[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
MAKING NETWORX WORK: AN EXAMINATION OF GSA'S CONTINUING EFFORTS TO
CREATE A MODERN, FLEXIBLE AND AFFORDABLE GOVERNMENT WIDE
TELECOMMUNICATIONS PROGRAM
=======================================================================
HEARING
before the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 15, 2004
__________
Serial No. 108-223
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
U.S. GOVERNMENT PRINTING OFFICE
96-747 WASHINGTON : 2004
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky DANNY K. DAVIS, Illinois
TODD RUSSELL PLATTS, Pennsylvania JOHN F. TIERNEY, Massachusetts
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida DIANE E. WATSON, California
EDWARD L. SCHROCK, Virginia STEPHEN F. LYNCH, Massachusetts
JOHN J. DUNCAN, Jr., Tennessee CHRIS VAN HOLLEN, Maryland
NATHAN DEAL, Georgia LINDA T. SANCHEZ, California
CANDICE S. MILLER, Michigan C.A. ``DUTCH'' RUPPERSBERGER,
TIM MURPHY, Pennsylvania Maryland
MICHAEL R. TURNER, Ohio ELEANOR HOLMES NORTON, District of
JOHN R. CARTER, Texas Columbia
MARSHA BLACKBURN, Tennessee JIM COOPER, Tennessee
PATRICK J. TIBERI, Ohio BETTY McCOLLUM, Minnesota
KATHERINE HARRIS, Florida ------
------ ------ BERNARD SANDERS, Vermont
(Independent)
Melissa Wojciak, Staff Director
David Marin, Deputy Staff Director/Communications Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
C O N T E N T S
----------
Page
Hearing held on September 15, 2004............................... 1
Statement of:
Bates, Sandra, Commissioner, Federal Technology Service, U.S.
General Services Administration; and Linda Koontz,
Director, Information Management Issues, U.S. Government
Accountability Office...................................... 6
Scott, Donald, senior vice president, EDS U.S. Government
Solutions; Jerry Hogge, senior vice president, Level 3
Communications LLC; Robert Collet, vice president,
engineering, AT&T Government Solutions; Shelley Murphy,
president, Federal markets, Verizon; and Jerry A. Edgerton,
senior vice president, Government markets, MCI............. 42
Letters, statements, etc., submitted for the record by:
Bates, Sandra, Commissioner, Federal Technology Service, U.S.
General Services Administration, prepared statement of..... 8
Collet, Robert, vice president, engineering, AT&T Government
Solutions, prepared statement of........................... 69
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 105
Davis, Chairman Tom, a Representative in Congress from the
State of Virginia, prepared statement of................... 4
Edgerton, Jerry A., senior vice president, Government
markets, MCI, prepared statement of........................ 83
Hogge, Jerry, senior vice president, Level 3 Communications
LLC, prepared statement of................................. 61
Kanjorski, Hon. Paul E., a Representative in Congress from
the State of Pennsylvania, prepared statement of........... 104
Koontz, Linda, Director, Information Management Issues, U.S.
Government Accountability Office, prepared statement of.... 19
Murphy, Shelley, president, Federal markets, Verizon,
prepared statement of...................................... 76
Scott, Donald, senior vice president, EDS U.S. Government
Solutions, prepared statement of........................... 45
Waxman, Hon. Henry A., a Representative in Congress from the
State of California, prepared statement of................. 102
MAKING NETWORX WORK: AN EXAMINATION OF GSA'S CONTINUING EFFORTS TO
CREATE A MODERN, FLEXIBLE AND AFFORDABLE GOVERNMENT WIDE
TELECOMMUNICATIONS PROGRAM
----------
WEDNESDAY, SEPTEMBER 15, 2004
House of Representatives,
Committee on Government Reform,
Washington, DC.
The committee met, pursuant to notice, at 10:15 a.m., in
room 2154, Rayburn House Office Building, Hon. Tom Davis
(chairman of the committee) presiding.
Present: Representatives Tom Davis of Virginia, McHugh,
Mica, Ose, Lewis, Platts, Waxman, Maloney, Cummings, Kucinich,
Clay, Watson, Ruppersberger, and Norton.
Staff present: Melissa Wojciak, staff director; David
Marin, deputy staff director/communications director; Ellen
Brown, legislative director and senior policy counsel; John
Hunter, counsel; Robert Borden, counsel/parliamentarian; Robert
White, press secretary; Drew Crockett, deputy director of
communications; Edward Kidd, professional staff member; John
Brosnan, GAO detailee; Teresa Austin, chief clerk; Sarah
Dorsie, deputy clerk; Corinne Zaccagnini, chief information
officer; Phil Barnett, minority staff director; Michelle Ash,
minority senior legislative counsel; Mark Stephenson, minority
professional staff member; Earley Green, minority chief clerk;
and Jean Gosa, minority assistant clerk.
Chairman Tom Davis. The hearing will come to order. I ask
that my total remarks be put in the record. As all of you know,
Congress is in the mad dash to adjournment. But I thought it
very important before the close of this Congress to hold this
hearing and make a few points to GSA, to the industry, and
especially to the agencies.
We have a couple objectives this morning. The first is to
receive a progress report from GSA on the Networx procurement,
and underscore to GSA and all of the parties interested in this
procurement just how important I think Networx is to the
Government.
More than ever, and for reasons all of us know, the U.S.
Government must be able to move information seamlessly,
securely, efficiently, in the most cost-effective manner
possible. This is best accomplished through a centrally managed
communications environment.
GSA is in the best position, both historically and in terms
of its jurisdiction, to manage this environment. Networx must
be this environment. In my mind, Networx must include a
spectrum of services to allow agencies flexibility in meeting
diverse requirements.
This should include the ability to introduce new
technologies, in this rapidly changing technology sector. And
this should have a minimum contract value to assure the best
industry participation. But, a minimum contract value can only
be set by GSA if agencies and departmental participation is
assured.
As the chairman of the committee, I want to ensure every
agency participation in Networx, because it is important to the
operation of our government, and because it is the historic and
jurisdictional responsibility of this committee to do so.
Agency participation is best assured when agencies feel
ownership of the contract. I think Don Scott is here today,
representing EDS. He understands this point, because the
Interagency Management Council he put in place for the original
FTS 2000 set the stage for what I hope GSA considers for
Networx. I want to see a Networx government that relies on both
the Federal CIO Council and OMB's Office of Electronic
Government for its management.
The second message I want to deliver is the importance of
ending the popcorn creation of networks across the government
that too often are not interoperable, are agency or mission
specific, and are expensive. Departments with
telecommunications procurements underway today first must view
Networx as the ultimate solution, and second, should consider
strongly the existing FTS 2001 environment as the bridge until
Networx is awarded.
I express this view to the Treasury Department in
correspondence and directly by phone with regard to the current
telecommunications procurement.
On this point, I am very disappointed that the Treasury
Department elected to decline my request to participate in the
hearing today. I am also disappointed that Treasury has yet to
respond my letter asking that their current telecommunications
procurement by reconsidered and ported to FTS 2001 pending
award of Networx. I am disappointed that my request that the
Treasury CIO meet with my staff has yet to be met.
OMB's Office of Electronic Government shares my views about
Networx and about Treasury's procurement in particular. This
office, which was created by legislation I authored and this
committee steered, understands the importance of an enterprise
environment for communications and other components of what is
termed enterprise architecture. This was the vision behind the
creation.
Treasury has chosen to disregard OMB's guidance, declined
GSA's proposal that could very quickly produce substantial
savings, and contribute to the communications environment many
of us envision, and apparently disregard this committee's
express concerns as well.
Treasury's record of IT management doesn't justify such
disregard. In fact, tax system modernization itself would
suggest that the Department very seriously consider the advice
it is receiving. This program started seven Presidents ago with
Richard Nixon, has consumed billions and billions of taxpayer
dollars, and it is still unfinished.
I focus on Treasury, but my message is to all of the
agencies, a vision which I know is shared by the majority of
our committee colleagues, is for agency CIOs to report their
requirements to departmental CIOs, and departmental CIOs to
work with GSA to ensure their inclusion in a more unified
centrally managed communications environment.
So let's be clear. The committee intends to look carefully
and critically at any communication procurement going forward
to determine, first, whether it can be met through Networx, and
second, whether FTS 2001 can satisfy its requirements as a
bridge contract until award.
Now, our Government finds itself today in one of the most
critical periods in our Nation's history. Its ability to
effectively move information is directly related to our
national security. Further, its ability to move information
also is directly related to the committee's jurisdiction. As
chairman, I take that responsibility seriously, that is why we
are here today.
I look forward to the testimony.
[The prepared statement of Chairman Tom Davis follows:]
[GRAPHIC] [TIFF OMITTED] T6747.001
[GRAPHIC] [TIFF OMITTED] T6747.002
Chairman Tom Davis. Any other opening statements? Any other
Members wish to make opening statements? If not, as you know,
it is our policy that we swear in witnesses. If you would rise
with me and raise your right hands. We have two distinguished
panelists to open.
We have Sandra Bates, a Commissioner of the Federal
Technology Service, the U.S. General Services Administration,
and we have Linda Koontz, the Director of Information
Management Issues, U.S. Government Accountability Office.
[Witnesses sworn.]
Chairman Tom Davis. Thank you very much. Please be seated.
Sandra, you are no stranger to this committee. We will
start with you. Then we will go to Ms. Koontz, and then we will
move to questions. Thanks for being here.
STATEMENTS OF SANDRA BATES, COMMISSIONER, FEDERAL TECHNOLOGY
SERVICE, U.S. GENERAL SERVICES ADMINISTRATION; AND LINDA
KOONTZ, DIRECTOR, INFORMATION MANAGEMENT ISSUES, U.S.
GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Bates. Mr. Chairman, members of the committee, thank
you for the opportunity to speak to you today. Our Networx
procurement is at an important stage. We consider Networx to be
far more than just another in a series of Federal
telecommunications contracts.
