Telecommunications
GSA Has Made Progress Planning for a New Governmentwide Program, But Critical Issues Remain Gao ID: GAO-05-361T March 3, 2005In October 2003, the General Services Administration (GSA) issued a request for information describing its plans for a new governmentwide telecommunications program known as Networx, which is to replace expiring contracts. The program consists of two simultaneous acquisitions: Networx Universal, which is to provide a full range of national and international network services across the United States, and Networx Enterprise, which is to provide agencies with mainly Internet-based services with less extensive geographic coverage In September 2004, GAO testified on GSA's actions to address challenges related to this program and made recommendations intended to improve transition planning, performance measures, and billing procedures. GSA subsequently issued a draft request for proposals (RFP) in October 2004. In response, the telecommunications industry and federal agencies provided more than 2,500 comments, covering technical issues such as the inclusion of certain standards and more general topics, such as the level of small business set-asides. GAO was requested to provide a progress report on GSA's planning for this program.
Since GAO's testimony in September, GSA has made progress in addressing the program's challenges and our recommendations. GSA has articulated a strategy for addressing billing concerns and has plans to complete transition planning and guidance for agencies on the identification of service inventories by February 2006. It has also drafted performance measures for each of its program goals. Critically important to the short-term progress of the Networx program are three issues that could, if unresolved, affect the ultimate success of the program. Contract scope: In commenting on the draft RFP, vendors indicated concerns about the potential size of the acquisitions as proposed by GSA. Subsequently, GSA doubled the minimum amounts to be bought under the Enterprise acquisition and is reexamining certain aspects of the acquisitions' requirements to ensure that they are all necessary. Evaluation criteria: GSA has yet to identify the evaluation criteria and share this information with prospective offerors. Traffic volumes: GSA has not yet determined the traffic volumes required by agencies at specific locations. Agency officials estimate that this information on the government's needs may not be ready until mid to late May 2005, after the final RFP is scheduled to be released. These uncertainties represent risks to potential offerors which may, in turn, affect the quality of their proposals particularly their ability to offer the best prices to the government. In addition, delays in establishing evaluation criteria and traffic volumes could affect GSA's ability to award the contract by April 2006 as planned.
GAO-05-361T, Telecommunications: GSA Has Made Progress Planning for a New Governmentwide Program, But Critical Issues Remain
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United States Government Accountability Office:
GAO:
Testimony:
Before the Committee on Government Reform, House of Representatives:
For Release on Delivery :
Expected at 10 a.m. EST March 3, 2005:
Telecommunications:
GSA Has Made Progress Planning for a New Governmentwide Program, But
Critical Issues Remain:
Statement of Linda D. Koontz, Director:
Information Management Issues:
GAO-05-361T:
GAO Highlights:
Highlights of GAO-05-361T, a testimony before the Committee on
Government Reform, House of Representatives
Why GAO Did This Study:
In October 2003, the General Services Administration (GSA) issued a
request for information describing its plans for a new governmentwide
telecommunications program known as Networx, which is to replace
expiring contracts. The program consists of two simultaneous
acquisitions: Networx Universal, which is to provide a full range of
national and international network services across the United States,
and Networx Enterprise, which is to provide agencies with mainly
Internet-based services with less extensive geographic coverage
In September 2004, GAO testified on GSA‘s actions to address challenges
related to this program and made recommendations intended to improve
transition planning, performance measures, and billing procedures.
GSA subsequently issued a draft request for proposals (RFP) in October
2004. In response, the telecommunications industry and federal agencies
provided more than 2,500 comments, covering technical issues such as
the inclusion of certain standards and more general topics, such as the
level of small business set-asides.
GAO was requested to provide a progress report on GSA‘s planning for
this program.
What GAO Found:
Since GAO‘s testimony in September, GSA has made progress in addressing
the program‘s challenges and our recommendations. GSA has articulated a
strategy for addressing billing concerns and has plans to complete
transition planning and guidance for agencies on the identification of
service inventories by February 2006. It has also drafted performance
measures for each of its program goals.
Critically important to the short-term progress of the Networx program
are three issues that could, if unresolved, affect the ultimate success
of the program:
* Contract scope. In commenting on the draft RFP, vendors indicated
concerns about the potential size of the acquisitions as proposed by
GSA. Subsequently, GSA doubled the minimum amounts to be bought under
the Enterprise acquisition and is reexamining certain aspects of the
acquisitions‘ requirements to ensure that they are all necessary.
