Testimony 

Before the Committee on Government 

Reform, House of Representatives 

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 10:00 a.m. EST 

Thursday, 

February 26, 2004 

TELECOMMUNICATIONS 

GSA Faces Challenges in 

Planning for New 

Governmentwide Program 

Statement of Linda D. Koontz 

Director, Information Management Issues 

GAO-04-486T 
www.gao.gov/cgi-bin/getrpt?GAO-04-486T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Linda D. 

Koontz at (202) 512-6240 or 

koontzl@gao.gov. 

Highlights of GAO-04-486T, testimony 

before the Committee on Government 

Reform, House of Representatives 

February 26, 2004 

TELECOMMUNICATIONS 

GSA Faces Challenges in Planning for 

New Governmentwide Program 

Over the past year, GSA has acted to ensure that all interested parties—

including industry and agency users—have had a chance to comment on the 

development of the successor to FTS2001 and associated contracts. In its 

planning for the Networx acquisition, GSA cited five goals for the program: 

(1) continuity of telecommunications services, (2) best value, (3) strong 

competition, (4) a broad range of services and providers in a changing 

marketplace, and (5) expanded opportunities for small businesses. To 

achieve this, GSA plans two acquisitions: Networx Universal—broadranging services with global coverage, and Networx Select—leading-edge 

services but more geographically limited. The table below displays GSA’s 

proposed schedule for the two contracts. 

GSA’s proposed schedule for Networx Universal and Networx Select acquisitions as of 

February 2, 2004 

Milestone Networx Universal Networx Select 

Draft RFPa released Spring 2004 Winter 2005 

Draft RFP responses due Summer 2004 Spring 2005 

Final RFP released Fall 2004 Summer 2005 

Final RFP responses due Winter 2004 Fall 2005 

Source selection complete Fall 2005 Summer 2006 

Contract award(s) Winter 2005 Fall 2006 

a

Request for proposals 

Source: GSA 

To take full advantage of the opportunities offered in these new contracts, 

GSA will need to address four key challenges: 

• Ensuring that an adequate inventory of information about existing 

telecommunications services and assets is available, to give planners an 

informed understanding of governmentwide requirements. 

• Establishing specific measures of success to aid acquisition decision 

making and effective program management. 

• Structuring and scheduling the contracts to ensure timely delivery of 

competitively priced telecommunications services that meet agency 

mission needs. 

• Ensuring a smooth transition from the current contracts by initiating 

appropriate implementation planning actions. 

Both leadership from GSA and commitment from stakeholders in resolving 

these issues will be essential to establishing efficient, cost-effective, and 

secure telecommunications services. If this can be achieved, the Networx 

contracts will be optimally positioned to leverage the power and creativity of 

today’s telecommunications marketplace to carry the federal government 

forward well into the 21st century. 

The Genera1 Services 

Administration (GSA) has initiated 

planning for its next-generation 

telecommunications acquisition 

program, known as Networx, 

which will replace the current 

Federal Telecommunications 

System (FTS) 2001 for longdistance and international services. 

It will also replace contracts for 

wireless and satellite 

communications products and 

services. 

Planning for this acquisition is 

occurring within an environment of 

tremendous change—in the 

industry, in underlying services and 

technology, and potentially in the 

regulatory environment. In this 

context, Networx can offer a 

significant opportunity for the 

federal government to flexibly 

acquire telecommunications 

services at competitive rates and 

apply innovative solutions to 

improving agency operations. 

At the request of the committee 

Chairman, GAO is providing an 

overview of acquisition planning 

steps completed to date, along with 

its assessment of challenges facing 

GSA and federal agencies as this 

acquisition proceeds. 
Page 1 GAO-04-486T 

Mr. Chairman and Members of the Committee: 

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

Services Administration’s (GSA) next generation governmentwide 

telecommunications acquisition program, known as Networx. As you 

know, GSA’s planning for this program is taking place within an 

environment of tremendous change—in the telecommunications industry, 

in underlying services and technology, and potentially in the regulatory 

environment. In this context, the Networx initiative can be viewed as a 

significant opportunity for the federal government to flexibly acquire and 

apply innovative telecommunications services offered by industry to 

improve agency operations. As requested, today I will discuss the 

background for this current initiative and provide an overview of the 

acquisition planning activities completed to date. I will also describe four 

challenges that GSA and executive branch agencies will need to address in 

the next few months as planning for this major acquisition proceeds. 

