TELECOMMUNICATIONS 

GSA Has Made Progress 

Planning for a New 

Governmentwide Program, 

But Critical Issues Remain 

Statement of Linda D. Koontz, Director 

Information Management Issues 

United States Government Accountability Office

GAO Testimony

Before the Committee on Government 

Reform, House of Representatives 

For Release on Delivery 

Expected at 10 a.m. EST 

March 3, 2005 

GAO-05-361T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-361T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Linda D. 

Koontz (202) 512-6240 or koontzl@gao.gov. 

Highlights of GAO-05-361T, a testimony

before the Committee on Government 

Reform, House of Representatives 

March 3, 2005

TELECOMMUNICATIONS 

GSA Has Made Progress Planning for a 

New Governmentwide Program, But 

Critical Issues Remain 

Since GAO’s testimony in September, GSA has made progress in addressing 

the program’s challenges and our recommendations. GSA has articulated a 

strategy for addressing billing concerns and has plans to complete transition 

planning and guidance for agencies on the identification of service 

inventories by February 2006. It has also drafted performance measures for 

each of its program goals. 

Critically important to the short-term progress of the Networx program are 

three issues that could, if unresolved, affect the ultimate success of the 

program: 

• Contract scope. In commenting on the draft RFP, vendors indicated 

concerns about the potential size of the acquisitions as proposed by 

GSA. Subsequently, GSA doubled the minimum amounts to be bought 

under the Enterprise acquisition and is reexamining certain aspects of 

the acquisitions’ requirements to ensure that they are all necessary. 

• Evaluation criteria. GSA has yet to identify the evaluation criteria and 

share this information with prospective offerors. 

• Traffic volumes. GSA has not yet determined the traffic volumes 

required by agencies at specific locations. Agency officials estimate that 

this information on the government’s needs may not be ready until mid 

to late May 2005, after the final RFP is scheduled to be released. 

These uncertainties represent risks to potential offerors which may, in turn, 

affect the quality of their proposals particularly their ability to offer the best 

prices to the government. In addition, delays in establishing evaluation 

criteria and traffic volumes could affect GSA’s ability to award the contract 

by April 2006 as planned. 

In October 2003, the General 

Services Administration (GSA) 

issued a request for information 

describing its plans for a new 

governmentwide 

telecommunications program 

known as Networx, which is to 

replace expiring contracts. The 

program consists of two 

simultaneous acquisitions: 

Networx Universal, which is to 

provide a full range of national and 

international network services 

across the United States, and 

Networx Enterprise, which is to 

provide agencies with mainly 

Internet-based services with less 

extensive geographic coverage 

In September 2004, GAO testified 

on GSA’s actions to address 

challenges related to this program 

and made recommendations 

intended to improve transition 

planning, performance measures, 

and billing procedures. 

GSA subsequently issued a draft 

request for proposals (RFP) in 

October 2004. In response, the 

telecommunications industry and 

federal agencies provided more 

than 2,500 comments, covering 

technical issues such as the 

inclusion of certain standards and 

more general topics, such as the 

level of small business set-asides. 

GAO was requested to provide a 

progress report on GSA’s planning 

for this program. 
Page 1 GAO-05-361T

I am pleased to participate in the Committee’s hearing on the 

General Services Administration’s (GSA) next generation, 

governmentwide telecommunications acquisition program, which is 

known as Networx. As you know, GSA’s planning for this program is 

taking place within an environment of tremendous change in the 

telecommunications industry, in underlying services and 

technology, and potentially in the regulatory environment. In this 

context, the Networx initiative can be viewed as a significant 

opportunity for federal agencies—GSA’s customers—to acquire and 

apply innovative telecommunications services to improve their 

operations. 

We previously reviewed, at your request, GSA’s initial planning 

efforts for Networx and identified several challenges GSA faced in 

ensuring a successful outcome for the program.1

 In September 2004, 

we testified that GSA had addressed the initial concerns about the 

timing and structure of the Networx acquisition.2

 While work was 

under way to address the challenges related to the need for 

transition plans, an inventory of current services, and effective 

measures of performance and billing procedures, GSA had not yet 

completed its efforts. We made several recommendations to GSA to 

assist it in addressing these challenges. In November, you requested 

that we assess GSA’s progress in addressing the challenges that we 

previously identified, our recommendations, and other outstanding 

issues. My testimony today presents our results to date on these 

topics. 