Networx is an initiative whose success can profoundly
affect the government's ability to move information at a
reasonable cost to the tax-paying public. Its success depends
on many factors. Networx will result in a series of contracts
that are designed to meet the existing and emerging needs of
our customers as addressed through our goals.
The goals are: Service, continuity, highly competitive
prices, high quality service full service vendors, alternative
sources, operations and transition support, and performance
based contracts.
Networx will provide a seamless, interoperable and secure
operating environment for the Federal Government. The
innovations and creativity of the industry will be challenged
by Networx. We have revised our Networx strategy based on the
guidance from this committee, our customers, and the industry.
Since our last discussion, we have had an ongoing dialog
with industry and others to mature our strategy. As a result of
this dialog, we observed four primary concerns that I will
briefly address.
One, should we relax our nationwide service requirement
formerly referred to as ``ubiquity'' and allow for a less
stringent requirement that will not compromise our goals? The
answer to this question is yes.
We have reduced our nationwide wire center pricing
requirement by 70 percent. We believe this change will result
in greater competition while sustaining service continuity for
our customers.
Two, could our goals and objectives be accomplished with
one acquisition or must we have two? Our original approach
suggested dual acquisitions awarded 9 months apart. After
careful consideration, we determined that dual acquisitions are
still required, but they will be awarded simultaneously.
Three, are the ordering and billing elements described in
the RFI too complex and extensive, resulting in the potential
for limited competition? We determined that they are too
complex and extensive. We have reduced them by 62 percent.
Finally, what should the role of the multiple award
schedules be in Networx? We believe that the schedules play a
valuable role in helping agencies craft solutions. The ongoing
expansion of schedule holders will complement the Networx
program and continue to provide our customers with choice.
The revised strategy has been accomplished without
compromising our program goals. We are excited about the
environment we will create with our two acquisitions, Networx
Universal and Networx Enterprise.
Networx Universal will serve as our full service continuity
acquisition. The entry criteria has been greatly reduced,
making it possible for more companies to compete.
Enterprise is designed to attract IP or wireless-based
offerors who do not provide the broad range of services offered
by Universal. They have a significant market presence today and
a strong future. Combined, both acquisitions will help us
accomplish our goals, foster competition, and provide us with
the agility we need to meet the uncertainties of the future.
We believe both small business and large business
cooperation will help Networx achieve success. All prime
contractors on Networx will be required to meet tough small
business goals. Additionally, small business multiple award
schedule holders may offer agency services that can complement,
and to some degree, compete with the Networx program awardees.
To achieve our goals, we are committed to a schedule that
is aggressive. We have much work to do. We are up to the task.
The Networx Universal and Enterprise draft RFPs will be
released on November 1, 2004. The final RFPs will be released
in April 2005, with contract award in April 2006.
Mr. Chairman, we have listened carefully to your
committee's guidance and to the feedback we received from our
customers and industry. We have revised our strategy and have
made significant and meaningful changes to our approach.
I thank you for the opportunity to testify before your
committee today. And I am ready to answer any questions. Thank
you very much.
Chairman Tom Davis. Thank you, Ms. Bates.
[The prepared statement of Ms. Bates follows:]
[GRAPHIC] [TIFF OMITTED] T6747.003
[GRAPHIC] [TIFF OMITTED] T6747.004
[GRAPHIC] [TIFF OMITTED] T6747.005
[GRAPHIC] [TIFF OMITTED] T6747.006
[GRAPHIC] [TIFF OMITTED] T6747.007
[GRAPHIC] [TIFF OMITTED] T6747.008
[GRAPHIC] [TIFF OMITTED] T6747.009
[GRAPHIC] [TIFF OMITTED] T6747.010
[GRAPHIC] [TIFF OMITTED] T6747.011
Chairman Tom Davis. Ms. Koontz.
Ms. Koontz. Mr. Chairman and members of the committee, I am
pleased to participate in the committee's hearing on the
General Services Administration's next generation
telecommunications acquisition program known as Networx.
As you know, GSA's planning for this program is taking
place within an environment of tremendous change in the
telecommunications industry and underlying services and
technology, and potentially in the regulatory environment.
In this context, the Networx initiative can be viewed as a
significant opportunity for agencies and GSA's customers to
flexibly acquire and apply innovative telecommunications
services offered by industry to improve their operations.
As you know, GSA issued a request for information in
October 2003 describing the strategy of the proposed Networx
program. At that time, GSA proposed two acquisitions. Networx
Universal was to provide a full range of national and
international network services. Offerors were to provide
ubiquitous service across the United States.
Networx Select was to provide agencies with leading edge
services and solutions with less extensive geographic and
service coverage than required by Universal. Contracts under
the Select acquisition were to be awarded 9 months after the
Universal contracts.
Last February, we testified on GSA's initial planning
efforts and identified four challenges GSA faced in ensuring a
successful outcome for the program. These challenges related to
the structure and timing of the proposed contracts, and the
need for transition plans and inventory of current services and
effective measures of performance.
In April, you requested that we assess GSA's progress in
addressing challenges that we identified, as well as GSA's
efforts to address longstanding issues related to billing.
My testimony today presents our results to date on these
topics. In brief, GSA has taken steps to address several of the
significant challenges facing the Networx program. Work is
either planned or underway on other challenges, but additional
efforts will be necessary to fully address these. Specifically,
first, GSA has addressed concerns about the structure and
scheduling of the two acquisitions now known as Universal and
Enterprise. Instead of the 9-month time lag between
acquisitions that might complicate agency decisionmaking, GSA
now plans to issue the request for proposal for the contract
simultaneously.
In addition, the Universal contracts will now require that
offerors provide services where Federal agencies are currently
located, rather than across the entire country, to potentially
allow more industry participants to compete.
Second, GSA has solicited quotes for contractor support to
assist with the development of plans to transition customers
who change carriers. However, GSA has not yet developed
procedures to ensure that lessons learned from past transitions
are applied or established a transition timeline.
Third, GSA worked with agencies to develop a service level
inventory as input into their requirements for the new
contracts. In addition, GSA plans to work with agencies to
build a more detailed inventory of currently used
telecommunication services for use during transition.
Fourth, GSA plans to implement performance measures that
evaluate progress against the program's goals. However, some of
the measures are still under development, and it does not yet
have a strategy for using the measures to monitor ongoing
program performance.
And last, GSA has reduced the number of billing elements
that it will track, and has begun a study designed to identify
potential improvements in the billing process and associated
administrative costs. However, it lacks a strategy for
addressing agency concerns about the usability of billing data.
To prevent unresolved challenges from hampering GSA's
efforts to provide agencies with the services they need, we
recommend that it finalize and implement processes for managing
transition efforts, measuring program performance, and
resolving agency concerns over the usability of billing data.
GSA agrees that more needs to be done in these areas, and
with continued focus on these challenges, the agency can ensure
that the goals of the Networx program are ultimately realized.
That concludes my statement. I would be happy to answer
questions.
[The prepared statement of Ms. Koontz follows:]
[GRAPHIC] [TIFF OMITTED] T6747.012
[GRAPHIC] [TIFF OMITTED] T6747.013
[GRAPHIC] [TIFF OMITTED] T6747.014
[GRAPHIC] [TIFF OMITTED] T6747.015
[GRAPHIC] [TIFF OMITTED] T6747.016
[GRAPHIC] [TIFF OMITTED] T6747.017
[GRAPHIC] [TIFF OMITTED] T6747.018
[GRAPHIC] [TIFF OMITTED] T6747.019
[GRAPHIC] [TIFF OMITTED] T6747.020
[GRAPHIC] [TIFF OMITTED] T6747.021
[GRAPHIC] [TIFF OMITTED] T6747.022
[GRAPHIC] [TIFF OMITTED] T6747.023
[GRAPHIC] [TIFF OMITTED] T6747.024
[GRAPHIC] [TIFF OMITTED] T6747.025
[GRAPHIC] [TIFF OMITTED] T6747.026
[GRAPHIC] [TIFF OMITTED] T6747.027
Chairman Tom Davis. Thank you very much. Let me start, Ms.
Bates, with you. The Networx strategy envision a centrally
managed Government-wide telecommunications program run through
GSA.
But, as I understand it, some government agencies, such as
Treasury, who I mentioned in my opening remarks has announced
plans to conduct their own large telecom acquisitions on their
own. What is your strategy for attracting these agencies to
participate in Networx?
What do you offer that they can't provide for themselves?
Ms. Bates. As an example, we have worked, currently are
working with, two agencies, Department of Justice, and
Department of Agriculture, in their strategy to utilize the
existing FTS 2001 contracts to begin moving their Networx
infrastructure to the next level, so that when Networx is
awarded, they can continue that journey, or will be in a
position to transition, whichever is necessary.
And that seems to be working for those two agencies very
well, both from a price perspective and technical innovation,
and was done in a competitive task order environment.
Our strategy overall is to keep the current contracts as
competitive, technologically and price wise, with the best
industry has to offer. When we have the Networx group of
contractors and new services, people then can continue
upgrading their networks or moving to their enterprise
architecture.
We are also planning for transition so that transition will
not be the huge effort and disruption that it has been in the
past. We think we have provided a clear pathway for agencies to
move into the future.
Chairman Tom Davis. But, if different agencies start
picking their own, and setting up their own networks and so on,
that will defeat the whole thing, won't it?
Ms. Bates. Yes, it will. It makes each agency doing
duplicative effort because they are conducting their own
procurements, they are not leveraging the government's buying
power.
Chairman Tom Davis. You lose economies of scale, obviously.
Ms. Bates. Absolutely. And they are placing a burden on the
industry as well, who has to spend a lot of money to respond to
these requests. Of course, that, in the end, gets passed on to
the taxpayer.
Chairman Tom Davis. OK. So more expensive. Probably not----
Ms. Bates. Right. And we have no standardization, we have
such a mixed bag of offerings, we don't know what the security
requirements are in each of these contracts. We don't know what
the interoperability is. There is just a whole host of problems
by doing this in a fragmented way.
Chairman Tom Davis. When GSA revised the timetable for the
Networx contract, it pushed back the award date for the
comprehensive Universal contract from the winter of 2005 to
April 2006.