In brief, over the past year, representatives of GSA, federal agencies, the 

Interagency Management Council (IMC), the telecommunications industry, 

and other interested parties have engaged in planning and dialogue over 

the replacement for the current Federal Telecommunications System 

(FTS) 2001 and associated contracts. This replacement acquisition 

program is known as FTS Networx.1

 GSA and the IMC have taken steps to 

ensure that all interested parties have had an opportunity to comment on 

at least a portion of their plans for this major initiative and to help refine 

their acquisition strategy. Nevertheless, significant challenges remain for 

GSA and the IMC to address in the coming months to help ensure a 

successful outcome for a more clearly and fully defined Networx program 

with respect to 

• ensuring that adequate inventory information is available to planners to 

provide an informed understanding of governmentwide requirements; 

• establishing measures of success to aid acquisition decision making and 

enable effective program management; 

• structuring and scheduling the Networx contracts to ensure that federal 

agencies have available to them the competitively priced 

 1

The IMC consists of senior government information resources management officials from 

agencies using FTS 2000. The council provides guidance to GSA officials in administering 

telecommunications contracts. 
Page 2 GAO-04-486T 

telecommunications services they need to support their mission 

objectives; and 

• initiating the implementation planning actions needed to ensure a smooth 

transition from current contracts to Networx. 

My remarks today are based on our previous reviews of GSA’s federal 

telecommunications programs, including implementation of the current 

FTS2001 contracts, as well as research to date into sound 

telecommunications planning and management practices that you recently 

requested. In addition, we reviewed comments submitted by industry and 

federal agencies to a request for information issued by GSA last October to 

provide information to potential industry offerors regarding its Networx 

program plan, and to solicit comments from industry regarding its 

acquisition strategy. We also attended the Industry Advisory Council’s 

February 17, 2004, forum held to obtain additional industry views on the 

Networx program and strategy.2

 We conducted our work in January and 

February 2004, in accordance with generally accepted government 

auditing standards. 

According to GSA, its Federal Technology Service, in conjunction with the 

IMC, is responsible for ensuring that federal agencies have access to the 

telecommunications services and solutions needed to meet mission 

requirements. Its current program to provide long- distance 

telecommunications services—FTS2001—has two goals: to ensure the best 

service and price for the government, and to maximize competition for 

services. 

In implementing this program strategy, GSA awarded two contracts for 

long-distance services—one to Sprint in December 1998 and one to MCI 

WorldCom in January 1999. Under the terms of these contracts, each firm 

was guaranteed minimum revenues of $750 million over the life of the 

contracts, which run for four base years and have four 1-year-extension 

options. If all contract options are exercised, those contracts will expire in 

December 2006 and January 2007, respectively. According to GSA, federal 

 2

The Industry Advisory Council is a broadly based organization of information technology 

professionals representing more than 400 companies nationwide that provide products and 

services to the government. Member firms include telecommunications companies, 

hardware and software providers, systems integrators, and professional services 

companies. 

Background 
Page 3 GAO-04-486T 

agencies spent approximately $614 million on FTS2001 services during 

fiscal year 2003 alone. 

Related governmentwide telecommunications services are provided by 

other GSA contracts: the Federal Wireless Telecommunications Service 

contract and the FTS Satellite Service contracts. The wireless contract 

was awarded in 1996 to provide wireless telecommunications products 

and services to all federal agencies, authorized federal contractors, and 

other users. The satellite services contracts are a series of contracts for a 

variety of commercial off-the-shelf satellite communications products and 

services, including mobile, fixed, and broadcast services. According to GSA, 

these contracts will expire in late 2004 and in 2007, respectively. 

We have periodically reviewed the development and implementation of the 

FTS2001 program and assessed its progress. In March 2001 we reported to 

you on the delays encountered during the government’s efforts to 

transition from the previous FTS 2000 to the FTS2001 contracts, the 

reasons for those delays, and the effects of the delays on meeting FTS2001 

program goals of maximizing competition for services and ensuring best 

service and price.3

 We recommended that GSA take numerous actions to 

facilitate those transition efforts. In April 2001 in testimony before you, we 

reiterated those recommendations and noted that the process of planning 

and managing future telecommunications service acquisition would 

benefit from an accurate and robust inventory of existing 

telecommunications services.4

 Ultimately, GSA acted on our 

recommendations and the transitions were successfully completed. 