Results in Brief 

Since we testified in September 2004, GSA has continued to make 

progress in addressing the program’s challenges and our 

recommendations. 

 

1

GAO, Telecommunications: GSA Faces Challenges in Planning for New 

Governmentwide Program, GAO-04-486T (Washington, D.C.: Feb. 26, 2004). 

2

GAO, Telecommunications: GSA Has Made Progress in Planning Governmentwide 

Program But Challenges Remain, GAO-04-1085T (Washington, D.C.: Sep., 15, 2004). 
Page 2 GAO-05-361T

● Transition planning. As we recommended, GSA developed a 

transition time line. It has also recently awarded a contract for 

support in transition planning and expects to develop procedures 

that apply the lessons learned from previous transitions by February 

2006. 

● Inventories. GSA continues to work with agencies to develop 

accurate, detailed inventories of current services to enable an 

effective transition. It is also developing guidance for agencies on 

gathering this information and plans to provide the agencies with 

further training on inventory issues. The guidance is expected to be 

included in the transition management plan scheduled for 

completion in February 2006. 

● Billing issues. In response to our recommendation that GSA develop 

a strategy for addressing billing issues, it has made plans to first, 

attempt to resolve billing issues internally, and second, refer 

unresolved issues to a working group of agency officials. It has also 

begun a long-term effort to identify changes to its current billing 

process. 

● Performance measurement. As we recommended, GSA has drafted 

an initial set of performance measures intended to address the 

program’s eight goals. GSA is continuing to work on these measures 

and plans in order to begin using them in 2006. 

Critically important to the short term progress of the Networx 

program are three issues regarding the requirements underlying the 

Networx acquisitions. These issues could, if unresolved, affect the 

ultimate success of the program: 

● Contract scope. In commenting on the draft RFP, vendors indicated 

concerns about the potential size of the acquisitions as proposed by 

GSA. Subsequently, GSA doubled the minimum amounts to be 

bought under the Enterprise acquisition and is reexamining certain 

aspects of the acquisitions’ requirements to ensure that they are all 

necessary. 

● Evaluation criteria. GSA has yet to identify the evaluation criteria 

and share this information with prospective offerors. 

● Traffic volumes. GSA has not yet determined the traffic volumes 

required by agencies at specific locations. GSA officials currently 

estimate that this information will not be available until mid-to-late 
Page 3 GAO-05-361T

May, even though the final request for proposals is scheduled for 

release on April 1. 

These uncertainties represent risks to potential offerors which may, 

in turn, affect the quality of their proposals, particularly their ability 

to offer the best prices to the government. In addition, delays in 

establishing evaluation criteria and traffic volumes could affect 

GSA’s ability to award the contract by April 2006. 

My remarks today are based on audit work conducted at GSA 

headquarters, where we reviewed program planning documents, 

public presentations, and comments on GSA’s plans. We also 

interviewed program officials and representatives of four vendors 

who provided comments to GSA and we reviewed analyses 

conducted by GSA as well as our previous work on FTS2001 and 

related contracts. We conducted our work in Washington, D.C., and 

Fairfax and Arlington, VA, between December 2004 and February 

2005 in accordance with generally accepted government auditing 

standards. 

Background 

GSA’s Federal Technology Service (FTS) is responsible for ensuring 

that federal agencies have access to the telecommunications 

services and solutions needed to meet mission requirements. 

Currently, GSA uses a series of contracts intended to meet agency 

needs for various telecommunications services. Specifically, it 

awarded two large, governmentwide contracts for long-distance 

services—one to Sprint in December 1998 and one to MCI in 

January 1999—known together as FTS2001. According to GSA, 

federal agencies spent approximately $614 million on FTS2001 

services during fiscal year 2003 and $780 million during fiscal year 

2004. 