If contracts are awarded as planned, how will GSA be able
to ensure a complete transition to new service providers before
the FTS 2001 contracts expire in December 2006 and January
2007?
When will the transition timeline be established to help
manage the process?
Ms. Bates. The planned--as you stated, the planned award in
April 2006 is predicated on the fact that we will have done,
with our customer agencies, a significant amount of transition
planning prior to that.
In fact, that has already begun. The IMC has working groups
established to begin with inventories, requirements
development, and timelines within their agencies to begin
transitioning right away.
Also, not all of the FTS 2001 contracts expire with the
Sprint and MCI. We have crossover contracts with--such as
Qwest, AT&T and Verizon that expire at different times later in
the time period. So transition will have to be carefully
orchestrated, and we are confident that we can do that.
Chairman Tom Davis. Ms. Koontz, you have been reviewing the
program for the last year or so. Based on that experience, how
you would you rate GSA's overall performance so far in
developing the Networx strategy?
Ms. Koontz. I think that based on the challenges that we
identified in February, I think that GSA has made good progress
toward addressing those challenges, which we thought were all
critical to ensuring the programs success.
Our major concern at this point is that GSA needs to remain
focused on these issues to ensure that all of the things that
they promised to do will be done in an appropriate time.
Chairman Tom Davis. Do you think that GSA currently has
adequate resources to manage the Networx program in the
anticipated transition?
Ms. Koontz. I do not know. We have not evaluated their
resources. That is an excellent question.
Chairman Tom Davis. Will their proposed performance
measures help ensure that the program fulfills its ultimate
goal in providing agencies with the services they need at
competitive prices?
Ms. Koontz. Performance measures are absolutely critical to
make sure that GSA, over the life of something as long as what
could be a 10-year contract, can know, you know, with the force
of data, that they are indeed meeting the goals of the program.
So it is absolutely critical that they have performance
measures, good performance measures, for all of the program
goals. I would also suggest that GSA would probably benefit
from actually reexamining and maybe refining some of the goals
to make sure that they really represent a picture of and
planned program performance and that they are results oriented.
Chairman Tom Davis. You said in your statement that GSA
needs to finalize and implement processes for managing its
transition efforts.
Compared to the last transition, is GSA better prepared for
the transition to Networx?
Ms. Koontz. I would have to say that GSA is better
prepared, to the extent that based on the report that we did
for you in the transition last time, and a rather exhaustive
study that they have done on their own of transition lessons
learned, I think they have a wealth of knowledge of the
problems and barriers that they have to address.
What is left to do, though, is to translate those lessons
learned into actual processes and procedures that will mitigate
the same problems recurring.
Chairman Tom Davis. OK. Ms. Watson, any questions? I will
have more.
Ms. Watson. Sure. I would like to possibly have you give
some specifics on the extent to which GSA and its customer
agencies have developed accurate and complete inventories for
the current services and requirements.
Ms. Bates. I will first address what--the customer
agencies. We have something called the Interagency Management
Council, which consists of the senior telecommunications
network officials from the 16 large agencies and the small
agencies council.
Each one of those agencies, plus others, in response to the
chairman's letter last December, have begun working on an
inventory. Many of them have a very good inventory based on the
last transition, the inventory they developed for Y2K, an
increased ongoing emphasis on inventory.
What they continue to work on is the inventory needed for
transition. It has a requirement for significantly more detail
than an inventory just to have. And I will cite an example. In
order for a service to transition from one service provider to
another, you have to have specifics such as room number, local
government contact, floor, that kind of thing where you
wouldn't need it if you just wanted a regular inventory.
The agencies are well aware of this, and they are working
hard. It is my estimation that we are further along at this
point in working on that inventory than we were for the last
transition. GSA, FTS, is working with the current service
providers, to make sure that their inventories are up to speed,
as well as the inventories we maintain from an overall
perspective.
I do believe we need to continue to be focused on
inventories since it is an everchanging data base.
Ms. Watson. Can you just describe what our objectives and
goals are? Where would we like to go with our inventory?
Ms. Bates. Ideally what we would like to have is for each
agency and component to have a very accurate inventory of all
of the telecommunications services they have, exactly where it
is located, as well as the program applications and systems
that are running over that network. This becomes critical when
you begin planning a change, you need to identify the programs
that are using that facility so that you have no program
interruption.
So it is a big job. I think the government agencies are up
to it. But, it is something that you should never declare
finished. It is ongoing.
Ms. Watson. My concerns go to how do we coordinate
communications across the board in times of emergencies or
tremendous threats? And I know as you transition, and all of
the agencies that you support, that I hope is kept in mind. And
I am just trying to find out, are we on the path to being sure
that the telecommunications and other systems are up to par,
working?
I heard mention of what are the best practices, best
equipment and are we getting there?
Ms. Bates. I think you have made a very good point. And by
GSA FTS having a centrally managed program, we are in a much
better position to work with the service providers to make sure
that in times of emergency or disaster, we can help coordinate
the recovery efforts, we have central inventories, and we know
where we are going.
If we do not have a centralized focus in times of natural
disaster or other emergencies, it is very difficult for the
government to coordinate the next steps. So I think we are on
the path. We are working very closely with the Department of
Homeland Security. They will be using the Networx network. And
I think we are on the right path.
Ms. Watson. That is a very effective nexus to my next
inquiry. I was visited yesterday by representatives of the fire
department in New York and some family members. And they are
very concerned about their communication--those radios and the
bands that they were using.
And apparently the equipment failed on September 11. And
when the Commission was holding the hearings, they felt that
they were not able to really get into the substance of why so
many firefighters were killed on that day, and why so many of
them didn't get the order to evacuate. And they talked about a
piece of equipment that came from Motorola.
And so I don't know how you get into the local first
responders and what they do and municipalities. I don't know
how we make that connection. But, on a National Federal level,
we ought to be looking at the equipment and how companies get
those contracts, and testing that equipment, does it work
properly at the time when it is needed? And I am trying to get
there.
And I don't know if it is GSA that could look into it. But,
certainly as we deal say with the Capitol under tremendous risk
on 9/11, you know, did we have a communications network, are we
getting the equipment in the agencies? Are we using the best
that we can get? Are we looking at competition so we can be
sure we are getting the best product at the best cost?
And I am interested in what you are doing along these
lines.
Ms. Bates. That particular requirement for the first
responder and interoperability of radio systems at the local
level is not covered--is not one of the main focuses of the
Networx acquisition. However, I can tell you that the
Department of Homeland Security, the Federal Emergency
Management Agency and other components, we are working with
them, and the focus on the first responder and the
interoperability of State, local, municipality and Federal
systems is one of great concern to everyone. And it is a very
complex problem.
Ms. Watson. Well, that is what I am trying to emphasize
here in terms of homeland security and national security, and
they affect the local areas. And there should be a network
across this country that is connected, and we can have
assurances that right down to the local level, the first
responders are part of that network, that Federal network, and
so this is something you probably can't get into any detail
now, because we are all trying to find our way as to what is
the best to do.
I was forced to raise that issue because I just had this
conversation. We are very, very concerned about what happened
on September 11 and what lessons were learned.
Ms. Bates. Well, I support you. And I can assure you that
the scope of the Networx contracts will be such that should we
receive the appropriate approvals to provide service to State
and local Governments, we will be in a position to do that and
to further that.
Ms. Watson. Right. You talk about possibly 10-year
contracts. And I would hate to think that GSA and the agencies
you serve would get into contracts of long extensions that--and
their equipment doesn't really stand up. So we can go into this
discussion in private. But I just wanted to raise these
concerns that I have.
And thank you very much, Mr. Chairman.
Chairman Tom Davis. Thank you very much. Ms. Bates, let me
just ask you, how did GSA decide which services to make
mandatory in the Universal contract?
Ms. Bates. We looked at the services that were being
provided today under FTS 2001. We looked at the services that
were going to be needed over the future of the next 10 years of
the contract, and decided that those were the ones to be made
mandatory. We did not do this in a vacuum. We worked with our
customer agencies as well as the industry to make sure that our
mandatory requirements were all inclusive, but, not so lengthy
that they limited competition.
Chairman Tom Davis. The revised strategy mentions an
increased role for the Federal Supply Schedules.
Ms. Bates. Yes.
Chairman Tom Davis. Could you elaborate on how this works?
Ms. Bates. Today there are many companies that are on the
Federal supply schedule that provide extensive amounts of
telecommunications equipment. There are some telecommunications
services on the schedules today. And certainly there are
integration services available on the schedules and GWACs
today.
As companies choose to widen of their schedule presence,
they do that as they see fit. And we see that growing more and
more. So I see the schedules as a complement to Networx and I
think it is a good thing. It allows companies that are new
companies to the marketplace to bring their services to the
government through the schedules. And we are working closely
with FSS in doing this. So I think that we have a very
compatible program.
Chairman Tom Davis. So innovation, new technologies, new
things that happen maybe outside of the parameters of the
original awardees are able to enter into the marketplace in
this way?
Ms. Bates. Sure. And the companies, as you know with the
schedules, the companies can select the time that they wish and
the services that they wish to offer, and the terms and
conditions as a part of the schedule, as opposed to doing it at
the Government's timeframe. So that does allow a company when
it is ready to seek a schedule contract.
Chairman Tom Davis. It is hard to foresee these things. But
how likely is it that the option years in the Networx contracts
would be exercised when you consider that the changes that are
taking place in the telecommunications industry, how is it
advantageous to enter into contracts that can last for as long
as 10 years?
Ms. Bates. Well, it is hard, particularly at this time and
with this industry, to predict too far into the future. But we
feel that our strategy really supports the government in a
position for a longer period of contract.
With the two acquisitions, we will have multiple awards,
within Universal and Enterprise. Universal will have, I think,
a very good cadre of full service contractors. And the
Enterprise will address those same contractors should they
decide to bid, as well as some emerging companies.
So hopefully, we will have a stable of contractors that
will see us through. However, if it doesn't make any sense to
exercise options, we won't.