GSA is now planning its FTS Networx acquisition program, including the 

awarding of new governmentwide contracts for a broad range of long 

distance and international voice and data communications services, 

wireless services, and satellite telecommunications services. These 

contracts are intended to replace the existing FTS2001, Federal Wireless 

Telecommunications Service, and FTS Satellite Service contracts. GSA 

and the IMC has identified five goals for the Networx acquisition program: 

 3

U.S. General Accounting Office, FTS2001: Transition Challenges Jeopardize Program 

Goals, GAO-01-289 (Washington, D.C.: March 30, 2001). 

4

U.S. General Accounting Office, FTS2001: Contract Transition Delays and Their Impact 

on Program Goals, GAO-01-544T (Washington, D.C.: April 26, 2001). 

GSA’s Networx

Program 

Development Actions 

Are Continuing 
Page 4 GAO-04-486T 

• Meet agency needs for a comprehensive acquisition that provides 

continuity of current telecommunications services and solutions. 

• Obtain best value (lowest prices while maintaining quality of service 

levels) for all services and solutions. 

• Encourage strong competition for the initial contract award(s), and ensure 

continuous competition throughout the life of the program. 

• Respond to the changing marketplace by providing agency access to a 

broad range of services and service providers. 

• Provide expanded opportunities for small businesses. 

To achieve those goals, the program calls for two acquisitions—Networx 

Universal and Networx Select. The Networx Universal contracts are 

expected to satisfy requirements for a full range of national and 

international network services. According to GSA, Networx Universal 

seeks to ensure the continuity of services and prices found under expiring 

contracts that provide broad-ranging service with global geographic 

coverage. GSA expects all Networx Universal offerors to provide a full 

range of voice and data network services, managed networking services 

and solutions, and network access, wireless, and satellite communications 

services. This acquisition is expected to result in multiple contract awards 

to relatively few offerors because few are expected to be able to satisfy 

the geographic coverage and comprehensive service requirements. GSA 

also intends to apply competitive incentives to obtain best value for its 

customer agencies, although those incentives are not yet defined. Further, 

GSA expects to establish minimum revenue guarantees for these 

contracts. 

In contrast, GSA plans to award multiple contracts for a more 

geographically limited set of services under Network Select. GSA generally 

describes these Select contracts as providing agencies with leading edge 

services and solutions with less extensive geographic and service coverage 

than that required by Networx Universal; specific Networx Select service 

requirements have not yet, however, been defined. Details of pricing 

structures and Select service delivery mechanisms are planned to be 

provided in the Networx Select request for proposals, which GSA intends 

to release in the summer of 2005. 

GSA anticipates awarding both the Networx Universal and the Networx 

Select contracts well before the expiration of the FTS2001 contracts. 
Page 5 GAO-04-486T 

Networx Select will be awarded approximately 9 months after Networx 

Universal. Table 1 displays GSA’s schedule for these two acquisitions: 

Table 1: GSA’s proposed schedule for Networx Universal and Networx Select 

acquisitions as of February 2, 2004 

Milestone Networx Universal Networx Select 

Draft RFPa released Spring 2004 Winter 2005 

Draft RFP responses due Summer 2004 Spring 2005 

Final RFP released Fall 2004 Summer 2005 

Final RFP responses due Winter 2004 Fall 2005 

Source selection complete Fall 2005 Summer 2006 

Contract award(s) Winter 2005 Fall 2006 

Source: GSA 

a

Request for proposals 

Notwithstanding the acquisition planning activities completed by GSA and 

the IMC to date, these entities face significant challenges in finalizing their 

program strategy to ensure that Networx is appropriately defined, 

structured, and managed to deliver those telecommunications services and 

solutions that will enable federal agencies to most efficiently and 

effectively meet their mission needs. Specifically, these challenges include: 

• Ensuring that adequate inventory information is available to planners 

to provide an informed understanding of governmentwide requirements. 

• Establishing measures of success to aid acquisition decision-making 

and enable effective program management. 

• Structuring and scheduling the Networx contracts to ensure that federal 

agencies have available to them the competitively priced

telecommunications services they need to support their mission 

objectives. 

• Initiating the implementation planning actions needed to ensure a 

smooth transition from current contracts to Networx. 

It is important that GSA and its customer agencies have a clear 

understanding of agency service requirements in order to make properly 

informed acquisition planning decisions. According to our ongoing 

Challenges Remain 

Before Finalizing the 

Networx Acquisition 

Program Strategy 

Ensuring Adequate 

Inventory Information 
Page 6 GAO-04-486T 

research on best practices in telecommunications acquisition and 

management, clear understanding comes at least in part from having an 

accurate baseline inventory of existing services and assets. More 

specifically, an inventory allows planners to make informed judgments 

based on an accurate analysis of current requirements and capabilities, 

emerging needs that must be considered, and the current cost of services. 