Related governmentwide telecommunications services are provided 

through additional GSA contracts: the Federal Wireless 

Telecommunications Service contract and the FTS Satellite Service 

contracts. The wireless contract was awarded in 1996 to provide 
Page 4 GAO-05-361T

wireless telecommunications products and services to all federal 

agencies, authorized federal contractors, and other users such as 

agency-sponsored laboratories. Satellite services are provided 

through a series of contracts for a variety of commercial off-theshelf satellite communications products and services, including 

mobile, fixed, and broadcast services. 

Figure 1: Time Periods for GSA’s Current and Planned Telecommunications Contracts 

GSA has begun the process of replacing all of these expiring 

contracts with a new set of contracts, collectively known as the 

Networx program. In October 2003, GSA released a request for 

information (RFI) that describes its initial strategy for Networx. In 

the request, GSA proposed two indefinite delivery/indefinite 

quantity acquisitions—Networx Universal and Networx Select. 

Awards under the Universal and Select acquisitions were to be 

staggered, with the Select acquisition to be awarded 9 months after 

the Universal acquisition. The Universal acquisition was expected to 

satisfy the requirements for a full range of national and international 

network services and, according to GSA, was intended to ensure the 

continuity of services and prices found under expiring contracts that 

provide broad-ranging services with global geographic coverage. By 
Page 5 GAO-05-361T

contrast, GSA planned to award multiple contracts for a more 

geographically limited set of services under the Select acquisition. 

The services required under these contracts focus on Internet-based 

offerings and related security and management services. This would 

provide agencies with leading-edge services and solutions and less 

extensive geographic and service requirements than Universal. 

GSA has worked with representatives of federal agencies, the 

telecommunications industry, and other interested parties to lay the 

groundwork for the Networx program. Agencies work directly with 

GSA and through the Interagency Management Council (IMC), a 

group of senior federal information resource officials who advise 

GSA on issues related to telecommunications contracts. GSA and 

the IMC have agreed on eight goals for the Networx program that 

include an emphasis on ongoing support and performance-based 

contracts. Table 1 lists each of the program’s goals. 

Table 1. Networx Program Goals 

Goal Description 

Service continuity Contracts should include all services 

currently available under FTS2001 to 

facilitate a smooth transition. 

Competitive prices Prices should be better than that 

available elsewhere in the 

telecommunications marketplace. 

High quality services Contracts should ensure a high quality of 

service throughout the life of the 

contracts by using enforceable 

agreements. 

Full service vendors Vendors should be capable of providing 

a broad array of services and provide 

follow-on services to avoid duplication of 

administrative and contracting costs. 

Alternate sources Agencies should be able to choose from 

a greater number of competing vendors 

that provide new, enhanced services and 

emerging technologies throughout the 

life of the contract. 

Operations support GSA should provide fully integrated 

ordering, billing, and inventory 

management. 

Transition assistance and support Contracts should include provisions that 

facilitate transition coordination and 

support. 
Page 6 GAO-05-361T

Goal Description 

Service continuity Contracts should include all services 

currently available under FTS2001 to 

facilitate a smooth transition. 

Performance-based contracts Contracts should be performance-based 

and include service level agreements 

where possible. 

Source: GSA. 

In our September 2004 testimony, we reported that GSA had made 

progress in planning the acquisition by responding to industry and 

agency concerns over the nine-month lag between the release of the 

Networx acquisitions, the geographic coverage requirements for the 

Universal acquisition, and the number of billing elements that 

vendors were to provide. Specifically, GSA decided to release the 

Universal and Enterprise (the current name for the contract 

formerly called Select) acquisitions simultaneously. It also reduced 

the geographic coverage requirements for the Universal acquisition 

by 76 percent. In addition, through a collaborative effort with the 

IMC and the Industry Advisory Council, GSA reduced the number of 

required billing elements by 62 percent. 

However, we also stated that additional efforts were necessary to 

fully address the management challenges we identified. We 

recommended that GSA finalize and implement processes for 

managing transition efforts, develop measures to monitor program 

performance and a strategy for using them, and develop and 

implement a strategy for resolving agency concerns about the 

usability of billing data. 