Chairman Tom Davis. Well, how many awardees do you envision
for the Universal segment?
Ms. Bates. The contracts will be multiple award. The number
of awards will be determined by the quality of the proposals
that are submitted.
Chairman Tom Davis. OK. How will new technologies be added
to the contracts? Will GSA add all new technologies whether
they are mandatory or nonmandatory to both contracts?
Ms. Bates. We will buildupon some of the things we have
done in the past. First, both of the contracts will be scoped
so that technology upgrade and technology refreshment will be
included in the scope.
In addition, industry will be able to propose a contract
modification to add new technology to whichever contract they
hold. Then should our customers have new requirements, the
customer can ask that new technology be added to the contracts.
So we have it covered three ways. Through scope, through
industry initiating modifications, or through customer-
initiated modifications. Of course we can do it any time we
want.
Chairman Tom Davis. Do you envision a process whereby an
Enterprise vendor could become a Universal provider as their
capabilities expand over the period?
Ms. Bates. As it is currently structured, we do not
envision that.
The Enterprise requires, I think--with being IP based or
wireless, is really the wave of the future. And I think that if
somebody is in the enterprise category, it will serve their
company well.
I really don't see an advantage to having a crossover after
the initial competition. That said, if the initial competition,
a company can bid both Universal and Enterprise, and can be
selected for both if it is appropriate.
Chairman Tom Davis. Ms. Koontz, let me ask you. Go back to
the first question I asked Ms. Bates.
Agencies such as Treasury, which I mentioned in my opening
remarks, they plan to conduct their own large telecom
acquisitions instead of participating in the GSA program. Do
you think such acquisitions have the potential to undermine
Networx?
Ms. Koontz. I think they do have the potential if this is
done too far. I guess that our position on anything that is
outside of Networx or FTS 2001, those contracts are not
mandatory.
However, every investment, including telecommunications
investments, have to be justified. And they have to be
justified in light of looking at other alternatives. And only
in that case where it was justified in other alternatives
should those other contracts be awarded.
Chairman Tom Davis. Over the years, prices have fallen
under FTS 2000 and FTS 2001. Do you think we have reached the
bottom, or do you expect prices to fall over the length of
Networx programs, or is it just hard to say?
Ms. Koontz. I think it is hard to say.
Chairman Tom Davis. Do you think that GSA has been
addressing need for inventories. Do you think their actions
have been adequate in that area?
Ms. Koontz. I think that GSA has made some very good first
steps toward establishing the inventories that we think are
really critical, particularly for transition. They did create
inventories that they used for the requirements planning
process.
And now they plan to go forward and develop the more
detailed kind of inventories that will support transition. So,
again, I think they are making progress. This is something they
need to stay focussed on throughout.
Chairman Tom Davis. Finally, in your statement, you
recommend that GSA finalize and implement processes for
managing transition efforts, measuring program performance,
resolving agency concerns over the usability of billing data.
Do you think GSA can comply with these recommendations and
still meet the projected timetable for Networx?
Ms. Koontz. I believe they can. I believe it is going to be
very challenging. But I think there is sufficient time for them
to resolve these issues and have them completed at the
appropriate time.
Chairman Tom Davis. Thank you. That is all of the questions
that I have for this panel. Ms. Watson, do you have any
additional questions?
Anything else anybody wants to add? Well, thank you very
much for being with us. We will take a 2-minute recess as we
move to our next panel. Thank you.
[Recess.]
Chairman Tom Davis. All right. Our second panel here. Thank
you very much, gentlemen. We have Don Scott, senior vice
president of EDS U.S. Government Solutions; Jerry Hogge the
senior vice president Level 3 Communications; Mr. Robert
Collet, vice president, engineering, AT&T Government Solutions;
Shelley Murphy, president, Federal markets for Verizon; and
Jerry Edgerton the senior vice president, government markets,
MCI.
It's policy that we swear you before you testify. If you'd
rise with me and raise your right hands.
[Witnesses sworn.]
Chairman Tom Davis. Mr. Scott, we will start with you and
we will move straight on down the line. We are debating a bill
on the floor. That's why we have had some animated discussions
here that affects this committee in a number of areas. I am not
going to be able to get over. I think if I can--on a couple of
amendments. But we want to move as quickly as we can.
Your entire statements are in the record.
Mr. Scott, we will start with you and we will move straight
down and then move to questions. Thank you.
STATEMENTS OF DONALD SCOTT, SENIOR VICE PRESIDENT, EDS U.S.
GOVERNMENT SOLUTIONS; JERRY HOGGE, SENIOR VICE PRESIDENT, LEVEL
3 COMMUNICATIONS LLC; ROBERT COLLET, VICE PRESIDENT,
ENGINEERING, AT&T GOVERNMENT SOLUTIONS; SHELLEY MURPHY,
PRESIDENT, FEDERAL MARKETS, VERIZON; AND JERRY A. EDGERTON,
SENIOR VICE PRESIDENT, GOVERNMENT MARKETS, MCI
Mr. Scott. Thank you. Mr Chairman and members of the
committee, I'm Don Scott.
Chairman Tom Davis. If you'd turn on your mic.
Mr. Scott. I'm vice president of U.S. Government Solutions,
EDS Corp. Thank you for inviting me today to testify on behalf
of EDS regarding the GSA strategy for the Networx program. We
believe our comments will help GSA's Networx be most effective
in today's telecommunications environment. I'm presenting an
abbreviated version. The rest is for the record. We have
included a recommendation to expand the scope of the Networx
program to include applications and other user services. This
is outlined in a white paper EDS provided recently to GSA and
is an included as a part of the testimony.
Also in the record are examples of this integrated
strategy's successful implementation. Please note that also in
our testimony submittal we have referred to some recently
published papers on network convergence.
And, finally, we have offered some suggestions for
transitions to those expanded services.
We do not propose that GSA eliminate any of the services
proposed under Networx; rather, it is our belief that Networx
should offer an even broader, richer set of services and
solutions. My comments that follow concentrate on the services
that should be offered and explain why.
GSA's governmentwide responsibility offers a unique
opportunity to support the agenda of the Congress and of the
administration. GSA is in a position to leverage the buying
power of the entire Federal Government and has a charter to
lead the technology initiatives. Networx should be aligned with
the Office of Management and Budget's efforts to move to common
governmentwide architectures.
Mr. Chairman, we commend you and your committee for your
high level of interest in this program and we commend GSA and
the leadership that Administrator Perry, Commissioner Bates,
and Assistant Commissioner Johnson have shown. In particular,
GSA's continuous outreach to stakeholders will help ensure that
services are acquired at the best value to the taxpayer and
that vigorous competition occurs.
Considerable investment will be required by both government
and industry, so we support the long-term contracts for
projects having such large size and scope. However, because the
Networx contract may be effective for the period 2007 through
2017, GSA should give serious consideration to the services
expected to be commonly available during that period and the
companies' ability to provide those services. GSA should not
leave it to the customer agencies to individually acquire
services that are available in the marketplace and are
appropriate for consolidated governmentwide buying consistent
with the government's common enterprise architecture goals.
The telecommunications industry will be much different by
2007 and beyond. There is compelling evidence that the IT and
telecommunication industries are converging and that
traditional telecommunications will likely be acquired using
commodity schedules or through integration into total IT
service packages and solutions. In the complete text of this
testimony, there are references to a number of industrial,
governmental, and academic and medical organizations who have
implemented or are in the process of implementing converged
solutions. Most will be fully implemented by 2007. Also
included are references to two convergent studies that were
completed this year. These studies, published in ``The
Economist,'' each surveyed approximately 100 senior executives
on the subject of convergence. The first study found that two
thirds of the organizations surveyed would shift their
applications to unified networks within the next 5 years, and
that one quarter sees this integration as crucial to fulfilling
their business strategy. The second study and report conclude
that 75 percent of companies will achieve widespread migration
to converged networks within 3 years.
The integrated services we are proposing include such items
as information storage; security; messaging; collaboration
tools; various business applications; situation awareness
capabilities; knowledge management tools; hosting capabilities;
and other services. Associated enabling devices such as desktop
computers, laptop computers, and telephones should be included.
BlackBerries, pagers, and other remote devices, together with
seamless network connectivity, should be included so that a
complete secure capability is provided wherever the user
happens to be. The industry is transitioning toward integrated
networks that will provide all media over a data network using
IP. We expect maturity by 2007, which will render the risk far
less than if government agencies acquire services
independently. Along with these technology developments, we
believe that traditional telecommunications organizations in
the user community will be fully integrated into the IT
organizations.
The transformation of the communication marketplace defines
the following progressions of events.
Transport will become a commodity, and minimal strategic
value will be placed on the transport providers. Transport will
be converged into IP-based services and applications.
IP solutions will become the strategic product, which will
be built on the transport infrastructure through the desktop,
personal data systems, and other devices. In essence, the
current logical demarcations will be moved further into the
infrastructure.
Government agencies will be enabled to move toward true
performance-based relationships in which the success of the
mission is directly related to the underlying technology that
provides the solution.
End-to-end services fit this new mold best. This approach
deals with the infrastructure as it directly interfaces with
the user and also facilitates consistent thought leadership
across the infrastructure. These success factors are critical
in IP-driven transformations. By anticipating these market
shifts, the Federal Government can provide for the breadth and
flexibility that will be required to integrate secure,
effective offerings over the life of the contract.
Therefore, while the transport components will continue to
be a foundation for the application services being carried, we
predict that these will be dwarfed in importance by the
applications. We believe that with these enhancements, the
Networx program can provide effective best-value solutions,
deliver cost savings to the taxpayer, enhance security and
increase user productivity, and contribute to the
organizational transformation. The Networx program should be an
integral part of the government's enterprise architecture. In
attracting customer agencies to participate, GSA should offer a
wide array of integrated services, thereby discouraging
agencies from acquiring them individually.
Mr. Chairman, thank you for the opportunity to comment, and
I will be pleased to answer any questions.
Chairman Tom Davis. Thank you very much.