* Evaluation criteria. GSA has yet to identify the evaluation criteria
and share this information with prospective offerors.
* Traffic volumes. GSA has not yet determined the traffic volumes
required by agencies at specific locations. Agency officials estimate
that this information on the government‘s needs may not be ready until
mid to late May 2005, after the final RFP is scheduled to be released.
These uncertainties represent risks to potential offerors which may, in
turn, affect the quality of their proposals particularly their ability
to offer the best prices to the government. In addition, delays in
establishing evaluation criteria and traffic volumes could affect GSA‘s
ability to award the contract by April 2006 as planned.
www.gao.gov/cgi-bin/getrpt?GAO-05-361T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Linda D. Koontz (202)
512-6240 or koontzl@gao.gov.
[End of section]
I am pleased to participate in the Committee's hearing on the General
Services Administration's (GSA) next generation, governmentwide
telecommunications acquisition program, which is 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 federal agencies--GSA's customers--to
acquire and apply innovative telecommunications services to improve
their operations.
We previously reviewed, at your request, GSA's initial planning efforts
for Networx and identified several challenges GSA faced in ensuring a
successful outcome for the program.[Footnote 1] In September 2004, we
testified that GSA had addressed the initial concerns about the timing
and structure of the Networx acquisition.[Footnote 2] While work was
under way to address the challenges related to the need for transition
plans, an inventory of current services, and effective measures of
performance and billing procedures, GSA had not yet completed its
efforts. We made several recommendations to GSA to assist it in
addressing these challenges. In November, you requested that we assess
GSA's progress in addressing the challenges that we previously
identified, our recommendations, and other outstanding issues. My
testimony today presents our results to date on these topics.
Results in Brief:
Since we testified in September 2004, GSA has continued to make
progress in addressing the program's challenges and our recommendations.
* Transition planning. As we recommended, GSA developed a transition
time line. It has also recently awarded a contract for support in
transition planning and expects to develop procedures that apply the
lessons learned from previous transitions by February 2006.
* Inventories. GSA continues to work with agencies to develop accurate,
detailed inventories of current services to enable an effective
transition. It is also developing guidance for agencies on gathering
this information and plans to provide the agencies with further
training on inventory issues. The guidance is expected to be included
in the transition management plan scheduled for completion in February
2006.
* Billing issues. In response to our recommendation that GSA develop a
strategy for addressing billing issues, it has made plans to first,
attempt to resolve billing issues internally, and second, refer
unresolved issues to a working group of agency officials. It has also
begun a long-term effort to identify changes to its current billing
process.
* Performance measurement. As we recommended, GSA has drafted an
initial set of performance measures intended to address the program's
eight goals. GSA is continuing to work on these measures and plans in
order to begin using them in 2006.
Critically important to the short term progress of the Networx program
are three issues regarding the requirements underlying the Networx
acquisitions. These issues could, if unresolved, affect the ultimate
success of the program:
* Contract scope. In commenting on the draft RFP, vendors indicated
concerns about the potential size of the acquisitions as proposed by
GSA. Subsequently, GSA doubled the minimum amounts to be bought under
the Enterprise acquisition and is reexamining certain aspects of the
acquisitions' requirements to ensure that they are all necessary.
* Evaluation criteria. GSA has yet to identify the evaluation criteria
and share this information with prospective offerors.
* Traffic volumes. GSA has not yet determined the traffic volumes
required by agencies at specific locations. GSA officials currently
estimate that this information will not be available until mid-to-late
May, even though the final request for proposals is scheduled for
release on April 1.
These uncertainties represent risks to potential offerors which may, in
turn, affect the quality of their proposals, particularly their ability
to offer the best prices to the government. In addition, delays in
establishing evaluation criteria and traffic volumes could affect GSA's
ability to award the contract by April 2006.
My remarks today are based on audit work conducted at GSA headquarters,
where we reviewed program planning documents, public presentations, and
comments on GSA's plans. We also interviewed program officials and
representatives of four vendors who provided comments to GSA and we
reviewed analyses conducted by GSA as well as our previous work on
FTS2001 and related contracts. We conducted our work in Washington,
D.C., and Fairfax and Arlington, VA, between December 2004 and February
2005 in accordance with generally accepted government auditing
standards.