GSA released the draft requests for proposals (RFP) for Networx in 

October 2004, providing industry and agencies an additional 

opportunity to comment on the structure and content of the 

Networx acquisition prior to the release of the final RFPs. In 

response, the telecommunications industry and federal agencies 

provided more than 2,500 comments, covering technical issues such 

as the inclusion of certain standards and more general topics, such 

as the level of small business set-asides. 

The draft RFPs were described by GSA as nearly complete versions 

of the final RFPs, which are scheduled to be released on April 1, 
Page 7 GAO-05-361T

2005. According to program officials, GSA provided as much detail 

as possible in the drafts because potential offerors will have only 3 

months to submit proposals once the final RFPs are released. After 

evaluating the submitted proposals, GSA plans to award contracts 

under both acquisitions in April 2006. 

GSA Is Addressing Networx Management Challenges 

Since we testified in September 2004, GSA has continued to make 

progress in addressing the program’s management challenges and 

our recommendations on transition planning, inventory 

development, billing procedures, and performance measures. 

GSA Continues to Plan for Contract Transition 

As we testified previously, adequate transition planning is one of the 

challenges that GSA must address to effectively complete the move 

to Networx. Further, experience demonstrates the need for 

comprehensive transition planning and an effective transition 

strategy. For example, the current FTS2001 contracts got off to a 

rocky start when efforts to transition services to the new contracts 

took more than 24 months, hindering timely achievement of 

program goals. Subsequently, a subgroup of the IMC—the Transition 

Working Group—identified past transition issues and documented 

22 lessons learned, including that the magnitude of the effort was 

not fully appreciated. The working group recommended that the 

findings of the lessons learned effort be used as input to the 

Networx program management strategy and specifications. In 

testimony before you in September 2004, we recommended that 

GSA develop a transition time line and use the lessons learned to 

develop procedures to prevent the reoccurrence of transition 

difficulties. 

In response, GSA has taken steps to begin preparing for the 

transition to the planned Networx contracts. For example, GSA has 

developed a document that defines the transition cost elements and 

identifies how those elements will be allocated to the GSA Networx 

program and its customer agencies and has also developed an 
Page 8 GAO-05-361T

outline of a transition management plan. Also, in response to our 

recommendation regarding a transition time line, GSA developed a 

high-level transition time line that depicts 28 tasks, beginning with 

the development of the document that defines transition cost 

elements and ends with the disconnection of services under the 

FTS2001 contract (transition end). These tasks span the time from 

July 2004 through January 2008. GSA estimates that the transition 

from the FTS2001 contracts to Networx should require at least 18 

months. 

Additional steps are in progress. For example, GSA has begun work 

on the outline of a transition management plan, which is intended to 

be used as a guide by GSA, customer agencies, the Transition 

Working Group, and the contract awardees to facilitate a smooth 

transition. The outline identifies planning steps that agencies should 

undertake and lists the lessons learned from past transitions. GSA 

has also recently awarded a contract for transition planning 

assistance. This contractor is to assist in finalizing the transition 

management plan, including developing procedures to address 

lessons learned as we recommended. The plan is scheduled to be 

finalized in February 2006. If completed as planned, this should 

position GSA to effectively implement the planned transition. 

Collection of Inventory Information is Ongoing 

When we last testified on this program, we noted the importance of 

GSA and its customer agencies having a clear understanding of 

agency service requirements in order to make properly informed 

acquisition planning decisions. This clear understanding comes, at 

least in part, from having an accurate baseline inventory of existing 

services and assets. More specifically, an inventory allows planners 

to make informed judgments based on an accurate analysis of 

current requirements and capabilities, emerging needs that must be 

considered, and the current cost of services. In addition, the 

FTS2001 transition lessons learned document identified the lack of a 

good starting inventory as the cause of problems in a number of 

areas and a contributing factor to the slow start on the FTS2001 

transition. 
Page 9 GAO-05-361T

GSA is addressing the need for inventory information in several 

ways. It first developed an inventory of the services currently used 

by its customers by reviewing the existing contracts, modifications 

to them, and billing information. Then, GSA used the inventory 

information from these sources in acquisition planning, for example, 

to justify GSA’s decision on which services to include in the 

proposed Networx contracts and which to make mandatory. 

