Telecommunications
GSA Faces Challenges in Planning for New Governmentwide Program Gao ID: GAO-04-486T February 26, 2004The Genera1 Services Administration (GSA) has initiated planning for its next-generation telecommunications acquisition program, known as Networx, which will replace the current Federal Telecommunications System (FTS) 2001 for longdistance and international services. It will also replace contracts for wireless and satellite communications products and services. Planning for this acquisition is occurring within an environment of tremendous change--in the industry, in underlying services and technology, and potentially in the regulatory environment. In this context, Networx can offer a significant opportunity for the federal government to flexibly acquire telecommunications services at competitive rates and apply innovative solutions to improving agency operations. At the request of the Chairman of the House Committee on Government Reform, GAO is providing an overview of acquisition planning steps completed to date, along with its assessment of challenges facing GSA and federal agencies as this acquisition proceeds.
Over the past year, GSA has acted to ensure that all interested parties-- including industry and agency users--have had a chance to comment on the development of the successor to FTS2001 and associated contracts. In its planning for the Networx acquisition, GSA cited five goals for the program: (1) continuity of telecommunications services, (2) best value, (3) strong competition, (4) a broad range of services and providers in a changing marketplace, and (5) expanded opportunities for small businesses. To achieve this, GSA plans two acquisitions: Networx Universal--broadranging services with global coverage, and Networx Select--leading-edge services but more geographically limited. To take full advantage of the opportunities offered in these new contracts, GSA will need to address four key challenges: (1) ensuring that an adequate inventory of information about existing telecommunications services and assets is available, to give planners an informed understanding of governmentwide requirements; (2) establishing specific measures of success to aid acquisition decision making and effective program management; (3) structuring and scheduling the contracts to ensure timely delivery of competitively priced telecommunications services that meet agency mission needs; and (4) ensuring a smooth transition from the current contracts by initiating appropriate implementation planning actions. Both leadership from GSA and commitment from stakeholders in resolving these issues will be essential to establishing efficient, cost-effective, and secure telecommunications services. If this can be achieved, the Networx contracts will be optimally positioned to leverage the power and creativity of today's telecommunications marketplace to carry the federal government forward well into the 21st century.
GAO-04-486T, Telecommunications: GSA Faces Challenges in Planning for New Governmentwide Program
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Testimony:
Before the Committee on Government Reform, House of Representatives:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EST:
Thursday, February 26, 2004:
Telecommunications:
GSA Faces Challenges in Planning for New Governmentwide Program:
Statement of Linda D. Koontz
Director, Information Management Issues:
GAO-04-486T:
GAO Highlights:
Highlights of GAO-04-486T, testimony before the Committee on
Government Reform, House of Representatives
Why GAO Did This Study:
The Genera1 Services Administration (GSA) has initiated planning for
its next-generation telecommunications acquisition program, known as
Networx, which will replace the current Federal Telecommunications
System (FTS) 2001 for long-distance and international services. It
will also replace contracts for wireless and satellite communications
products and services.
Planning for this acquisition is occurring within an environment of
tremendous change”in the industry, in underlying services and
technology, and potentially in the regulatory environment. In this
context, Networx can offer a significant opportunity for the federal
government to flexibly acquire telecommunications services at
competitive rates and apply innovative solutions to improving agency
operations.
At the request of the committee Chairman, GAO is providing an overview
of acquisition planning steps completed to date, along with its
assessment of challenges facing GSA and federal agencies as this
acquisition proceeds.
What GAO Found:
Over the past year, GSA has acted to ensure that all interested
parties”including industry and agency users”have had a chance to
comment on the development of the successor to FTS2001 and associated
contracts. In its planning for the Networx acquisition, GSA cited five
goals for the program: (1) continuity of telecommunications services,
(2) best value, (3) strong competition, (4) a broad range of services
and providers in a changing marketplace, and (5) expanded
opportunities for small businesses. To achieve this, GSA plans two
acquisitions: Networx Universal”broad-ranging services with global
coverage, and Networx Select”leading-edge services but more
geographically limited. The table below displays GSA‘s proposed
schedule for the two contracts.
To take full advantage of the opportunities offered in these new
contracts, GSA will need to address four key challenges:
* Ensuring that an adequate inventory of information about existing
telecommunications services and assets is available, to give planners
an informed understanding of governmentwide requirements.
* Establishing specific measures of success to aid acquisition
decision making and effective program management.
* Structuring and scheduling the contracts to ensure timely delivery
of competitively priced telecommunications services that meet agency
mission needs.
* Ensuring a smooth transition from the current contracts by
initiating appropriate implementation planning actions.