Background:
GSA's Federal Technology Service (FTS) is responsible for ensuring that
federal agencies have access to the telecommunications services and
solutions needed to meet mission requirements. Currently, GSA uses a
series of contracts intended to meet agency needs for various
telecommunications services. Specifically, it awarded two large,
governmentwide contracts for long-distance services--one to Sprint in
December 1998 and one to MCI in January 1999--known together as
FTS2001. According to GSA, federal agencies spent approximately $614
million on FTS2001 services during fiscal year 2003 and $780 million
during fiscal year 2004.
Related governmentwide telecommunications services are provided through
additional 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 such as agency-sponsored laboratories.
Satellite services are provided through a series of contracts for a
variety of commercial off-the-shelf satellite communications products
and services, including mobile, fixed, and broadcast services.
Figure 1: Time Periods for GSA's Current and Planned Telecommunications
Contracts:
[See PDF for image]
[End of figure]
GSA has begun the process of replacing all of these expiring contracts
with a new set of contracts, collectively known as the Networx program.
In October 2003, GSA released a request for information (RFI) that
describes its initial strategy for Networx. In the request, GSA
proposed two indefinite delivery/indefinite quantity acquisitions--
Networx Universal and Networx Select. Awards under the Universal and
Select acquisitions were to be staggered, with the Select acquisition
to be awarded 9 months after the Universal acquisition. The Universal
acquisition was expected to satisfy the requirements for a full range
of national and international network services and, according to GSA,
was intended to ensure the continuity of services and prices found
under expiring contracts that provide broad-ranging services with
global geographic coverage. By contrast, GSA planned to award multiple
contracts for a more geographically limited set of services under the
Select acquisition. The services required under these contracts focus
on Internet-based offerings and related security and management
services. This would provide agencies with leading-edge services and
solutions and less extensive geographic and service requirements than
Universal.
GSA has worked with representatives of federal agencies, the
telecommunications industry, and other interested parties to lay the
groundwork for the Networx program. Agencies work directly with GSA and
through the Interagency Management Council (IMC), a group of senior
federal information resource officials who advise GSA on issues related
to telecommunications contracts. GSA and the IMC have agreed on eight
goals for the Networx program that include an emphasis on ongoing
support and performance-based contracts. Table 1 lists each of the
program's goals.
Table 1: Networx Program Goals:
Goal: Service continuity;
Description: Contracts should include all services currently available
under FTS2001 to facilitate a smooth transition.
Goal: Competitive prices;
Description: Prices should be better than that available elsewhere in
the telecommunications marketplace.
Goal: High quality services;
Description: Contracts should ensure a high quality of service
throughout the life of the contracts by using enforceable agreements.
Goal: Full service vendors;
Description: Vendors should be capable of providing a broad array of
services and provide follow-on services to avoid duplication of
administrative and contracting costs.
Goal: Alternate sources;
Description: Agencies should be able to choose from a greater number of
competing vendors that provide new, enhanced services and emerging
technologies throughout the life of the contract.
Goal: Operations support;
Description: GSA should provide fully integrated ordering, billing, and
inventory management.
Goal: Transition assistance and support;
Description: Contracts should include provisions that facilitate
transition coordination and support.
Goal: Performance-based contracts;
Description: Contracts should be performance-based and include service
level agreements where possible.
Source: GSA.
[End of table]
In our September 2004 testimony, we reported that GSA had made progress
in planning the acquisition by responding to industry and agency
concerns over the nine-month lag between the release of the Networx
acquisitions, the geographic coverage requirements for the Universal
acquisition, and the number of billing elements that vendors were to
provide. Specifically, GSA decided to release the Universal and
Enterprise (the current name for the contract formerly called Select)
acquisitions simultaneously. It also reduced the geographic coverage
requirements for the Universal acquisition by 76 percent. In addition,
through a collaborative effort with the IMC and the Industry Advisory
Council, GSA reduced the number of required billing elements by 62
percent.
However, we also stated that additional efforts were necessary to fully
address the management challenges we identified. We recommended that
GSA finalize and implement processes for managing transition efforts,
develop measures to monitor program performance and a strategy for
using them, and develop and implement a strategy for resolving agency
concerns about the usability of billing data.
GSA released the draft requests for proposals (RFP) for Networx in
October 2004, providing industry and agencies an additional opportunity
to comment on the structure and content of the Networx acquisition
prior to the release of the final RFPs. In response, the
telecommunications industry and federal agencies provided more than
2,500 comments, covering technical issues such as the inclusion of
certain standards and more general topics, such as the level of small
business set-asides.