In addition, GSA recently asked agencies to provide and verify 

detailed inventory information that includes the geographic 

locations of those services that are used and how much they are 

used. In January, GSA released a preliminary list that identified the 

geographic locations of required services. 

GSA will need to continue to work with its customer agencies to 

gather the even more detailed information that will be needed to 

conduct an effective transition, including the specific location of 

equipment within a room, provisions for accessing the equipment, 

and contact information for personnel authorized to access the 

space. According to the Networx program manager, GSA expects 

agencies to use site plans developed by the incumbent vendors to 

assist in developing this information. In addition, GSA is developing 

guidance for the agencies on gathering this information and plans to 

provide further training to the agencies on inventory issues. This 

guidance, according to GSA, will be included in the transition 

management plan scheduled for completion in February 2006. 

GSA Has Developed a Strategy to Address Billing Issues 

Clear, accurate, and complete billing records are an important 

internal control: they record the detail of each telecommunications 

transaction for later verification and management oversight. 

However, bills and billing systems have been a problem in the 

current generation of FTS programs and continue to be a concern 

for their proposed replacement. Agencies have commented that, in 

the past, billing information they received hampered their efforts to 

reconcile invoices, resulting in hundreds of thousands of dollars of 

additional costs. In testimony before you in September 2004, we 

recommended that GSA develop and implement a strategy for 

addressing the billing data issues raised by its customer agencies. 
Page 10 GAO-05-361T

Under FTS2001, GSA resolved agency billing problems by 

establishing a Billing Issues Team that was responsible for tracking 

issues through to resolution. GSA stated that, for example, due to 

the efforts of this team, it has already altered the way it processes 

the vendor-provided billing data so that it now aligns with agency 

needs. 

In response to our recommendation, GSA officials identified several 

methods for addressing possible billing data issues, including 

● service level agreements that hold the contractors accountable for 

the accuracy of the billing data they provide and 

● a requirement that contractors assign a unique identifier to each 

transaction, which agencies believe will improve both billing and 

inventory management. 

Further, according to GSA officials, it will first attempt to address 

internally any future billing issues raised by customer agencies after 

contract award. Any unresolved issues will be raised to the IMC for 

additional action. 

GSA has also initiated a long-term strategy to address the billing 

process as a whole. In January 2005, GSA issued a RFI that asked 

vendors to identify potential alternatives to the way it currently 

consolidates carrier billing data and provides the data to agencies. 

GSA is considering several billing options, including the option of 

contracting out bill consolidation and the potential costs and 

benefits of those options. The study is a part of a larger GSA effort 

to define the requirements of FTS’s future operating environment. 

GSA Has Developed Draft Performance Measures 

Our research into recommended program and project measurement 

practices highlights the importance of establishing clear measures 

of success to aid acquisition decision making as well as to provide 

the foundation for program management. Such measures define 

what must be done for a project to be acceptable to the 

stakeholders and users affected by it; these measures enable 

measurement of progress and effectiveness in meeting objectives. In 

our testimony before you in September 2004, we recommended that 
Page 11 GAO-05-361T

GSA finalize its efforts to identify measures to evaluate progress 

toward program goals and develop a strategy for using those 

measures for ongoing program management. 

In response, GSA provided the first draft of a Networx strategic 

business plan that lists performance measures for the eight program 

goals previously discussed. (These preliminary measures are listed 

in table 2.) 

Table 2. GSA’s Initial Draft Performance Measures for Networx 

Strategic goal Performance goal Performance measure 

Service continuity: contracts should include all 

services currently available under FTS2001 to 

facilitate a smooth transition 

98% of agency transition orders 

filled without the need for 

contract modification 

Number of modifications compared 

to services transitioned 

Competitive prices: prices should be better than 

those available elsewhere in the 

telecommunications marketplace 

Average prices attained on 

Networx are at least 25% less 

than comparable, negotiated 

commercial prices 

Quarterly price comparison of 

commercial and Networx for like 

services 

High quality service: contracts should ensure a 

high quality of service throughout the life of the 

contracts using enforceable agreements 

95% of all service metrics met 

on an annual basis 

Contractor performance per annual 

service level agreement report 

Full service vendors: vendors should be capable 

of providing a broad array of services and provide 

follow-on services to avoid duplication of 

administrative and contracting costs. 