Both leadership from GSA and commitment from stakeholders in resolving
these issues will be essential to establishing efficient, cost-
effective, and secure telecommunications services. If this can be
achieved, the Networx contracts will be optimally positioned to
leverage the power and creativity of today‘s telecommunications
marketplace to carry the federal government forward well into the 21st
century.
www.gao.gov/cgi-bin/getrpt?GAO-04-486T.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Linda D. Koontz at
(202) 512-6240 or koontzl@gao.gov.
[End of section]
Mr. Chairman and Members of the Committee:
I am pleased to participate in the Committee's hearing on the General
Services Administration's (GSA) next generation governmentwide
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, in underlying
services and technology, and potentially in the regulatory environment.
In this context, the Networx initiative can be viewed as a significant
opportunity for the federal government to flexibly acquire and apply
innovative telecommunications services offered by industry to improve
agency operations. As requested, today I will discuss the background
for this current initiative and provide an overview of the acquisition
planning activities completed to date. I will also describe four
challenges that GSA and executive branch agencies will need to address
in the next few months as planning for this major acquisition proceeds.
In brief, over the past year, representatives of GSA, federal agencies,
the Interagency Management Council (IMC), the telecommunications
industry, and other interested parties have engaged in planning and
dialogue over the replacement for the current Federal
Telecommunications System (FTS) 2001 and associated contracts. This
replacement acquisition program is known as FTS Networx.[Footnote 1]
GSA and the IMC have taken steps to ensure that all interested parties
have had an opportunity to comment on at least a portion of their plans
for this major initiative and to help refine their acquisition
strategy. Nevertheless, significant challenges remain for GSA and the
IMC to address in the coming months to help ensure a successful outcome
for a more clearly and fully defined Networx program with respect to:
* ensuring that adequate inventory information is available to planners
to provide an informed understanding of governmentwide requirements;
* establishing measures of success to aid acquisition decision making
and enable effective program management;
* structuring and scheduling the Networx contracts to ensure that
federal agencies have available to them the competitively priced
telecommunications services they need to support their mission
objectives; and:
* initiating the implementation planning actions needed to ensure a
smooth transition from current contracts to Networx.
My remarks today are based on our previous reviews of GSA's federal
telecommunications programs, including implementation of the current
FTS2001 contracts, as well as research to date into sound
telecommunications planning and management practices that you recently
requested. In addition, we reviewed comments submitted by industry and
federal agencies to a request for information issued by GSA last
October to provide information to potential industry offerors regarding
its Networx program plan, and to solicit comments from industry
regarding its acquisition strategy. We also attended the Industry
Advisory Council's February 17, 2004, forum held to obtain additional
industry views on the Networx program and strategy.[Footnote 2] We
conducted our work in January and February 2004, in accordance with
generally accepted government auditing standards.
Background:
According to GSA, its Federal Technology Service, in conjunction with
the IMC, is responsible for ensuring that federal agencies have access
to the telecommunications services and solutions needed to meet mission
requirements. Its current program to provide long-distance
telecommunications services--FTS2001--has two goals: to ensure the best
service and price for the government, and to maximize competition for
services.
In implementing this program strategy, GSA awarded two contracts for
long-distance services--one to Sprint in December 1998 and one to MCI
WorldCom in January 1999. Under the terms of these contracts, each firm
was guaranteed minimum revenues of $750 million over the life of the
contracts, which run for four base years and have four 1-year-extension
options. If all contract options are exercised, those contracts will
expire in December 2006 and January 2007, respectively. According to
GSA, federal agencies spent approximately $614 million on FTS2001
services during fiscal year 2003 alone.
Related governmentwide telecommunications services are provided by
other GSA contracts: the Federal Wireless Telecommunications Service
contract and the FTS Satellite Service contracts. The wireless contract
was awarded in 1996 to provide wireless telecommunications products and
services to all federal agencies, authorized federal contractors, and
other users. The satellite services contracts are a series of contracts
for a variety of commercial off-the-shelf satellite communications
products and services, including mobile, fixed, and satellite services.
According to GSA, these contracts will expire in late 2004 and in 2007,
respectively.
We have periodically reviewed the development and implementation of the
FTS2001 program and assessed its progress. In March 2001 we reported to
you on the delays encountered during the government's efforts to
transition from the previous FTS 2000 to the FTS2001 contracts, the
reasons for those delays, and the effects of the delays on meeting
FTS2001 program goals of maximizing competition for services and
ensuring best service and price.[Footnote 3] We recommended that GSA
take numerous actions to facilitate those transition efforts. In April
2001 in testimony before you, we reiterated those recommendations and
noted that the process of planning and managing future
telecommunications service acquisition would benefit from an accurate
and robust inventory of existing telecommunications services.[Footnote
4] Ultimately, GSA acted on our recommendations and the transitions
were successfully completed.