The draft RFPs were described by GSA as nearly complete versions of the
final RFPs, which are scheduled to be released on April 1, 2005.
According to program officials, GSA provided as much detail as possible
in the drafts because potential offerors will have only 3 months to
submit proposals once the final RFPs are released. After evaluating the
submitted proposals, GSA plans to award contracts under both
acquisitions in April 2006.
GSA Is Addressing Networx Management Challenges:
Since we testified in September 2004, GSA has continued to make
progress in addressing the program's management challenges and our
recommendations on transition planning, inventory development, billing
procedures, and performance measures.
GSA Continues to Plan for Contract Transition:
As we testified previously, adequate transition planning is one of the
challenges that GSA must address to effectively complete the move to
Networx. Further, experience demonstrates the need for comprehensive
transition planning and an effective transition strategy. For example,
the current FTS2001 contracts got off to a rocky start when efforts to
transition services to the new contracts took more than 24 months,
hindering timely achievement of program goals. Subsequently, a subgroup
of the IMC--the Transition Working Group--identified past transition
issues and documented 22 lessons learned, including that the magnitude
of the effort was not fully appreciated. The working group recommended
that the findings of the lessons learned effort be used as input to the
Networx program management strategy and specifications. In testimony
before you in September 2004, we recommended that GSA develop a
transition time line and use the lessons learned to develop procedures
to prevent the reoccurrence of transition difficulties.
In response, GSA has taken steps to begin preparing for the transition
to the planned Networx contracts. For example, GSA has developed a
document that defines the transition cost elements and identifies how
those elements will be allocated to the GSA Networx program and its
customer agencies and has also developed an outline of a transition
management plan. Also, in response to our recommendation regarding a
transition time line, GSA developed a high-level transition time line
that depicts 28 tasks, beginning with the development of the document
that defines transition cost elements and ends with the disconnection
of services under the FTS2001 contract (transition end). These tasks
span the time from July 2004 through January 2008. GSA estimates that
the transition from the FTS2001 contracts to Networx should require at
least 18 months.
Additional steps are in progress. For example, GSA has begun work on
the outline of a transition management plan, which is intended to be
used as a guide by GSA, customer agencies, the Transition Working
Group, and the contract awardees to facilitate a smooth transition. The
outline identifies planning steps that agencies should undertake and
lists the lessons learned from past transitions. GSA has also recently
awarded a contract for transition planning assistance. This contractor
is to assist in finalizing the transition management plan, including
developing procedures to address lessons learned as we recommended. The
plan is scheduled to be finalized in February 2006. If completed as
planned, this should position GSA to effectively implement the planned
transition.
Collection of Inventory Information is Ongoing:
When we last testified on this program, we noted the importance of GSA
and its customer agencies having a clear understanding of agency
service requirements in order to make properly informed acquisition
planning decisions. This 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. In addition, the FTS2001 transition
lessons learned document identified the lack of a good starting
inventory as the cause of problems in a number of areas and a
contributing factor to the slow start on the FTS2001 transition.
GSA is addressing the need for inventory information in several ways.
It first developed an inventory of the services currently used by its
customers by reviewing the existing contracts, modifications to them,
and billing information. Then, GSA used the inventory information from
these sources in acquisition planning, for example, to justify GSA's
decision on which services to include in the proposed Networx contracts
and which to make mandatory.
In addition, GSA recently asked agencies to provide and verify detailed
inventory information that includes the geographic locations of those
services that are used and how much they are used. In January, GSA
released a preliminary list that identified the geographic locations of
required services.
GSA will need to continue to work with its customer agencies to gather
the even more detailed information that will be needed to conduct an
effective transition, including the specific location of equipment
within a room, provisions for accessing the equipment, and contact
information for personnel authorized to access the space. According to
the Networx program manager, GSA expects agencies to use site plans
developed by the incumbent vendors to assist in developing this
information. In addition, GSA is developing guidance for the agencies
on gathering this information and plans to provide further training to
the agencies on inventory issues. This guidance, according to GSA, will
be included in the transition management plan scheduled for completion
in February 2006.
GSA Has Developed a Strategy to Address Billing Issues:
Clear, accurate, and complete billing records are an important internal
control: they record the detail of each telecommunications transaction
for later verification and management oversight. However, bills and
billing systems have been a problem in the current generation of FTS
programs and continue to be a concern for their proposed replacement.