Awardees deliver 98% of 

services ordered under 

Universal 

Services delivered by transition end

Alternative services: agencies should be able to 

choose from a greater number of competing 

vendors that provide new, enhanced services and 

emerging technologies. 

Awardees can provide 98% of 

mandatory services offered 

under Enterprise 

Transition end 

Transition support: contracts should include 

provisions that facilitate transition coordination 

and support 

98% of services transitioned 

within planned transition period 

Quarterly audit of services that do 

not have disconnects completed 

before contract expiration date 

Performance-based contracts: contracts should 

be performance based and include service level 

agreements where possible 

95% of contracted services 

have metrics 

Audit of contracts at contract award 
Page 12 GAO-05-361T

Strategic goal Performance goal Performance measure 

Operations support: GSA should provide fully 

integrated ordering, billing, and inventory 

management 

Ordering: 90% of orders 

provisioned within standard 

intervals in contract or by firm 

order commitment in project 

plans. No more than 5% annual 

growth in ordering data 

elements. 

Ordering: monthly service level 

agreement compliance report. Data 

elements added annually through 

contract modification 

Billing: 90% of monthly billed 

revenue is without error. No 

more than 5% annual growth in 

data elements for billing 

Billing: monthly service level 

agreement compliance report. Data 

elements added annually through 

contract 

Inventory: inventory audits 

produce at least 95% match 

with agency inventories 

Inventory: annual audits of FTS 

inventory with service order 

completion notices, billing data, and 

downloads from industry partners, 

then comparison with agency 

inventories 

Source: GSA. 

GSA is continuing to work on these measures. For example, the 

draft measures for the operations support goal—which calls for GSA 

to establish integrated ordering, billing, and inventory 

management—address the individual functions without addressing 

the overall management of the services or their integration. GSA 

officials are aware of the need to refine the measures and are 

working to determine how to address integrating ordering, billing, 

and inventory. They stated, however, that this is a longer-term effort 

and will not be resolved by contract award. GSA does not yet have 

an expected completion date for the measures but plans to begin 

using them in 2006. 

Critical Issues Regarding Requirements Have Not Yet Been 

Addressed 

Critically important to the short-term progress of the Networx 

program are three issues that could, if unresolved, affect the 

ultimate success of the program. These issues involve setting the 

scope of the contacts, establishing the criteria against which 

proposals will be evaluated, and determining the traffic volumes 

required by agencies at specific locations. 
Page 13 GAO-05-361T

GSA Has Not Released Information on the Estimated Scope of Networx that Potential 

Offerors Need to Estimate Business Risks 

Federal acquisition regulations require indefinite-quantity contracts 

such as Networx to estimate the minimum and maximum levels of 

goods or services that will be purchased by the government. The 

minimum must be more than a nominal quantity, but it should not 

exceed the amount that the government is fairly certain to order.3

 In 

addition, reasonable minimum quantities provide potential 

competitors with an understanding of what will be required of them 

and allow them to compete on a reasonable basis.4

GSA has not yet estimated contract maximums; it proposed 

minimums in the form of minimum revenue guarantees (MRG) for 

each contract, subsequent to the release of the draft RFP. GSA 

proposed a minimum for the Universal acquisition of $525 million 

for all awardees over the life of the acquisition and a minimum of 

$25 million for all awardees for the life of the Enterprise acquisition. 

