GSA to extend Networx reimbursement deadline

By Jason Miller
Executive Editor
Federal News Radio

The General Services Administration will announce soon that it is giving agencies another year to submit their plans to transition to the Networx telecommunications contract and receive reimbursement for all costs.

Industry sources and GSA confirmed that the agency sent out a memo to the five Networx carriers stating that 41 agencies requested and received a 12-month extension to Aug. 31, 2011, and another agency is awaiting approval for the extension.

This is a significant about-face for GSA. Agency officials have said time and again that Aug. 31, 2010 was a drop dead date for customer departments to develop their transition plans and receive reimbursement from GSA. After this date, agencies would have to pay for the transition themselves.


GSA has about $111 million in the Networx transition fund to pay for agency costs. GSA’s Richard Williams, director of Networx Transition, said about 10 percent of the fund has been dispersed and the agency is processing another 13 percent in claims.

“We all knew that agencies weren’t going to make upcoming deadline,” said one industry source, who requested anonymity because GSA had not yet made their decision public. “The question was what was GSA going to do? All five carriers spoke to GSA about it. The problem is a lack of ownership and leadership.”

Another industry source said agencies are making progress, but this extension is a consequence of more than two years of lethargic attention and efforts.

In November 2009, GSA extended the deadline the first time by four months. At that time, Karl Krumbholz, GSA’s director of the Office of Network Services Program in the Federal Acquisition Service, said agencies requested the extra four months and GSA, working with the Interagency Management Council (IMC), decided on the extension through August.

This latest extension also means the government will continue to lose more than $18 million a month for all those agencies still using the current FTS2001 contract.

The Office of Management and Budget also encouraged agencies in May to meet the Aug. 31 deadline, and there have been several meeting of the Chief Information Officer’s Council where Networx was the main topic of discussion.

Repeated requests to GSA for comment on the extension have not been returned as Krumbholz was on vacation.

An OMB spokeswoman deferred all comments about Networx to GSA as well.

The latest decision by GSA received a cold welcome from Capitol Hill.

“Senator Lieberman has repeatedly expressed frustration with the slow modernization of federal agency telecommunications operations,” said Leslie Phillips, the Senate Homeland Security and Governmental Affairs spokeswoman. “Ongoing delays in the contracting and transition process add to the cost of the business of government and are not an efficient way to manage taxpayer dollars. The Senator, however, recognizes that this is the most extensive transition of telecommunications services the government has ever undertaken and remains hopeful that the transition will be complete by the June 2011 deadline.”

Congressman Edolphus Towns (D-N.Y.), chairman of the Oversight and Government Reform Committee, said the delays are putting the government at risk and he wants to force the issue.

“I am extremely disappointed with the continued foot dragging by some federal agencies in the Networx transition,” Towns said in an e-mailed comment to Federal News Radio. “The failure to effectively manage this transition is costing taxpayers $22 million a month. I will continue to insist that the federal government become better stewards of taxpayer dollars. To this end, I intend to introduce legislation soon that will require agencies to complete the transition before the expiration of the current bridge and crossover contracts. ”

GSA reports on its Networx website that almost 65 percent of all transitions are completed. The first industry source, however, said that number is misleading.

“GSA counts all units of telecom equally so a prepaid calling card counts the same as 10 gig wavelength, and they are not the same,” the source said. “Transition has been largely voice services so far, which are much easier to move from one network to another than data.”

The source estimates about 77 percent of transition spending still needs to be completed, and it is up to four times more complex to move data than voice.

Many of the large agencies are in making awards or reviewing bids, but the one big outlier is the Defense Department. DoD has made its award for voice, but not for virtual private network or for private line service. Sources say that is the largest request for proposal remaining.

There are several outstanding questions that come from GSA’s decision to extend the reimbursement timeline:

  • Will GSA extend for a third time the current FTS2001 contract? And if so, for how long?
  • If GSA extends the FTS2001 contract, how will they do it? Sole source to each of the FTS2001 vendors or will they issue a RFP?

The current FTS2001 contracts expire by June 2011. GSA said during a May hearing that it would likely have to extend those contracts because agencies were moving too slowly.

Sources say the problem with the Networx transition remains the same–agencies have no reason to make this a priority, especially if GSA continues to extend deadlines.

“There is no change in the process, no change in the program and no penalties for doing what they need to do,” the first source said. “GSA’s fees are not going up and Networx pricing is not going up. So now agencies have another 8-to-10 months to work on other high priority activities and then come back and work on this when the deadline gets close again.”

The industry source said GSA should take the same tact it did with the Washington Interagency Telecommunications Services (WITS) 3 contract.

As transition slowed around WITS, GSA told agencies they had a year to make the transition or the prices they pay for services would increase dramatically.

“That would be something that would scare any procurement officer, going from a highly negotiated price structure to a tariff structure that includes a massive increase in price,” the source said. “GSA’s WITS team did the inventory, wrote the statement of requirements, sent them to vendors and made a recommendation to agencies. All the pre-work was done by GSA.”

The source added that this idea was brought to the attention of GSA, but it was not implemented. To GSA’s credit, they have offered to help agencies in anyway necessary to help speed up the transition, and several smaller agencies have taken advantage of the offer.

The source also said the OMB is not taking an active enough role in pressuring agencies to complete the transition in short order.

“I would love to see OMB mandate transition to a specific date then look at GSA and ask how they are enabling agencies to do it,” the source said. “Without a threat or impetus to move, there is no reason to broadly accept GSA’s proposal for help.”

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