Although leading organizations acknowledge that establishing and 

maintaining such an inventory may be difficult, they view this baseline as 

an essential first step to high-quality telecommunications requirements 

analysis, and subsequent sourcing decisions associated with meeting those 

requirements. 

Despite this importance, it is not clear whether GSA and federal agencies 

have yet established the comprehensive, accurate inventories needed to 

support Networx planning. Mr. Chairman, you followed up on this issue in 

your December 17, 2003, letter to GSA asking to what extent such detailed 

inventories were currently being maintained and kept accurate and up-todate for use both in acquisition planning and future contract transitions. In 

his response, the Administrator of General Services identified sources of 

information provided by GSA and the FTS2001 vendors—for example, 

monthly billing information—that would be helpful to agencies in 

developing inventories of existing services. In addition, the Administrator 

noted that GSA is examining methods of incorporating better billing and 

inventory data into the Networx program where practical. However, the 

Administrator did not provide specific information on the extent to which 

these inventories exist, or whether agencies are periodically validating 

that information to ensure that it is accurate and complete. Further, the 

Administrator acknowledged that the accuracy and completeness of 

telecommunications service inventories varies among agencies. As a 

result, without a clear understanding by GSA and its customer agencies of 

the FTS2001 services used today and the applications they support, it is 

unclear how properly informed Networx acquisition planning decisions 

can be made. 

Our research into recommended program and project measurement 

practices, which we affirmed in discussions with private-sector 

telecommunications managers, highlights the importance of establishing 

clear measures of success to aid acquisition decision making as well as to 

provide the foundation for accountable program management. Such 

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

stakeholders and users affected by it, and in so doing enables 

measurement of progress and effectiveness in meeting objectives. 

Establishing Measures of 

Success 
Page 7 GAO-04-486T 

Although GSA has established program goals, it has not yet defined a 

comprehensive set of corresponding performance measures for the 

Networx acquisition program. According to GSA’s Assistant Commissioner 

for Service Delivery/Development, one of the criteria for measuring 

Networx success will be identical to that used for FTS2001—that is, 

savings as measured by contract service costs compared with best 

commercial pricing. Further, according to this official, this was the sole 

measure reported to the Office of Management and Budget for FTS2001. 

While low pricing is an important criterion reflected in program goals, 

GSA has not yet defined measures about how well its final acquisition plan 

will deliver the value (service plus price) that agencies need to improve 

their operations and meet their mission needs. For example, GSA’s 

Networx environmental assessment indicates that agencies want this 

program to support network planning and optimization, include simple 

and understandable fees, provide management of contracts and 

contractors on the agencies’ behalf, and include other elements of value. 

GSA’s Assistant Commissioner for Service Delivery/Development 

recognizes the importance of having such measures, and told us that GSA 

would be establishing such measures coincident with its actions to finalize 

the Networx Universal RFP in the coming months. It will be important 

that GSA follow through on this commitment to establish that appropriate 

set of measures to evaluate the intended business value of the Networx 

program and enable the effective management of this significant program 

over time. 

Once agency requirements are adequately understood and measures of 

success defined, structuring and scheduling the Networx contracts to 

successfully encourage industry competition to obtain low prices and 

high-quality, innovative services becomes the next challenge. The varying 

views of industry representatives commenting on the request for 

information raised fundamental questions about the soundness of the 

proposed acquisition approach for accomplishing this. For example, large, 

interexchange carriers, like those that hold the current FTS2001 contracts, 

generally agreed with the broad scope of the Universal contracts. They 

further suggested that services offered under Networx Select and 

Universal should be mutually exclusive, and that all carriers should be 

allowed to compete for both. 