GSA's Network Program Development Actions Are Continuing:
GSA is now planning its FTS Networx acquisition program, including the
awarding of new governmentwide contracts for a broad range of long
distance and international voice and data communications services,
wireless services, and satellite telecommunications services. These
contracts are intended to replace the existing FTS2001, Federal
Wireless Telecommunications Service, and FTS Satellite Service
contracts. GSA and the IMC has identified five goals for the Networx
acquisition program:
* Meet agency needs for a comprehensive acquisition that provides
continuity of current telecommunications services and solutions.
* Obtain best value (lowest prices while maintaining quality of service
levels) for all services and solutions.
* Encourage strong competition for the initial contract award(s), and
ensure continuous competition throughout the life of the program.
* Respond to the changing marketplace by providing agency access to a
broad range of services and service providers.
* Provide expanded opportunities for small businesses.
To achieve those goals, the program calls for two acquisitions--Networx
Universal and Networx Select. The Networx Universal contracts are
expected to satisfy requirements for a full range of national and
international network services. According to GSA, Networx Universal
seeks to ensure the continuity of services and prices found under
expiring contracts that provide broad-ranging service with global
geographic coverage. GSA expects all Networx Universal offerors to
provide a full range of voice and data network services, managed
networking services and solutions, and network access, wireless, and
satellite communications services. This acquisition is expected to
result in multiple contract awards to relatively few offerors because
few are expected to be able to satisfy the geographic coverage and
comprehensive service requirements. GSA also intends to apply
competitive incentives to obtain best value for its customer agencies,
although those incentives are not yet defined. Further, GSA expects to
establish minimum revenue guarantees for these contracts.
In contrast, GSA plans to award multiple contracts for a more
geographically limited set of services under Network Select. GSA
generally describes these Select contracts as providing agencies with
leading edge services and solutions with less extensive geographic and
service coverage than that required by Networx Universal; specific
Networx Select service requirements have not yet, however, been
defined. Details of pricing structures and Select service delivery
mechanisms are planned to be provided in the Networx Select request for
proposals, which GSA intends to release in the summer of 2005.
GSA anticipates awarding both the Networx Universal and the Networx
Select contracts well before the expiration of the FTS2001 contracts.
Networx Select will be awarded approximately 9 months after Networx
Universal. Table 1 displays GSA's schedule for these two acquisitions:
Table 1: GSA's proposed schedule for Networx Universal and Networx
Select acquisitions as of February 2, 2004:
Milestone: Draft RFP[A] released;
Networx Universal: Spring 2004;
Networx Select: Winter 2005.
Milestone: Draft RFP responses due;
Networx Universal: Summer 2004;
Networx Select: Spring 2005.
Milestone: Final RFP released;
Networx Universal: Fall 2004;
Networx Select: Summer 2005.
Milestone: Final RFP responses due;
Networx Universal: Winter 2004;
Networx Select: Fall 2005.
Milestone: Source selection complete;
Networx Universal: Fall 2005;
Networx Select: Summer 2006.
Milestone: Contract award(s);
Networx Universal: Winter 2005;
Networx Select: Fall 2006.
Source: GSA:
[A] Request for proposals:
[End of table]
Challenges Remain Before Finalizing the Network Acquisition Program
Strategy:
Notwithstanding the acquisition planning activities completed by GSA
and the IMC to date, these entities face significant challenges in
finalizing their program strategy to ensure that Networx is
appropriately defined, structured, and managed to deliver those
telecommunications services and solutions that will enable federal
agencies to most efficiently and effectively meet their mission needs.
Specifically, these challenges include:
* Ensuring that adequate inventory information is available to planners
to provide an informed understanding of governmentwide requirements.
* Establishing measures of success to aid acquisition decision-making
and enable effective program management.
* Structuring and scheduling the Networx contracts to ensure that
federal agencies have available to them the competitively priced
telecommunications services they need to support their mission
objectives.
* Initiating the implementation planning actions needed to ensure a
smooth transition from current contracts to Networx.
Ensuring Adequate Inventory Information:
It is important that GSA and its customer agencies have a clear
understanding of agency service requirements in order to make properly
informed acquisition planning decisions. According to our ongoing
research on best practices in telecommunications acquisition and
management, clear understanding comes at least in part from having an
accurate baseline inventory of existing services and assets. More
specifically, an inventory allows planners to make informed judgments
based on an accurate analysis of current requirements and capabilities,
emerging needs that must be considered, and the current cost of
services. Although leading organizations acknowledge that establishing
and maintaining such an inventory may be difficult, they view this
baseline as an essential first step to high-quality telecommunications
requirements analysis, and subsequent sourcing decisions associated
with meeting those requirements.