Agencies have commented that, in the past, billing information they
received hampered their efforts to reconcile invoices, resulting in
hundreds of thousands of dollars of additional costs. In testimony
before you in September 2004, we recommended that GSA develop and
implement a strategy for addressing the billing data issues raised by
its customer agencies.
Under FTS2001, GSA resolved agency billing problems by establishing a
Billing Issues Team that was responsible for tracking issues through to
resolution. GSA stated that, for example, due to the efforts of this
team, it has already altered the way it processes the vendor-provided
billing data so that it now aligns with agency needs.
In response to our recommendation, GSA officials identified several
methods for addressing possible billing data issues, including:
* service level agreements that hold the contractors accountable for
the accuracy of the billing data they provide and:
* a requirement that contractors assign a unique identifier to each
transaction, which agencies believe will improve both billing and
inventory management.
Further, according to GSA officials, it will first attempt to address
internally any future billing issues raised by customer agencies after
contract award. Any unresolved issues will be raised to the IMC for
additional action.
GSA has also initiated a long-term strategy to address the billing
process as a whole. In January 2005, GSA issued a RFI that asked
vendors to identify potential alternatives to the way it currently
consolidates carrier billing data and provides the data to agencies.
GSA is considering several billing options, including the option of
contracting out bill consolidation and the potential costs and benefits
of those options. The study is a part of a larger GSA effort to define
the requirements of FTS's future operating environment.
GSA Has Developed Draft Performance Measures:
Our research into recommended program and project measurement practices
highlights the importance of establishing clear measures of success to
aid acquisition decision making as well as to provide the foundation
for program management. Such measures define what must be done for a
project to be acceptable to the stakeholders and users affected by it;
these measures enable measurement of progress and effectiveness in
meeting objectives. In our testimony before you in September 2004, we
recommended that GSA finalize its efforts to identify measures to
evaluate progress toward program goals and develop a strategy for using
those measures for ongoing program management.
In response, GSA provided the first draft of a Networx strategic
business plan that lists performance measures for the eight program
goals previously discussed. (These preliminary measures are listed in
table 2.)
Table 2: GSA's Initial Draft Performance Measures for Networx:
Strategic goal: Service continuity: contracts should include all
services currently available under FTS2001 to facilitate a smooth
transition;
Performance goal: 98% of agency transition orders filled without the
need for contract modification;
Performance measure: Number of modifications compared to services
transitioned.
Strategic goal: Competitive prices: prices should be better than those
available elsewhere in the telecommunications marketplace;
Performance goal: Average prices attained on Networx are at least 25%
less than comparable, negotiated commercial prices;
Performance measure: Quarterly price comparison of commercial and
Networx for like services.
Strategic goal: High quality service: contracts should ensure a high
quality of service throughout the life of the contracts using
enforceable agreements;
Performance goal: 95% of all service metrics met on an annual basis;
Performance measure: Contractor performance per annual service level
agreement report.
Strategic goal: Full service vendors: vendors should be capable of
providing a broad array of services and provide follow-on services to
avoid duplication of administrative and contracting costs;
Performance goal: Awardees deliver 98% of services ordered under
Universal;
Performance measure: Services delivered by transition end.
Strategic goal: Alternative services: agencies should be able to choose
from a greater number of competing vendors that provide new, enhanced
services and emerging technologies;
Performance goal: Awardees can provide 98% of mandatory services
offered under Enterprise;
Performance measure: Transition end.
Strategic goal: Transition support: contracts should include provisions
that facilitate transition coordination and support;
Performance goal: 98% of services transitioned within planned
transition period;
Performance measure: Quarterly audit of services that do not have
disconnects completed before contract expiration date.
Strategic goal: Performance-based contracts: contracts should be
performance based and include service level agreements where possible;
Performance goal: 95% of contracted services have metrics;
Performance measure: Audit of contracts at contract award.
Strategic goal: Operations support: GSA should provide fully integrated
ordering, billing, and inventory management;
Performance goal: Ordering: 90% of orders provisioned within standard
intervals in contract or by firm order commitment in project plans. No
more than 5% annual growth in ordering data elements;
Performance measure: Ordering: monthly service level agreement
compliance report. Data elements added annually through contract
modification;
Performance goal: Billing: 90% of monthly billed revenue is without
error. No more than 5% annual growth in data elements for billing;
Performance measure: Billing: monthly service level agreement
compliance report. Data elements added annually through contract;
Performance goal: Inventory: inventory audits produce at least 95%
match with agency inventories;
Performance measure: Inventory: annual audits of FTS inventory with
service order completion notices, billing data, and downloads from
industry partners, then comparison with agency inventories.