According to the Networx program manager, these figures were 

derived by taking 75 percent of the estimated total revenue (less 

fees, taxes, and surcharges) expected under the two acquisitions in 

their first year. The total was then allocated between the two 

acquisitions based on estimates of the relative level of business 

during that first year. He added that GSA was purposefully 

conservative in defining the minimums for several reasons: 

● it experienced program delays when it did not fulfill the MRGs as 

fast as originally estimated on the FTS 2001 contract, 

● it was unsure how much agencies will use the Enterprise contracts 

and did not want to risk being unable to recover the MRGs within 

the 4-year base period of the contract, and 

● vendors are aware of the overall level of revenue generated by 

FTS2001 which should provide them with an indication of the scope 

of the new acquisitions, regardless of the size of any MRGs. 

 

3

 FAR 16.504, 48 C.F.R. 16.504 

4

 B-244710, Nov. 13, 1991; and B-291185, Nov. 8, 2002. 
Page 14 GAO-05-361T

In commenting on the draft RFP, vendors expressed concerns about 

the potential size of the acquisitions as proposed by GSA. In 

addition to noting the absence of maximum amounts, vendors 

commented on: 

● uncertainty over how business will be allocated between the two 

acquisitions and the number of awards to be made under each; 

● the time period during which the MRGs will be paid; and 

● the relatively small size of the Enterprise MRG compared to the 

costs of developing proposals and fulfilling the administrative 

requirements of the contracts. (Administrative requirements in the 

RFP call for the contractors to provide, for example, training, 

management reporting, and systems to perform billing, ordering, 

and other functions.) 

These vendors commented that, because of such uncertainties, they 

have difficulty estimating the revenue potentially available to them. 

This, according to their comments, may cause difficulties in 

developing viable business cases to support proposals, particularly 

on the Enterprise acquisition. Vendors also raised the possibility 

that their proposed prices for the Enterprise acquisition would need 

to be raised to account for the risk of not recovering initial costs. 

Subsequently, GSA took several actions. Specifically, it recently 

raised the MRG for Enterprise to $50 million. In addition, according 

to GSA officials, GSA is also reexamining the acquisitions’ 

requirements to ensure that they are all necessary. Finally, the 

program manager indicated that maximum amounts would be 

included in the final RFP. 

Establishing the required maximums should help offerors determine 

the potential size of the contracts; however, until GSA fully resolves 

the issues surrounding the Enterprise MRGs and administrative 

requirements, uncertainty about contract requirements could result 

in proposals that limit the government’s ability to leverage its buying 

power and obtain necessary services at favorable prices. 
Page 15 GAO-05-361T

GSA Has Not Finalized its Evaluation Criteria for Networx Proposals 

Federal acquisition regulations require that, when an agency plans 

to base award decisions on factors other than price, it must describe 

in its solicitation: 

● all evaluation factors and significant subfactors that will affect 

contract award and their relative importance and 

● whether all evaluation factors other than cost or price, when 

combined, are significantly more important than, approximately 

equal to, or significantly less important than cost or price.5

The draft Networx RFP released by GSA did not include information 

on the evaluation criteria GSA planned to use. According to the 

Networx program manager, GSA thought it would be premature to 

release the evaluation criteria at that time, given its state of 

development. He added that GSA plans to identify the necessary 

evaluation criteria in time to include them in the final RFP. 

In commenting on the draft RFP, vendors asked that GSA should 

make the evaluation criteria available to them in draft form. For 

example, one vendor commented that the evaluation criteria and 

other instructions to offerors drive the strategy and framework for 

technical and business offers. The earlier the service provider 

community receives such information, the more time can be spent 

on refining offers and arriving at the solution set that provides the 

best value to the government. 

While GSA’s approach will fulfill FAR requirements, it is 

inconsistent with the broader strategy for Networx, which has 

featured several opportunities for interested parties to review 

different aspects of the program and comment on them; public 

forums, the October 2003 RFI, and the October 2004 draft RFP. 

Because the selection criteria will receive limited outside input and 

vendors have only a 3-month time period to prepare proposals, GSA 

risks delaying contract awards should any unanticipated concerns 

 

5

 FAR 15.101-1, 48 C.F.R. 15.101-1 
Page 16 GAO-05-361T

arise that require it to revise the criteria. In addition, continued 

uncertainty about the criteria could affect the quality of the 

proposals received in response to the Networx RFPs. 