Despite this importance, it is not clear whether GSA and federal
agencies have yet established the comprehensive, accurate inventories
needed to support Networx planning. Mr. Chairman, you followed up on
this issue in your December 17, 2003, letter to GSA asking to what
extent such detailed inventories were currently being maintained and
kept accurate and up-to-date for use both in acquisition planning and
future contract transitions. In his response, the Administrator of
General Services identified sources of information provided by GSA and
the FTS2001 vendors--for example, monthly billing information--that
would be helpful to agencies in developing inventories of existing
services. In addition, the Administrator noted that GSA is examining
methods of incorporating better billing and inventory data into the
Networx program where practical. However, the Administrator did not
provide specific information on the extent to which these inventories
exist, or whether agencies are periodically validating that information
to ensure that it is accurate and complete. Further, the Administrator
acknowledged that the accuracy and completeness of telecommunications
service inventories varies among agencies. As a result, without a clear
understanding by GSA and its customer agencies of the FTS2001 services
used today and the applications they support, it is unclear how
properly informed Networx acquisition planning decisions can be made.
Establishing Measures of Success:
Our research into recommended program and project measurement
practices, which we affirmed in discussions with private-sector
telecommunications managers, highlights the importance of establishing
clear measures of success to aid acquisition decision making as well as
to provide the foundation for accountable program management. Such
measures define what must be done for a project to be acceptable to the
stakeholders and users affected by it, and in so doing enables
measurement of progress and effectiveness in meeting objectives.
Although GSA has established program goals, it has not yet defined a
comprehensive set of corresponding performance measures for the Networx
acquisition program. According to GSA's Assistant Commissioner for
Service Delivery/Development, one of the criteria for measuring Networx
success will be identical to that used for FTS2001--that is, savings as
measured by contract service costs compared with best commercial
pricing. Further, according to this official, this was the sole measure
reported to the Office of Management and Budget for FTS2001. While low
pricing is an important criterion reflected in program goals, GSA has
not yet defined measures about how well its final acquisition plan will
deliver the value (service plus price) that agencies need to improve
their operations and meet their mission needs. For example, GSA's
Networx environmental assessment indicates that agencies want this
program to support network planning and optimization, include simple
and understandable fees, provide management of contracts and
contractors on the agencies' behalf, and include other elements of
value. GSA's Assistant Commissioner for Service Delivery/Development
recognizes the importance of having such measures, and told us that GSA
would be establishing such measures coincident with its actions to
finalize the Networx Universal RFP in the coming months. It will be
important that GSA follow through on this commitment to establish that
appropriate set of measures to evaluate the intended business value of
the Networx program and enable the effective management of this
significant program over time.
Structuring and Scheduling Contracts to Deliver Needed Services:
Once agency requirements are adequately understood and measures of
success defined, structuring and scheduling the Networx contracts to
successfully encourage industry competition to obtain low prices and
high-quality, innovative services becomes the next challenge. The
varying views of industry representatives commenting on the request for
information raised fundamental questions about the soundness of the
proposed acquisition approach for accomplishing this. For example,
large, interexchange carriers, like those that hold the current FTS2001
contracts, generally agreed with the broad scope of the Universal
contracts. They further suggested that services offered under Networx
Select and Universal should be mutually exclusive, and that all
carriers should be allowed to compete for both.
In contrast, other carriers criticized the approach. These carriers
asserted that some major telecommunications providers might be
precluded from bidding on the Networx Universal contracts because of
the broad service and ubiquitous geographic coverage requirements
described in the request for information. For example, one vendor
stated that it was quite possible that only traditional long distance
carriers could effectively bid for Universal, thus denying many players
in the industry a realistic chance to compete for major portions of the
federal long distance business. One carrier noted that, based on the
procurement timetable, the timing of the award for the Select contracts
would minimize the opportunity to compete for long-distance
telecommunications services. Because of the 9-month lag between the
Universal and Select acquisitions indicated in the proposed acquisition
schedule, agencies could be asked to make decisions regarding their use
of awarded Universal service contracts before information is available
regarding Select leading edge services and solutions that may be more
suitable for their needs.[Footnote 5]
Defining an acquisition strategy that appropriately balances the need
to ensure the continuation of existing telecommunications services in
all current government locations with encouraging strong competition to
obtain best value is a daunting challenge. However, proceeding from a
clear understanding of requirements and measures of success--as I
previously discussed--should aid in meeting this challenge by providing
guideposts for a decision that strikes an appropriate balance on
contract scope, program structure, and acquisition schedules that can
deliver to agencies competitively priced solutions that meet their
mission needs. Further, continuing to solicit and effectively implement
feedback from stakeholders should help GSA achieve this goal.
