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96–747 PDF 2004

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

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

DOUG OSE, California

RON LEWIS, Kentucky

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

TIM MURPHY, Pennsylvania

MICHAEL R. TURNER, Ohio

JOHN R. CARTER, Texas

MARSHA BLACKBURN, Tennessee

PATRICK J. TIBERI, Ohio

KATHERINE HARRIS, Florida

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

BETTY MCCOLLUM, Minnesota

———

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

(III)

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

(1)

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 enVerDate 11-MAY-2000 13:13 Dec 01, 2004 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\96747.TXT HGOVREF1 PsN: HGOVREF1
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vironment. 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 colVerDate 11-MAY-2000 13:13 Dec 01, 2004 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 D:\DOCS\96747.TXT HGOVREF1 PsN: HGOVREF1
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leagues, 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:]

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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.

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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:]

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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

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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:]

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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?

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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.

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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?

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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.

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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?

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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

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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.

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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

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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 transVerDate 11-MAY-2000 13:13 Dec 01, 2004 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 D:\DOCS\96747.TXT HGOVREF1 PsN: HGOVREF1
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formations. 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:]

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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.

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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.

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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:]

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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 largescale 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

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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:]

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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 soonto-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

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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:]

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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 speVerDate 11-MAY-2000 13:13 Dec 01, 2004 Jkt 000000 PO 00000 Frm 00084 Fmt 6633 Sfmt 6633 D:\DOCS\96747.TXT HGOVREF1 PsN: HGOVREF1
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cialized 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 compaVerDate 11-MAY-2000 13:13 Dec 01, 2004 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 D:\DOCS\96747.TXT HGOVREF1 PsN: HGOVREF1
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nies 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:]

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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.

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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

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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

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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 appliVerDate 11-MAY-2000 13:13 Dec 01, 2004 Jkt 000000 PO 00000 Frm 00101 Fmt 6633 Sfmt 6633 D:\DOCS\96747.TXT HGOVREF1 PsN: HGOVREF1
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cations, 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.

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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

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tions 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

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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:]

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