In contrast, other carriers criticized the approach. These carriers asserted 

that some major telecommunications providers might be precluded from 

bidding on the Networx Universal contracts because of the broad service 

and ubiquitous geographic coverage requirements described in the request 

Structuring and Scheduling 

Contracts to Deliver 

Needed Services 
Page 8 GAO-04-486T 

for information. For example, one vendor stated that it was quite possible 

that only traditional long distance carriers could effectively bid for 

Universal, thus denying many players in the industry a realistic chance to 

compete for major portions of the federal long distance business. One 

carrier noted that, based on the procurement timetable, the timing of the 

award for the Select contracts would minimize the opportunity to compete 

for long-distance telecommunications services. Because of the 9-month lag 

between the Universal and Select acquisitions indicated in the proposed 

acquisition schedule, agencies could be asked to make decisions regarding 

their use of awarded Universal service contracts before information is 

available regarding Select leading edge services and solutions that may be 

more suitable for their needs.5

Defining an acquisition strategy that appropriately balances the need to 

ensure the continuation of existing telecommunications services in all 

current government locations with encouraging strong competition to 

obtain best value is a daunting challenge. However, proceeding from a 

clear understanding of requirements and measures of success—as I 

previously discussed—should aid in meeting this challenge by providing 

guideposts for a decision that strikes an appropriate balance on contract 

scope, program structure, and acquisition schedules that can deliver to 

agencies competitively priced solutions that meet their mission needs. 

Further, continuing to solicit and effectively implement feedback from 

stakeholders should help GSA achieve this goal. 

As we reported to you in March 2001, the current FTS2001 contracts got 

off to a rocky start as significant delays in transitioning to the new 

contracts hindered timely achievement of program goals.6

 Factors 

contributing to those delays included a lack of data needed to accurately 

measure and effectively manage the transitions, inadequate resources, and 

other process and procedural issues. Ultimately, GSA did take action on all 

of our recommendations and the transition to the FTS2001 contracts was 

finally completed. In subsequent testimony before you in April 2001 we 

noted the importance of incorporating the lessons learned from this 

transition into future procurements. Specifically, we stated that “the 

 5

GSA plans to award the Networx Universal contracts at about the same time that it 

releases a draft request for proposals to solicit public review and comment on the Select 

services segment of this acquisition program. 

6

GAO-01-289. 

Initiating Implementation 

Planning to Ensure 

Smooth Transition 
Page 9 GAO-04-486T 

process of planning and managing future telecommunications service 

acquisitions—both by GSA and by the agencies themselves—will benefit 

from an accurate and robust inventory of current telecommunications 

services. Further, the value of this critical program to customer agencies 

will be improved through the application of lessons learned in 

streamlining and prioritizing the contract modification process, in 

effectively and expeditiously resolving billing problems, and in holding 

contractors accountable for meeting agency requirements in a timely 

manner.”7

 Those in industry who commented on the Networx request for 

information also noted the need for strong and comprehensive program 

management to ensure successful transition, including not only the 

availability of accurate inventories but also defined contractor and 

government responsibilities. 

While GSA recognizes the importance of transition planning, it has not yet 

fully addressed these issues. GSA has emphasized that its development of 

the Networx program included an analysis of lessons learned from 

existing programs and previous acquisitions. Further, in his February 11 

letter in response to your inquiry about agency inventories, the 

Administrator outlined the proactive steps GSA plans to take, including 

actions to establish a working group and to improve the availability of 

accurate inventory information to support the transition. According to the 

GSA’s Associate Commissioner Service Delivery/Development, these 

actions will also include developing processes and procedures, identifying 

funding needs, and training agency personnel in order to support a smooth 

contract transition. As acquisition plans are finalized in the coming 

months, it will be important that GSA follow through on these initial steps 

to ensure that the transition to the new contracts proceeds efficiently and 

seamlessly, and that a repeat of the FTS2001 transition difficulties is 

avoided. 

In summary, Mr. Chairman, Networx represents a critical opportunity to 

leverage the strength and creativity of the telecommunications 

marketplace to make the vision of delivering to agencies the 

telecommunications business solutions they need to perform their 

missions better and more cost-effectively a reality, and in so doing to carry 

the federal government forward well into the 21st century. To accomplish 

this, however, GSA will need to overcome significant challenges and 

 7

GAO-01-544T. 
Page 10 GAO-04-486T 

demonstrate solid leadership. Likewise critical will be stakeholder 

commitment. Actions taken and decisions reached in the coming months 

to more fully define the Networx program and finalize an appropriate 

acquisition strategy will significantly influence the telecommunications 

choices federal agencies will have for the next several years. Unless GSA 

follows through to resolve the challenges outlined today, the potential of 

Networx may well not be realized. 

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

any questions that you or other members of the Committee may have at 

this time. 

Should you have any questions about this testimony, please contact me by 

e-mail at koontzl@gao.gov or Kevin Conway, Assistant Director, at 

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

512-6340, respectively. Another major contributor to this testimony was 

Michael P. Fruitman. 

(310376) 

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