Initiating Implementation Planning to Ensure Smooth Transition:
As we reported to you in March 2001, the current FTS2001 contracts got
off to a rocky start as significant delays in transitioning to the new
contracts hindered timely achievement of program goals.[Footnote 6]
Factors contributing to those delays included a lack of data needed to
accurately measure and effectively manage the transitions, inadequate
resources, and other process and procedural issues. Ultimately, GSA did
take action on all of our recommendations and the transition to the
FTS2001 contracts was finally completed. In subsequent testimony before
you in April 2001 we noted the importance of incorporating the lessons
learned from this transition into future procurements. Specifically, we
stated that "the process of planning and managing future
telecommunications service acquisitions--both by GSA and by the
agencies themselves--will benefit from an accurate and robust inventory
of current telecommunications services. Further, the value of this
critical program to customer agencies will be improved through the
application of lessons learned in streamlining and prioritizing the
contract modification process, in effectively and expeditiously
resolving billing problems, and in holding contractors accountable for
meeting agency requirements in a timely manner."[Footnote 7] Those in
industry who commented on the Networx request for information also
noted the need for strong and comprehensive program management to
ensure successful transition, including not only the availability of
accurate inventories but also defined contractor and government
responsibilities.
While GSA recognizes the importance of transition planning, it has not
yet fully addressed these issues. GSA has emphasized that its
development of the Networx program included an analysis of lessons
learned from existing programs and previous acquisitions. Further, in
his February 11 letter in response to your inquiry about agency
inventories, the Administrator outlined the proactive steps GSA plans
to take, including actions to establish a working group and to improve
the availability of accurate inventory information to support the
transition. According to the GSA's Associate Commissioner Service
Delivery/Development, these actions will also include developing
processes and procedures, identifying funding needs, and training
agency personnel in order to support a smooth contract transition. As
acquisition plans are finalized in the coming months, it will be
important that GSA follow through on these initial steps to ensure that
the transition to the new contracts proceeds efficiently and
seamlessly, and that a repeat of the FTS2001 transition difficulties is
avoided.
In summary, Mr. Chairman, Networx represents a critical opportunity to
leverage the strength and creativity of the telecommunications
marketplace to make the vision of delivering to agencies the
telecommunications business solutions they need to perform their
missions better and more cost-effectively a reality, and in so doing to
carry the federal government forward well into the 21st century. To
accomplish this, however, GSA will need to overcome significant
challenges and demonstrate solid leadership. Likewise critical will be
stakeholder commitment. Actions taken and decisions reached in the
coming months to more fully define the Networx program and finalize an
appropriate acquisition strategy will significantly influence the
telecommunications choices federal agencies will have for the next
several years. Unless GSA follows through to resolve the challenges
outlined today, the potential of Networx may well not be realized.
Mr. Chairman, this concludes my statement. I would be pleased to answer
any questions that you or other members of the Committee may have at
this time.
Contact and Acknowledgments:
Should you have any questions about this testimony, please contact me
by e-mail at koontzl@gao.gov or Kevin Conway, Assistant Director, at
conwayk@gao.gov. We can also be reached at (202) 512-6240 and (202)
512-6340, respectively. Another major contributor to this testimony was
Michael P. Fruitman.
FOOTNOTES
[1] The IMC consists of senior government information resources
management officials from agencies using FTS 2000. The council provides
guidance to GSA officials in administering telecommunications
contracts.
[2] The Industry Advisory Council is a broadly based organization of
information technology professionals representing more than 400
companies nationwide that provide products and services to the
government. Member firms include telecommunications companies,
hardware and software providers, systems integrators, and professional
services companies.
[3] U.S. General Accounting Office, FTS2001: Transition Challenges
Jeopardize Program Goals, GAO-01-289 (Washington, D.C.: March 30,
2001).
[4] U.S. General Accounting Office, FTS2001: Contract Transition Delays
and Their Impact on Program Goals, GAO-01-544T (Washington, D.C.: April
26, 2001).
[5] GSA plans to award the Networx Universal contracts at about the
same time that it releases a draft request for proposals to solicit
public review and comment on the Select services segment of this
acquisition program.
[6] GAO-01-289.
[7] GAO-01-544T.
