting. “Agencies no longer needed to retain these large staffs and no longer needed to take day-to-day responsibility for a lot of the operational detail,” he said.

The arrangement worked well until the time came to switch to a new contract and agencies suddenly found themselves short-staffed for handling all the tasks associated with the transition, including developing new statements of work for bidders and evaluating proposals.

“Whenever there’s a surge in demand, agencies are caught short,” Suss said.

Before the Networx transition, agencies’ networks were in good shape and their telecom services were running smoothly. In most cases, agencies didn’t have a strong operational need to make a change. And compared to other challenges they might have been facing, a telecom transition was relatively low on their priority list.

“That to me frames the problem: If you look at the pressures brought on by the Hill and OMB, you could say, ‘Oh, the transition was a terrible problem,’” Suss said. “But really, the transition delays didn’t interfere with the day-to-day operations of government. They didn’t generate extraordinary costs, though there were some savings that were forgone because of the delays in transition.”

Others disagree, saying that the lost savings represent a significant amount of money. In May 2010, Edward Morche, senior vice president of federal markets at Level 3 Communications, testified before the House Oversight and Government Reform Committee about the implementation of Networx and highlighted the vast amount of money lost because of the transition delays.

In his testimony, Morche said that three years after the first Networx awards were made, 80 percent of federal telecom expenditures were still showing up under FTS 2001. He also cited GSA estimates that the federal government had lost $650 million to $750 million in potential savings by not transitioning to the more cost-effective Networx contracts and said it would face additional losses if the pace of transition was not accelerated.

But the concerns went beyond money. Networx was supposed to be a transformative effort. “We are far behind on the transition, but we are even farther behind on the transformation aspect,” Morche said.

An uncertain future

In 2008, GAO officials wrote that GSA would have to think more proactively about identifying and resolving common transition problems as the facilitator of the Networx transition. GSA officials are taking that advice to heart for Networx's successor contract.

Frank Tiller, acting director of the Office of Network Services Programs at GSA, said officials are already meeting with customers to discuss strategies for Network Services 2020, the telecom contract that will follow Networx. GSA has gathered extensive feedback from customers and other stakeholders on its current offerings, and officials are also listening to federal and industry experts to better understand trends in the telecom market. Tiller’s office then plans to meet with agency customers to refine the NS2020 strategy before its expected release in fiscal 2013.

Officials want to gather the lessons they’ve learned through the years to find more cost savings and become more efficient at acquisitions, they want to support aggregated requirements instead of dealing with agency problems individually, and they want to provide better customer service. In sum, the strategy consists of a top-to-bottom review of the Integrated Technology Services portfolio to ensure that GSA delivers networking services and technology solutions that help agencies transform their business practices and become more efficient.

GSA recognizes that it needs to be flexible given the changes in the market. New approaches might include a segmented portfolio of contracts rather than one omnibus contract and customized solutions rather than a catalogue of service sets. GSA officials say many CIOs have asked GSA to continue providing common IT and telecom services to help agencies deal collectively with challenges such as mobility, cybersecurity and bringing commercial IT into the government arena.

GSA’s NS2020 planning meetings have been valuable to HHS as it consider its next contract vehicle, Baitman said.

“It's important that we approach this with our eyes wide open to the enormous technological changes we'll continue to see in telecommunications and to the value-added services this will allow vendors to offer,” he said.

For NS2020, “it's incredibly valuable for GSA to engage with the agencies, early on, to develop business requirements well before the solicitation goes out,” Baitman added.

“When we coordinate planning and execution of project schedules for the transition, we enable agencies to see their progress and to identify problems early on,” he said. “We might even want to take a look at having GSA develop a project management toolkit that's designed specifically for NS2020 to help agencies manage and report progress in a consistent manner.”

Ongoing technological and market innovations raise the question of whether a follow-on contract to Networx is even needed. Tiller said GSA and its customers must decide whether a large, dedicated telecom contract still makes sense. The model is now nearly 25 years old, and perhaps it’s time for GSA to find more efficient ways to use its contracting resources and employees’ time, which are getting tighter all the time.

“‘Because we’ve always done it this way’ is not a valid business case,” Allen said.