Source: GSA.
[End of table]
GSA is continuing to work on these measures. For example, the draft
measures for the operations support goal--which calls for GSA to
establish integrated ordering, billing, and inventory management--
address the individual functions without addressing the overall
management of the services or their integration. GSA officials are
aware of the need to refine the measures and are working to determine
how to address integrating ordering, billing, and inventory. They
stated, however, that this is a longer-term effort and will not be
resolved by contract award. GSA does not yet have an expected
completion date for the measures but plans to begin using them in 2006.
Critical Issues Regarding Requirements Have Not Yet Been Addressed:
Critically important to the short-term progress of the Networx program
are three issues that could, if unresolved, affect the ultimate success
of the program. These issues involve setting the scope of the contacts,
establishing the criteria against which proposals will be evaluated,
and determining the traffic volumes required by agencies at specific
locations.
GSA Has Not Released Information on the Estimated Scope of Networx that
Potential Offerors Need to Estimate Business Risks:
Federal acquisition regulations require indefinite-quantity contracts
such as Networx to estimate the minimum and maximum levels of goods or
services that will be purchased by the government. The minimum must be
more than a nominal quantity, but it should not exceed the amount that
the government is fairly certain to order.[Footnote 3] In addition,
reasonable minimum quantities provide potential competitors with an
understanding of what will be required of them and allow them to
compete on a reasonable basis.[Footnote 4]
GSA has not yet estimated contract maximums; it proposed minimums in
the form of minimum revenue guarantees (MRG) for each contract,
subsequent to the release of the draft RFP. GSA proposed a minimum for
the Universal acquisition of $525 million for all awardees over the
life of the acquisition and a minimum of $25 million for all awardees
for the life of the Enterprise acquisition. According to the Networx
program manager, these figures were derived by taking 75 percent of the
estimated total revenue (less fees, taxes, and surcharges) expected
under the two acquisitions in their first year. The total was then
allocated between the two acquisitions based on estimates of the
relative level of business during that first year. He added that GSA
was purposefully conservative in defining the minimums for several
reasons:
* it experienced program delays when it did not fulfill the MRGs as
fast as originally estimated on the FTS 2001 contract,
* it was unsure how much agencies will use the Enterprise contracts and
did not want to risk being unable to recover the MRGs within the 4-year
base period of the contract, and:
* vendors are aware of the overall level of revenue generated by
FTS2001 which should provide them with an indication of the scope of
the new acquisitions, regardless of the size of any MRGs.
In commenting on the draft RFP, vendors expressed concerns about the
potential size of the acquisitions as proposed by GSA. In addition to
noting the absence of maximum amounts, vendors commented on:
* uncertainty over how business will be allocated between the two
acquisitions and the number of awards to be made under each;
* the time period during which the MRGs will be paid; and:
* the relatively small size of the Enterprise MRG compared to the costs
of developing proposals and fulfilling the administrative requirements
of the contracts. (Administrative requirements in the RFP call for the
contractors to provide, for example, training, management reporting,
and systems to perform billing, ordering, and other functions.)
These vendors commented that, because of such uncertainties, they have
difficulty estimating the revenue potentially available to them. This,
according to their comments, may cause difficulties in developing
viable business cases to support proposals, particularly on the
Enterprise acquisition. Vendors also raised the possibility that their
proposed prices for the Enterprise acquisition would need to be raised
to account for the risk of not recovering initial costs.
Subsequently, GSA took several actions. Specifically, it recently
raised the MRG for Enterprise to $50 million. In addition, according to
GSA officials, GSA is also reexamining the acquisitions' requirements
to ensure that they are all necessary. Finally, the program manager
indicated that maximum amounts would be included in the final RFP.
Establishing the required maximums should help offerors determine the
potential size of the contracts; however, until GSA fully resolves the
issues surrounding the Enterprise MRGs and administrative requirements,
uncertainty about contract requirements could result in proposals that
limit the government's ability to leverage its buying power and obtain
necessary services at favorable prices.