[The prepared statement of Mr. Scott follows:]
[GRAPHIC] [TIFF OMITTED] T6747.028
[GRAPHIC] [TIFF OMITTED] T6747.029
[GRAPHIC] [TIFF OMITTED] T6747.030
[GRAPHIC] [TIFF OMITTED] T6747.031
[GRAPHIC] [TIFF OMITTED] T6747.032
[GRAPHIC] [TIFF OMITTED] T6747.033
[GRAPHIC] [TIFF OMITTED] T6747.034
[GRAPHIC] [TIFF OMITTED] T6747.035
[GRAPHIC] [TIFF OMITTED] T6747.036
[GRAPHIC] [TIFF OMITTED] T6747.037
[GRAPHIC] [TIFF OMITTED] T6747.038
[GRAPHIC] [TIFF OMITTED] T6747.039
[GRAPHIC] [TIFF OMITTED] T6747.040
Chairman Tom Davis. Mr. Hogge.
Mr. Hogge. Good morning, Chairman Davis, members of the
committee, and thank you for inviting me here today to speak to
you about the Networx program. My name is Jerry Hogge and I'm
senior vice president and general manager of Level 3
Communications, government markets.
On February 26 of this year, Level 3 and other industry
participants testified before this committee to offer
suggestions about how GSA might best procure telecommunications
services through the Networx program. The efforts of this
committee and GSA's Federal Technology Service appear to have
made significant improvements to the original procurement
approach as announced in the Networx request for information
released last fall. As outlined in GSA's August 11th briefing,
the revised approach embraces many of the procompetitive
recommendations offered by industry. However, since the full
details of the revised strategy won't be available until the
draft RFP is released, certain central elements of the
procurement remain as open questions. Level 3 believes that
GSA's revisions, together with a few key additional elements,
can combine to maximize competition, attract Federal agency
participation, and ensure best value for our Federal Government
and taxpayers. Level 3 is encouraged by the revised strategy
and looks forward to reviewing the full detail of how the
proposed changes will be implemented as well as how the
remaining elements of the procurement will be characterized in
the draft RFP.
In our earlier testimony, Level 3 made four recommendations
which we believe must be addressed to ensure competition and
end-user value in the Networx program. Those recommendations
were that Networx should allow bidders to bid to their
strengths; that Networx should specify the services required
and avoid specifying particular technologies; that Networx
should avoid being locked into one or two providers; and that
Networx should allow for the adoption of best practices for
operational support.
We believe that GSA has taken very positive steps to
address these issues through its revised strategy.
Specifically, we believe that GSA's proposed changes improve
the Networx procurement in four key dimensions.
First, Networx service ubiquity requirements appear to have
been substantially relaxed. Level 3 considers this revision
procompetitive because it allows communications providers to
bid to their strengths, while permitting them to expand their
coverage as their networks and services expand.
Second, Networx service requirements are now to be
specified in functional terms with key performance criteria
rather than in terms of specific technologies. Level 3
considers this proposed revision fundamental to ensuring that
Networx will be flexible enough to facilitate the availability
of leading-edge technology as well as address the possibility
of legacy service obsolescence.
Third, Networx-Universal and Networx-Enterprise contracts
are to be simultaneously awarded. Level 3 considers this
proposed revision essential to leveling the competitive playing
field, encouraging competition, and reducing the possibility
for Networx to be dominated by one or two providers.
Four, the number of required billing elements is expected
to be reduced by 62 percent. In our view, it appears that these
simplifications will be procompetitive, as reduced operational
requirements should reduce the cost of entry for new
competitors and may add flexibility to the program as new
services are introduced.
In addition to these four areas, GSA's strategy document
addressed potential changes covering a wide range of program
elements. Level 3 is encouraged by the proposed changes and
will offer a complete assessment when greater detail is
released in the draft request for proposal.
I'd like to suggest that a number of critical issues should
be addressed to ensure that Networx delivers the greatest value
and efficiency to the government. Most important are two
related terms that address, one, the government's business
commitment to successful bidders; and two, the means through
which the government will ensure full competition at the time
of contracting and then post award.
These two concepts are at the heart of the Networx
program's ability to attract agency participation, to motivate
vigorous industry competition, and ensure best value for end-
user agencies. Just as agency decisionmakers will weigh the
cost and benefits of making a change between possible service
providers, so too will prospective bidders consider the costs,
risks, and potential benefits associated with pursuing and
winning a Networx contract. Specifying a minimum business
commitment for each successful bidder is a simple tool to
facilitate this assessment and directly leverage the
government's aggregate buying power. Minimum business
commitments, expressed through minimum revenue guarantees,
serve as basic consideration for the competitive process.
Finally, in order for Networx to be a successful program
for the government and industry, there must be an effective
competition throughout the life of the program. There are many
processes available to the government to ensure competition,
and many methods have been used successfully by GSA and other
agencies in the past. Indeed, the committee has touched on this
issue by raising a question about GSA's ability to execute the
Networx program as currently proposed. Based on GSA's high-
level strategy and its extensive and successful record of
achievement through previous programs, Level 3 is confident
that GSA will be able to successfully design and implement the
Networx program in such a way that it will stimulate agency
participation and deliver agency value, while driving
competition that will be fair to all bidders and result in
meaningful business opportunity for successful industry
participants.
In summary, GSA's revised strategy suggests that Networx
will be flexible enough to encourage new competitive providers,
new technologies, new services and changing market forces; that
Networx's legacy operational and system requirements will be
simplified, and that service coverage requirements will be
optimized to the agency needs.
Level 3 looks forward to continuing to work with GSA and
Chairman Davis and this committee to ensure that Networx
continues along a successful path as the procurement process
moves forward.
Thank you, and I'm happy to answer any questions that you
have.
Mr. Mica [presiding]. Thank you. And we will hold questions
till we have heard from the rest of the panelists.
[The prepared statement of Mr. Hogge follows:]
[GRAPHIC] [TIFF OMITTED] T6747.041
[GRAPHIC] [TIFF OMITTED] T6747.042
[GRAPHIC] [TIFF OMITTED] T6747.043
[GRAPHIC] [TIFF OMITTED] T6747.044
[GRAPHIC] [TIFF OMITTED] T6747.045
[GRAPHIC] [TIFF OMITTED] T6747.046
Mr. Mica. I recognize now Mr. Robert Collet, vice president
of Engineering, AT&T Government Solutions. Welcome, and you're
recognized, sir.
Mr. Collet. Thank you. Good morning, Mr. Mica and members
of the Committee on Government Reform. My name is Bob Collet.
I'm the vice president of Engineering and Chief Technology
Officer for AT&T'S Government Solutions Division. I'm also
leading the AT&T's FTS Networx proposal team. My remarks today
respond to the committee's questions regarding FTS Networx
benefits and GSA's ability to manage the program. We believe
the procurement is on track, that the changes made since the
RFI was issued last October are positive, and that the benefits
that Networx can bring to the government should not be delayed.
The procurement should stay on schedule and move forward as
expeditiously as possible.
The first question in the committee's letter of invitation
was whether the revised acquisition strategy as proposed by GSA
would be effective in today's telecommunications environment.
The answer to that question is yes. Through the Universal suite
of products GSA will deliver four key things: a vehicle that
enables continuity of service; products that anticipate future
agency requirements; and choices and continuous competition.
For those agencies that do not require the comprehensive suite
of services under Universal, there will be a data network and
wireless Enterprise tracks. And when GSA expands the multiple
award schedule with additional telecommunication options, there
will be an easy-to-use vehicle for obtaining off-the-shelf
products.
The committee's second question focused on GSA's ability to
execute the proposed strategy. We believe that GSA is capable
of executing both Universal and Enterprise strategies if they
are provided adequate resources. Managing a handful of
Universal contracts and a larger number of Enterprise contracts
would tax the management capabilities of any agency. The
complexity would be further compounded if all Universal and
Enterprise contracts provided up to 53 types of network
services. Therefore, we recommend that GSA award only the
number of contracts that it guarantees that it can manage well
in terms of vendor, contract administration, and agency
customer service.
The last question posed by the committee addressed the
program's attractiveness to the agency in terms of best value.
If the gist of the question is whether the Networx procurement
is designed to give the agency the right products at the best
industry practices, the answer is yes. The Federal Government,
as a large-scale buyer, has tremendous purchasing power. We
believe that agencies would be satisfied with GSA's acquisition
strategy because it will yield competitive sources for a broad
range of telecommunications hosting and application services.
AT&T has consistently stressed the importance of strong
security and continuity of operations capabilities. The current
procurement addresses these requirements and will bring robust
value to the agencies. While GSA is maintaining and expanding
its portfolio of networking and hosting security services,
agencies can obtain a rating of ``green'' on their Federal
Information Security Management Act scorecard. Agencies can
also obtain ``green'' on the continuity of operations
scorecard, as contractors will be required to provide robust
national security, emergency preparedness, and disaster
recovery services.
Finally, with regard to billing, even though GSA recently
reduced the number of billing elements by 62 percent, the
remaining elements should provide the agencies with the billing
detail they need to effectively run their businesses. With the
changes that have been made to date, GSA has the right vision
for the Networx procurement. We believe the FTS Networx
strategy is responsive to the needs of the agencies. The
government should expect AT&T to submit competitive bids for
both the Universal and Enterprise options of the Networx
procurement. We look forward to bringing the government the
benefits of our extensive investments in the network, security,
continuity of operation services, and in applications services,
and back-office systems to give agencies a quantum leap in
productivity and to make America stronger and more secure.
Thank you, Mr. Chairman, for the invitation to appear
before the committee. I appreciate having the opportunity to
share AT&T's views on this important matter and welcome any
questions that you may have or wish to ask. Thank you.
Mr. Mica. Thank you. We will withhold questions until we
have heard from all the panelists, as I said.