Information on Traffic Volumes May Be Delayed 

As previously indicated, an accurate inventory of current services is 

critical to defining the government’s requirements for Networx. The 

inventory should identify the level of services needed at each 

location (traffic volumes) to allow offerors to assess the 

government’s requirements and submit a proposal that accurately 

reflects those requirements. Further, information on the level of 

service needed at each location is necessary for GSA to ensure 

achievement of the goal of service continuity, which requires all 

services currently available under FTS2001 be included in the 

Networx acquisition. 

GSA has yet to finalize its assessment of the volume of traffic that 

will be necessary at each location. In January, GSA released a 

preliminary list of the locations to which offerors must provide 

services under the Universal acquisition to ensure continuity of 

existing services. GSA provided the list to allow potential offerors to 

begin assessing how they can meet the government’s needs. 

However, according to the Networx program manager, the 

additional analysis needed to finalize traffic volumes has not been 

completed due to delays in developing an underlying software 

system. He estimated that the traffic volumes would not be available 

until mid-to-late May. 

Since this information is critical to developing proposals, delays in 

providing this information to potential offerors further diminishes 

the time frames they have to respond to the RFP and may ultimately 

affect the quality of their proposals. Further, if GSA decides to 

provide offerors with additional time to prepare and submit 

proposals, it could ultimately delay GSA’s ability to award contracts 

by April 2006. 
Page 17 GAO-05-361T

In summary, since our testimony in September, GSA has made 

progress in addressing the management issues we previously 

identified, as well as our previous recommendations. However, 

several critical issues present significant short-term hurdles to 

GSA’s timely achievement of the program’s goals. GSA has not yet 

fully resolved issues concerning the MRGs, including determining 

the validity of administrative requirements. In addition, less than 

one month before the scheduled release of the final RFP, GSA has 

yet to finalize its assessment of traffic volumes and to share 

evaluation criteria with potential offerors. Resolving these issues 

will be a significant challenge for GSA considering the tight 

schedule it has outlined. However, if these issues are not resolved 

promptly, GSA risks limiting its ability to deliver improved services 

to its customer agencies at favorable prices. 

Mr. Chairman, this concludes my statement. I would be pleased to 

answer any questions from you or other members of the Committee. 

Contacts and Acknowledgements 

Should you have any questions about this testimony, please contact 

me by e-mail at koontzl@gao.gov or James Sweetman at 

sweetmanj@gao.gov. We can also be reached at (202) 512-6240 and 

(202) 512-3347, respectively. Other major contributors to this 

testimony were Jamey Collins, Nancy Glover, and Nicholas Marinos. 

310728 
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
Page 18 GAO-05-361T

GAO’s Mission 

The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting 

its constitutional responsibilities and to help improve the 

performance and accountability of the federal government for the 

American people. GAO examines the use of public funds; evaluates 

federal programs and policies; and provides analyses, 

recommendations, and other assistance to help Congress make 

informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony 

The fastest and easiest way to obtain copies of GAO documents at 

no cost is through GAO’s Web site (www.gao.gov). Each weekday, 

GAO posts newly released reports, testimony, and correspondence 

on its Web site. To have GAO e-mail you a list of newly posted 

products every afternoon, go to www.gao.gov and select “Subscribe 

to Updates.” 

Order by Mail or Phone 

The first copy of each printed report is free. Additional copies are $2 

each. A check or money order should be made out to the 

Superintendent of Documents. GAO also accepts VISA and 

Mastercard. Orders for 100 or more copies mailed to a single 

address are discounted 25 percent. Orders should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by phone: 

voice: (202) 512-6000 

TDD: (202) 512-2537 

fax: (202) 512-6061 
Page 19 GAO-05-361T

To Report Fraud, Waste, and Abuse in Federal Programs 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Congressional Relations 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-

4400 U.S. Government Accountability Office, 441 G Street NW, 

Room 7125 Washington, D.C. 20548 

Public Affairs 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-

4800 U.S. Government Accountability Office, 441 G Street NW, 

Room 7149 Washington, D.C. 20548