GSA Has Not Finalized its Evaluation Criteria for Networx Proposals:
Federal acquisition regulations require that, when an agency plans to
base award decisions on factors other than price, it must describe in
its solicitation:
* all evaluation factors and significant subfactors that will affect
contract award and their relative importance and:
* whether all evaluation factors other than cost or price, when
combined, are significantly more important than, approximately equal
to, or significantly less important than cost or price.[Footnote 5]
The draft Networx RFP released by GSA did not include information on
the evaluation criteria GSA planned to use. According to the Networx
program manager, GSA thought it would be premature to release the
evaluation criteria at that time, given its state of development. He
added that GSA plans to identify the necessary evaluation criteria in
time to include them in the final RFP.
In commenting on the draft RFP, vendors asked that GSA should make the
evaluation criteria available to them in draft form. For example, one
vendor commented that the evaluation criteria and other instructions to
offerors drive the strategy and framework for technical and business
offers. The earlier the service provider community receives such
information, the more time can be spent on refining offers and arriving
at the solution set that provides the best value to the government.
While GSA's approach will fulfill FAR requirements, it is inconsistent
with the broader strategy for Networx, which has featured several
opportunities for interested parties to review different aspects of the
program and comment on them; public forums, the October 2003 RFI, and
the October 2004 draft RFP. Because the selection criteria will receive
limited outside input and vendors have only a 3-month time period to
prepare proposals, GSA risks delaying contract awards should any
unanticipated concerns arise that require it to revise the criteria. In
addition, continued uncertainty about the criteria could affect the
quality of the proposals received in response to the Networx RFPs.
Information on Traffic Volumes May Be Delayed:
As previously indicated, an accurate inventory of current services is
critical to defining the government's requirements for Networx. The
inventory should identify the level of services needed at each location
(traffic volumes) to allow offerors to assess the government's
requirements and submit a proposal that accurately reflects those
requirements. Further, information on the level of service needed at
each location is necessary for GSA to ensure achievement of the goal of
service continuity, which requires all services currently available
under FTS2001 be included in the Networx acquisition.
GSA has yet to finalize its assessment of the volume of traffic that
will be necessary at each location. In January, GSA released a
preliminary list of the locations to which offerors must provide
services under the Universal acquisition to ensure continuity of
existing services. GSA provided the list to allow potential offerors to
begin assessing how they can meet the government's needs. However,
according to the Networx program manager, the additional analysis
needed to finalize traffic volumes has not been completed due to delays
in developing an underlying software system. He estimated that the
traffic volumes would not be available until mid-to-late May.
Since this information is critical to developing proposals, delays in
providing this information to potential offerors further diminishes the
time frames they have to respond to the RFP and may ultimately affect
the quality of their proposals. Further, if GSA decides to provide
offerors with additional time to prepare and submit proposals, it could
ultimately delay GSA's ability to award contracts by April 2006.
In summary, since our testimony in September, GSA has made progress in
addressing the management issues we previously identified, as well as
our previous recommendations. However, several critical issues present
significant short-term hurdles to GSA's timely achievement of the
program's goals. GSA has not yet fully resolved issues concerning the
MRGs, including determining the validity of administrative
requirements. In addition, less than one month before the scheduled
release of the final RFP, GSA has yet to finalize its assessment of
traffic volumes and to share evaluation criteria with potential
offerors. Resolving these issues will be a significant challenge for
GSA considering the tight schedule it has outlined. However, if these
issues are not resolved promptly, GSA risks limiting its ability to
deliver improved services to its customer agencies at favorable prices.
Mr. Chairman, this concludes my statement. I would be pleased to answer
any questions from you or other members of the Committee.
Contacts and Acknowledgements:
Should you have any questions about this testimony, please contact me
by e-mail at koontzl@gao.gov or James Sweetman at sweetmanj@gao.gov. We
can also be reached at (202) 512-6240 and (202) 512-3347, respectively.
Other major contributors to this testimony were Jamey Collins, Nancy
Glover, and Nicholas Marinos.
FOOTNOTES
[1] GAO, Telecommunications: GSA Faces Challenges in Planning for New
Governmentwide Program, GAO-04-486T (Washington, D.C.: Feb. 26, 2004).
[2] GAO, Telecommunications: GSA Has Made Progress in Planning
Governmentwide Program But Challenges Remain, GAO-04-1085T (Washington,
D.C.: Sep., 15, 2004).
[3] FAR 16.504, 48 C.F.R. 16.504
[4] B-244710, Nov. 13, 1991; and B-291185, Nov. 8, 2002.
[5] FAR 15.101-1, 48 C.F.R. 15.101-1