[The prepared statement of Mr. Collet follows:]
[GRAPHIC] [TIFF OMITTED] T6747.047
[GRAPHIC] [TIFF OMITTED] T6747.048
[GRAPHIC] [TIFF OMITTED] T6747.049
[GRAPHIC] [TIFF OMITTED] T6747.050
[GRAPHIC] [TIFF OMITTED] T6747.051
Mr. Mica. Shelley Murphy is president of Federal markets
for Verizon. Welcome, and you're recognized.
Ms. Murphy. Thank you, Mr. Chairman and members of the
committee. My name is Shelley Murphy and I'm the president of
Verizon Federal markets. I want to thank you for giving me
another opportunity to testify on the GSA Networx procurement.
In February of this year, I testified on concerns regarding
the Networx procurement as laid out by the GSA. Verizon thanks
the GSA for listening and addressing a number of our concerns.
However, we believe a few key modifications are still necessary
to allow sufficient competition on both the Enterprise and
Universal contracts and to ensure that the contracts remain
viable through the expected 10-year term.
Although the GSA reduced the number of wire centers for
Universal bidders to approximately 5,400, the GSA requires
vendors to provide a wide range of services including high-
speed data services to all of these locations. From the
information provided by the GSA, only about 5 percent, or 300
of these 5,400 Universal locations use these high-speed
services today. Many of the sites may never need these
services, so requiring them at all of the 5,400 wire centers on
the Universal contract is excessive. It also presents a high
barrier for companies attempting to bid on the Universal
contract, effectively limiting competition to the traditional
long distance carriers and increasing prices for the services
that the government agency will require.
The GSA also needs to reevaluate its wireless strategy. The
GSA provides the option for a wireless provider to bid on a
modified Enterprise specification with only certain mandatory
wireless requirements. However, the requirement of this
modified procurement to provision service in 100 percent of the
Nation's metropolitan statistical areas and 90 percent of the
rural statistical areas would not allow Verizon Wireless, the
Nation's largest carrier, to participate in the wireless-only
Enterprise procurement.
Verizon is also concerned about the long-term viability of
Networx. With the volatility of the telecommunications market,
over time it is possible that consolidation will reduce the
number of Networx awardees, thereby reducing the competition
for services.
The GSA's current approach omits a plan for adding new
technologies as they become available, and mandates the use of
soon-to-be-obsolete services throughout the 10-year term of the
contract. It is very expensive to build or retain
infrastructure to support outdated technologies, and this will
drive up prices. Such an approach will also limit competition
to those with legacy networks in place, the traditional long
distance carriers.
Verizon requests that the GSA consider several key changes
to the network acquisition strategy. These changes will
maximize competition, reduce risk, and achieve best value,
while ensuring rapid introduction of new technologies and
services.
The GSA defined approximately 300 locations that today
require high-speed data services. For the Universal contract,
the GSA should make high-speed data services mandatory for the
300 locations currently requiring these services, the remaining
100 largest metropolitan statistical areas and locations where
the bidders have the services commercially available. The
remaining locations should be nonmandatory. These changes, in
conjunction with the future deployment of new technologies by
the industry, should satisfy the government's current and
future needs for continuity of service, as well as increase the
number of potential bidders for the Universal contract.
The GSA also needs to change the wireless coverage
requirements to 95 percent of the top 100 most-populated
markets to allow major wireless providers to bid on the
optional wireless-only Enterprise contract. GSA should focus on
the wireless carriers' ability to provision quality network
coverage and advanced voice and data services within these
markets.
As envisioned under the two-contract approach, there is no
ability to compete agency requirements between the Universal
and Enterprise contracts. One solution to maintaining
sufficient competition on the Networx contract is to allow
Enterprise contractors to graduate to the Universal contract as
their capabilities evolve.
The GSA must define the processes and criteria by which old
technologies and outdated standards are eliminated. The Networx
contract must include a separate new technology insertion
mechanism that allows for rapid contract modifications to add
new technologies as they are made available. This process must
be flexible enough to allow the marketplace to define the
standards during the life cycle of the technology so that
providers will not be required to provide outdated network
services to the government. In addition, pricing needs to
evolve as the technologies evolve.
In summary, the GSA has made significant progress evolving
the Networx strategy, but the evolution is not finished. These
recommendations will increase competition on both contracts,
ensure highly competitive prices for required services, and
protect the government's networks from obsolescence throughout
the life of the contract.
I thank the committee for the opportunity to discuss the
Networx procurement and would be pleased to answer any
questions at the appropriate time.
Mr. Mica. Thank you.
[The prepared statement of Ms. Murphy follows:]
[GRAPHIC] [TIFF OMITTED] T6747.052
[GRAPHIC] [TIFF OMITTED] T6747.053
[GRAPHIC] [TIFF OMITTED] T6747.054
[GRAPHIC] [TIFF OMITTED] T6747.055
Mr. Mica. And we will hear from our final witness who is
Jerry Edgerton, and he is senior vice president of Government
markets at MCI. Welcome, sir, and you're recognized.
Mr. Edgerton. Mr. Chairman and members of the committee,
good morning. My name is Jerry Edgerton. I'm the senior vice
president of MCI'S Government markets division. I want to thank
Mr. Chairman and the committee for your support of the FTS 2001
program and I appreciate the opportunity to provide you with
MCI's comments regarding the government strategy for Networx.
The existing Federal telecommunications program, FTS 2001,
has been very successful in meeting the changing and expanding
telecommunications needs of the Federal Government's agencies.
The world, as well as the mission of many government agencies,
has changed since that contract was awarded in 1999. And the
Federal Telecommunications Service, FTS, has delivered on its
promise to support increasingly complex communications needs.
The FTS has been quick to respond to agency requirements by
adding new services to support security, citizens' access to
services, and continuity of operations.
Furthermore, GSA has delivered on its promise to provide
value for government users. According to the GSA Fiscal Year
2003 Annual Performance and Accountability Report, FTS 2001
prices are 53 percent lower than comparable services purchased
by large commercial clients.
MCI strongly believes that the Networx structure being
proposed by GSA will continue to provide the flexibility,
innovation, technology refreshment and value that agencies need
to perform their mission-critical operations.
MCI attended the GSA's Networx Industry Day in August, and
GSA provided a clear and detailed profile of its Networx
strategy. MCI believes that GSA has been inclusive and diligent
in soliciting input from all of the stakeholders in the Networx
project. The strategy briefing has resolved most of our
outstanding questions about the general direction of the
program, with a few exceptions that I will note later.
MCI supports the FTS plan to provide agencies with choices
by competing two separate contracts, Universal and Enterprise.
Offering two separate contracts recognizes the fact that one
size does not fit all Federal networks. The Universal contract
allows agencies to procure the full range of telecommunication
and network services by choosing from a set of capable teams.
The Enterprise contract gives agencies the option of addressing
additional telecom and network needs by choosing from more
specialized providers.
The FTS also addressed industry's concerns about the timing
issue of these two procurements and now plans to conduct those
simultaneously. The Enterprise procurement also offers small
and disadvantaged businesses an opportunity to compete for
government business. They can continue to partner with the
Universal service providers and bid Enterprise procurements as
an additional entry to the Federal Government space.
MCI supports the requirement for continuity of service on
the Universal contract. Many agencies desire to procure
services from a single contractor who will provide all required
network services to agency locations worldwide. Most agencies
don't have the specialized technical staff, budget, time or
systems and processing required to procure services from
multiple vendors. The continuity requirement in the Networx
proposal will save most agencies time and money and allow them
to focus their resources on their mission-critical activities.
FTS has streamlined the Networx Management and Operations
Support [MOPS], requirement. FTS listened to industry and has
crafted an appropriate compromise between agency requirements
and industry capabilities. This will allow agencies with
extensive detailed billing and operational requirements to
receive the level of support that is needed without raising the
cost of doing business for all users. FTS is taking the right
approach by mandating a fixed set of service capabilities on
both Universal and Enterprise contracts. Agencies would be ill
served by having to put together workable network solutions
using a jigsaw puzzle of mismatched parts from different
vendors. FTS correctly concluded that program flexibility that
provides convenience for some service providers would not be
beneficial for the government. Most agencies would face higher
prices to fill the gaps in service.
MCI does have concerns about two unresolved issues that
could negatively impact the ability of government to obtain the
best possible pricing and services under Networx. First, FTS
has not clearly set forth the number of awardees under either
the Universal or the Enterprise procurements.
Networx, like FTS 2001, can provide agency users with the
lowest possible prices by aggregating the massive volume-of-
service demands for much of the Federal Government into a
single contract vehicle. FTS should maximize the competition by
encouraging as many bids as possible from potential service
providers, but must limit the number of awardees.
In order for the government to lock in rock-bottom prices
for the contract's 10-year term, providers must be confident of
their ability to win certain levels of revenue. The greater the
number of awardees, the less the business that each awardee
will be able to capture and the more the government's
purchasing power is diluted. FTS must leverage the government's
volume to produce the lowest possible prices from industry.
Second, FTS has not offered many details on its proposal to
add telecom services to the Federal Supply Schedule program.
MCI supports the inclusion of commodity-like services on the
Federal Supply Schedule. The absence of clear, precise
definitions by the FSS will create uncertainty for Networx
bidders by creating an unpredictable and uncontrollable
backdoor, post-award path for entry into the Federal
telecommunications market space.
In order to make the business case for the lowest possible
prices, Networx bidders must have a level of certainty as to
the number and type of services and thereby the potential
revenue under the contract. I might add that this is a concern
from any other government contract that attempts to offer
services to other government agencies other than through GSA.
In conclusion, I want to assure this committee and the
government that MCI is fully committed to ensure the continued
success of FTS 2001 and the future success of Networx. GSA
plans for the Networx procurement are on the right track. It
will require companies like MCI to compete like never before,
and will force our rivals to do the same. But that's really the
whole point of the exercise and the only way to guarantee that
Federal agencies and the taxpayers will get the best deal
possible. Thank you.
[The prepared statement of Mr. Edgerton follows:]
[GRAPHIC] [TIFF OMITTED] T6747.056
[GRAPHIC] [TIFF OMITTED] T6747.057
[GRAPHIC] [TIFF OMITTED] T6747.058
[GRAPHIC] [TIFF OMITTED] T6747.059
[GRAPHIC] [TIFF OMITTED] T6747.060
[GRAPHIC] [TIFF OMITTED] T6747.061
[GRAPHIC] [TIFF OMITTED] T6747.062
[GRAPHIC] [TIFF OMITTED] T6747.063
[GRAPHIC] [TIFF OMITTED] T6747.064
[GRAPHIC] [TIFF OMITTED] T6747.065
[GRAPHIC] [TIFF OMITTED] T6747.066
Chairman Tom Davis [presiding]. Well, thank all of you for
your testimony. I'm sorry I wasn't here for everything. We're
trying to get a couple of things straight over on the floor,
but I have read everybody's testimony.
Let me ask each of you--and I don't want you to be bashful;
GSA won't hold anything against you, I'm sure, when they start
evaluating the prospective bids--but how would you rate GSA's
overall performance on a scale of 1 through 10? And, Don, I'll
start with you. I don't want to put anybody on the spot, but I
just want to----
Mr. Scott. Seven.
Mr. Hogge. Eight.
Mr. Collet. Eight and a half.
Ms. Murphy. Eight.
Mr. Edgerton. Eight point five.
Chairman Tom Davis. I don't think anybody hurt themselves
there.
A recurrent theme, we have some different testimony, is
does the proposed structure provide enough flexibility for
companies to offer new services as they become available?
That's a critical question for us, because things change so
quickly in this. I'll start and just go down the line.
Mr. Scott. I think it provides the flexibility to provide
infrastructure certainly, telecommunications infrastructure.
But it does not provide the capability to move to where I think
the government--the whole industry is going to be in this
timeframe, and that is the convergence of telecommunications
and IT so that it all ends up as a solution. And so I don't
think--I don't think it will get GSA to that point. And what I
fear is, if they don't, we are going to have more situations
such that we have in this agriculture and such that we have had
at Homeland Security and other places.
Mr. Hogge. From Level 3's perspective, we are one of the
companies that is going to be providing those infrastructure or
telecommunications services, some broad-brush strokes were
given in the strategy document. But we were encouraged by the
specification of requirements and functional terms with key
performance criteria rather than by specific technologies. And
we see that as a key element of flexibility needed in the
future.
Mr. Collet. I believe there is plenty of flexibility in the
acquisition strategy. If you break it down into components such
as telecommunications, definitely. For wireless there is,
especially from a mobile virtual service operator perspective.
And I do disagree with Mr. Scott's proposition about
information technology. The acquisition, from our perspective,
includes a substantial amount of flexibility in the IT space,
because hosting and application services are a part of the
acquisition, and therefore we should be able to integrate those
in very nicely with the network and actually provide it in an
optimal way.
A model would be to look at how the Defense Information
Systems Agency is structuring its network-centric Enterprise
services and the global information grid. You don't want to
take it too far. You don't want to do too much at one time. By
starting first with the establishment of Web services, things
on the desktop can certainly come later, and they certainly
become simpler rather than more complex.
Ms. Murphy. We are really pleased also by functional
definitions of the services that GSA provided in the strategy
documents that they released. And we believe there is adequate
flexibility. We won't know until we really see the process
further defined.
Ms. Bates mentioned that it will be through, you know,
contract modifications with three pads in, you know, that's--
that sounds very good. But once we get to the draft RFP and see
the further definition, we'll be able to answer that more
clearly.
The other piece that's critical is the flexibility and
pricing of those new services. Pricing algorithms that have
been used for traditional services aren't going to work for the
services of the future, because the underlying infrastructure
is different and the pricing structures need to differ to go
along with that.
Mr. Edgerton. Mr. Chairman, if the success on the change-
out of the services and the requirements by the agencies in the
FTS 2001 is any indication, what we implemented in 1999 and
2000 is totally different than what the customers are asking
for today. And the current vehicle has been adaptable for that,
and we believe that the current processes that have been in
place will allow those kinds of innovations to be presented and
accommodated in this next procurement.
Chairman Tom Davis. My time is almost up for my first
round. But Ms. Murphy let me ask you. You suggested GSA needs
to make some changes in its strategy, particularly reducing
locations specified for high-data services and reducing
wireless, a couple of its requirements. Would these changes be
necessary for firms other than, you know, the usual long
distance carriers? I mean, how would you----
Ms. Murphy. We believe that these changes will increase the
number of companies that are in a position to respond to the
Universal portion of the procurement.
Chairman Tom Davis. Correct. But I'm trying to look at the
bells. I mean, you've removed more in the long distance
business, the backbone, but this is still a very high bar for
you is what you're telling us.
Ms. Murphy. This is still a very high bar, especially when
you consider that at this point, 5.5 of those 54 locations
require those types of services today. We know the requirement
for those services will grow over time. But we also believe
that there will be alternate technologies available, wireless
technologies, for instance, that aren't envisioned today that
may provide more cost-effective ways to serve those customers
at those higher bandwidth requirements in the future.
Chairman Tom Davis. And you also suggest that Networx
should allow Enterprise contractors to graduate to be Universal
as their capabilities evolve. And I asked this question of the
panel prior to that: Do you think that feature would
significantly increase competition both on the front end and as
the contract goes on?
Ms. Murphy. I don't know that it will increase competition
for the Universal portion on the front end. But what it will do
is help mitigate the risk for the industry issues that we are
currently having. If you have consolidation within the
industry, if that consolidation includes one of the traditional
long distance providers that we could envision being awarded
under Universal, what you want is to make sure that you
continue to have sufficient competition on the Universal
contract to make sure that the government is continuing to get
best value and rapid introduction of new services.
Chairman Tom Davis. Thank you. Ms. Watson.
Ms. Watson. Universal communications is my interest, and
you heard me raise some questions in the first panel. And
anyone on this panel who would like to speak to it, are we
looking at ways when we service our various agencies of setting
up a Universal system that works, is tested, tried and true,
across this country as it relates to security?
Ms. Murphy. Ms. Watson, I think any number of the agencies
are looking at putting that type of network infrastructure in
place that will provide the high availability and security
that's required. As we go forward in a post-September 11th
world, I think part of the discussion we have had here today
revolves around encouraging agencies to use the Networx
procurement potentially as the vehicle to do that. My opinion
is that the way the procurement is structured, with some minor
changes, would allow the agencies to do exactly that.
Ms. Watson. Do that monitor in terms of procurement, the
efficacy of the products that are served--the products that are
sold? And do they work? How do we evaluate the equipment? Is it
a good contract, you know, and are they using state-of-the-art,
and are we giving the best value for our money? How does your
agency or the GSA do that?
Mr. Collet. OK. Perhaps I could answer that question. The
products that the government is asking for is under a broad
scope. And many of the products--let me rephrase that. All of
the products that they are asking for have standards. So things
that need interoperability, they will certainly be able to have
that. Now, there are some risk areas in the future with regards
to convergence. Much work is being done in places like the
Internet Engineering Task Force to establish the standards in
which Networx can carry multiple kinds of communications.
Ms. Watson. Let me just ask this. Who evaluates whether or
not these contractors meet the standards at the end of their
contract or during their contract? Who monitors to see that
they meet these standards that are being formulated.
Mr. Edgerton. I think the customers do that by virtue of
their satisfaction with the services. GSA conducts an active
program with the Interagency Management Council to make sure
that the services being provided are up to the industry
standards but are also forward looking. So each agency lays on
the GSA its unique requirements, and then they are fulfilled
through the GSA execution of that.
Ms. Watson. Is there anywhere where the information that
comes from the customers is housed so we can look back to see
that we have made the best contractual decision, and that the
equipment, indeed, or whatever the services are, indeed are of
some value and a cost savings to the taxpayers? Is there any
way that the information can be deposited in a central place?
Does that exist?
Mr. Edgerton. I think we would have to yield to GSA as to
what their requirements are on that. But we certainly make
available performance in terms of installation, performance in
terms of mean time to repair, overall network performance
statistics, and so forth.
Ms. Watson. Well you know, you hear story after story about
how we contract for government services and equipment, and we
are paying too much for what we are getting. And you know, we
keep doing this, and I'm just wondering that this information
could be deposited in a central place where we can see and kind
of monitor, a committee like this, kind of monitor whether or
not we are making the best decisions on procurement.
Mr. Edgerton. I would submit that the competitive process
that the GSA has put into place certainly on FTS 2001 has
provided the opportunity for my esteemed colleagues to make
aware to all customers, as well as GSA, the current price
points and the current values in the marketplace, so there is
always pressure to do better both from a pricing and
performance perspective.
Ms. Watson. Well, I know about competitive processes, but
it seems like the people in several cases who do get the
contracts are way over what they should be, and I don't know
how that process works.
Mr. Edgerton. Well, let me make one other observation.
Under FTS 2001, there was a price management mechanism put into
place to assure that the prices were always good, or as good or
better than commercial. And as a result of the processes that
GSA put in place, they have never had to exercise that option
because our prices have always been better than commercial
prices.
Mr. Scott. Let me support that, Ms. Watson. Over the last
more than 10 years, GSA has led the industry in driving the
prices down for this service. The initiative that was taken in
that has driven these prices down. They are the best in the
industry. And I am not one of the contractors.
Ms. Watson. Well, let me ask this. Does the GSA deal with
noncompetitive or nonbiddable processes?
Mr. Scott. Not on this contract.
Mr. Edgerton. You have to ask GSA that.
Ms. Watson. OK. Because, you know, we are hearing about a
particular contract was given, it wasn't bidded on, you know,
and I'm just wondering what the connection is with GSA. Anybody
from GSA want to respond? OK. I'm not going to put you on the
spot.
Chairman Tom Davis. I think some of this may be anecdotal.
And so you need to run it down on this. These folks deal with
it every day. There's always somebody who doesn't get
something. We tend to operate a lot by anecdote here. I think
she's trying to get to that.
Ms. Watson. Yes. So I will just stop there. Thank you, Mr.
Chairman.
Chairman Tom Davis. Ms. Watson, thank you very much.
I've got a few more questions, if you can just indulge me.
From an industry perspective, how do we ensure participation of
small and disadvantaged businesses in the Networx program?
Mr. Scott. Well, a lot of the small business--a lot of it
comes out of the applications software development. They do
very well, and they probably lead the industries into
development of innovative new software. And so if Networx is
pushed toward more applications, you'd get more participation
in the program by small businesses.
Mr. Hogge. As part of delivering the services that are
mandatory under either the Universal or the Enterprise
contracts--and there are lots of bits and pieces that have
traditionally fallen to small disadvantaged businesses
historically either as specified percentages or as goals and
objectives in that regard work quite well. In my experience,
and previous programs.
Chairman Davis. But I mean just let me ask you all, if
you're going to do that--and I'm not advocating you do or don't
do, because my philosophy is that on procurements we ought to
let the value for the taxpayer be the driving force, not making
sure it's spread around that everybody gets a little piece of
it. I mean I think when you start doing those other things in
the procurement system, it just raises your cost, so it just
creates inefficiencies. But if you're going to do that, I mean,
we're realistic here. I think there'll be a component of that
in most of this. Are you better off letting your primes pick it
and decide and be the integrators, or are you better off
letting the government--I mean, how would you--anybody have any
thoughts on that?
Mr. Collet. Well, I think the prime contractor should
select its teaming partners. There's a lot of technology that
needs to be brought to bear on this deal. And small businesses
can be a very important part of that. I think there's a natural
synergy between the large companies and the small ones. Given
the scope and requirements of FTS networks today, even just
under FTS crossover and our day-to-day business at AT&T, we use
a large number of small contractors. And it's for a selfish
reason: They bring innovation and flexibility to the team that
we might not have otherwise.
Ms. Murphy. I would agree. I think the primes should select
their subs. And if you look at the way GSA has defined the
mandatory services under Universal and the optional services
under Enterprise, there are some areas that are a natural fit
for small business partners.
Chairman Tom Davis. The revised strategy mentions an
increased role for the Federal Supply Schedules, which I think
makes a lot of sense. But how would you suggest GSA implement
the used schedules within the program? Anybody have any
thoughts on that.
Mr. Collet. Well I think there are two elements in the
supply schedule that would need to be modified. First is, I
think contractors can change their prices every year, so that
might be an issue that needs to be addressed here. And there
are also some difficulties associated with how you stitch
together end-to-end solutions. So maybe the multiple awards
schedule, rules of engagements, need to be changed a little bit
to address telecommunications.
Chairman Tom Davis. OK.
Mr. Collet. But it should be doable.
Chairman Tom Davis. Anybody else want to add anything?
Ms. Murphy. The way we've thought about it from a schedules
perspective is that can be a very efficient way for agencies to
acquire what we often refer to as stems and ends of their
networks. You know, the broad----
Chairman Tom Davis. We call them bells and whistles,
whatever.
Ms. Murphy. Yeah and the broad-brush Enterprise core of an
agency's network backbone is probably going to be procured
through Universal. It is going to have to be designed. It's got
very stringent specifications. But as that network changes or
needs to be added to over time, schedules become a very
efficient way to do those add-ons.
Chairman Tom Davis. It can be an entry point for people who
couldn't get in otherwise--new companies, startup small
companies.
Ms. Murphy. Absolutely.
Mr. Scott. That's very compatible with a solution base,
because the commodity services that are available on the
schedule could then be assembled into a solution by some
solution provider.
Chairman Tom Davis. Mr. Scott, let me ask, does the change
in strategy make the Networx acquisition more attractive to
integrators?
Mr. Scott. It is more attractive, but it's my estimation at
this point in time that we cannot compete effectively on it as
currently structured.
Chairman Tom Davis. OK.
Mr. Scott. There are not enough solutions yet and not
enough applications, not enough of the stuff that we do.
Chairman Tom Davis. And if other agencies start setting up
their own systems, would this be even less attractive?
Mr. Scott. We'll go try to win them.
Chairman Tom Davis. OK. But that would be one at a time
and--OK.
Mr. Scott. Yes. And that's what I was suggesting we ought
to stop doing here.
Chairman Tom Davis. Mr. Hogge, you note that Networx, to be
successful, should be effective through the life of the
program, the competition should be effective through the life
of the program, which I agree with.
Any other specific suggestions you want to make just in
terms of how we can accomplish this?
Mr. Hogge. Well, I think you heard from a couple of the
panelists, including me, as we look at this opportunity and try
to understand what sort of business opportunity it represents
for us, and that's a part of the catalyst for the competitive
process. So having some level of certainty, understanding what
the business commitment will be, is a key element from our
perspective as a nonincumbent contender here.
The argument was made by a couple of the other panelists
who sit in different positions in the current program, and I
think that the two things, business commitment and
understanding how the competitive process will work, both at
the initial contracting period and over the life of the
program, are keys to competitiveness.
Chairman Tom Davis. OK. You suggest that GSA has yet to
address fully the issue of specifying a minimum business
commitment, or what you call the MRG. The new strategy does say
that MRGs will be smaller than under FTS 2001, which I would
agree with, just looking back historically. Are you saying you
disagree with the concept of the smaller MRGs, or do you have
any suggestions for a minimum MRG level for the Universal and
the Enterprise?
Mr. Hogge. Well, smaller is a relative term. So we are
trying to understand. There is a threshold on both sides that
makes sense; that, No. 1, leverages the government's buying
power and is roughly equivalent to what happens on the
commercial side with minimum commitments and minimum contract
commitments that occur.
Chairman Tom Davis. Before you gear up, you want to make
sure you're going to be able to----
Mr. Hogge. Exactly.
Chairman Tom Davis. OK. I think it's fair.
Mr. Collet, you indicated that the changes made since the
issuance of the RFI are positive. What changes do you think
were the most helpful?
Mr. Collet. I'm sorry. What changes----
Chairman Tom Davis. You indicated that changes, that the
changes made, such the issuance of the request for information,
were positive. What particular changes were most helpful?
Mr. Collet. OK. I would say the changes that were helpful
were in the area of billing. Originally the government had a
requirement for roughly 500 elements, and that's been reduced
by 62 percent, so we are very much capable of meeting those
requirements and doing so very cost effectively. That was the
most key area.
Chairman Tom Davis. OK. And let me just ask Mr. Edgerton,
what's your position on the contract term for Networx,
including base and option years? Do you have a thought on that,
the way it's being structured?
Mr. Edgerton. We're satisfied with the way it is. The 5-
year base and the option year make you do the right thing as
you go through the process of the contract.
Chairman Tom Davis. And I asked this of the GAO testifier
in the previous panel, and you've had an extensive experience
in this. Under the prior program, do you think that we reached
the bottom in terms of prices, and what's your expectation for
changes in unit prices for service to be acquired in Networx
over the length of that contract? Have any idea or you think
it's still just too dynamic?
Mr. Edgerton. We've squeezed our lemon pretty tight.
Chairman Tom Davis. That's well scripted.
Mr. Edgerton. That's better than the sour apples. This
whole business now is all about what can you do and how can you
more efficiently. We have a transition going in the industry to
IP platforms that require investment. We're doing that against
an uncertain revenue base, uncertain regulatory environment,
and certainly the issues relative to consolidation in the
industry. So our focus has been to move with the IP platform to
focus on Enterprise solutions and continue to drive the prices
out. We still have the access cost piece, which is our
significant cost. But we have done and continue to do what's
necessary.
I would certainly hope that the prices are at the lowest
level. GSA would probably have a different view of that. But I
think as we make the additional investments in the network and
we increase our reach in the access area and use alternative
methods of access, then there is the possibility of additional
savings to the government.
Chairman Tom Davis. Thank you. Is there anything else
anybody wants to add on top of what anybody else has said, or
any questions that we've gotten here before we close the
hearing?
Mr. Collet. I'd just like to add one point about the issue
of convergence. You know, when we are looking forward, we're
probably going to see a great deal of technological churn
during the next few years and the benefits to the government
should be absolutely fantastic in terms of moving business
logic functions and capabilities off stovepipe IT systems onto
the Web. But doing that is going to be challenging.
There's a lot that needs to be done at the network-centric
Enterprises services layer, and then at the transport layer
beneath that. We're probably looking at a 5 to 10-year story,
rather than just having everything ready by 2007.
And one of the things we--well, there's lots that we like
about the acquisition strategy, but a key aspect of that is if
it bundles enough IT and network components so that we'll have
a fighting chance of making it all work and providing the
government the best service that they can possibly set. So
keeping it together is important. But keeping the scope where
it is is very important. And I think industry could deliver
those tools and processes that will help the agencies go to the
next level.
Chairman Tom Davis. Good. Well let me just say we
appreciate everybody's interest. Did you want to add anything?
Mr. Scott. I had one more comment. If GSA sees fit to move
forward pretty much on the course they're on, I would encourage
them to leave great flexibility over the life of this contract
for the entry of new services and new providers. We're going to
see a time of very very great change, and GSA needs to be
positioned to accommodate that or the agencies will leave them.
Chairman Tom Davis. OK. Well thank you very much. I think
this has been helpful to us. I think it has probably been
helpful to GSA as we continue to formulate it, and obviously
this committee will continue to stay on top of this procurement
as it moves forward.
Thank you very much and the hearing is adjourned.
[Whereupon, at 11:55 a.m., the committee was adjourned.]
[The prepared statements of Hon. Henry A. Waxman, Hon. Paul
E. Kanjorski, and Hon. Elijah E. Cummings follow:]
[GRAPHIC] [TIFF OMITTED] T6747.067
[GRAPHIC] [TIFF OMITTED] T6747.068
[GRAPHIC] [TIFF OMITTED] T6747.069
[GRAPHIC] [TIFF OMITTED] T6747.070
[GRAPHIC] [TIFF OMITTED] T6747.071
[GRAPHIC] [TIFF OMITTED] T6747.072
[GRAPHIC] [TIFF OMITTED] T6747.074
[GRAPHIC] [TIFF OMITTED] T6747.075