U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

63–039 PDF 2011

RUNNING OUT OF TIME: TELECOMMUNICATIONS

TRANSITION DELAYS WASTING MILLIONS OF

FEDERAL DOLLARS

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

MAY 20, 2010

Serial No. 111–100

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

MARCY KAPTUR, Ohio

ELEANOR HOLMES NORTON, District of

Columbia

PATRICK J. KENNEDY, Rhode Island

DANNY K. DAVIS, Illinois

CHRIS VAN HOLLEN, Maryland

HENRY CUELLAR, Texas

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

JACKIE SPEIER, California

STEVE DRIEHAUS, Ohio

JUDY CHU, California

DARRELL E. ISSA, California

DAN BURTON, Indiana

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

BRIAN P. BILBRAY, California

JIM JORDAN, Ohio

JEFF FLAKE, Arizona

JEFF FORTENBERRY, Nebraska

JASON CHAFFETZ, Utah

AARON SCHOCK, Illinois

BLAINE LUETKEMEYER, Missouri

ANH ‘‘JOSEPH’’ CAO, Louisiana

RON STROMAN, Staff Director

MICHAEL MCCARTHY, Deputy Staff Director

CARLA HULTBERG, Chief Clerk

LARRY BRADY, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on May 20, 2010 ............................................................................... 1

Statement of:

Kempf, Steven J., Acting Commissioner, Federal Acquisition Service, U.S.

General Services Administration; and Sanjeev Bhagowalia, Chief Information Officer, Office of the Secretary, U.S. Department of the Interior 11

Bhagowalia, Sanjeev ................................................................................. 29

Kempf, Steven J. ....................................................................................... 11

Zeleniak, Susan, group president, Verizon Federal, Inc.; Bill White, vice

president of Federal programs, Sprint Nextel Corp.; Diana L. Gowen,

senior vice president and general manager, Qwest Government Services, Inc.; Edward C. Morche, senior vice president, Federal Markets,

Level 3 Communications; and Don Herring, senior vice president,

AT&T Government Solutions ....................................................................... 54

Gowen, Diana L. ........................................................................................ 70

Herring, Don .............................................................................................. 91

Morche, Edward C. .................................................................................... 83

White, Bill .................................................................................................. 61

Zeleniak, Susan ......................................................................................... 54

Letters, statements, etc., submitted for the record by:

Bhagowalia, Sanjeev, Chief Information Officer, Office of the Secretary,

U.S. Department of the Interior, prepared statement of ........................... 32

Connolly, Hon. Gerald E., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 48

Gowen, Diana L., senior vice president and general manager, Qwest

Government Services, Inc., prepared statement of .................................... 72

Herring, Don, senior vice president, AT&T Government Solutions, prepared statement of ........................................................................................ 93

Issa, Hon. Darrell E., a Representative in Congress from the State of

California:

Followup question and response .............................................................. 46

Prepared statement of ............................................................................... 9

Kempf, Steven J., Acting Commissioner, Federal Acquisition Service, U.S.

General Services Administration, prepared statement of ......................... 14

Morche, Edward C., senior vice president, Federal Markets, Level 3 Communications, prepared statement of ............................................................ 85

Towns, Hon. Edolphus, a Representative in Congress from the State

of New York, prepared statement of ........................................................... 3

White, Bill, vice president of Federal programs, Sprint Nextel Corp.,

prepared statement of ................................................................................... 63

Zeleniak, Susan, group president, Verizon Federal, Inc., prepared statement of ........................................................................................................... 56

(1)

RUNNING OUT OF TIME: TELECOMMUNICATIONS TRANSITION DELAYS WASTING

MILLIONS OF FEDERAL DOLLARS

THURSDAY, MAY 20, 2010

HOUSE OF REPRESENTATIVES,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The committee met, pursuant to notice, at 9:03 a.m. in room

2154, Rayburn House Office Building, Hon. Edolphus Towns (chairman of the committee) presiding.

Present: Representatives Towns, Cummings, Kucinich, Watson,

Connolly, Cuellar, Issa, and Luetkemeyer.

Staff present: John Arlington, chief counsel—investigations; Lisa

Cody, investigator; Adam Hodge, deputy press secretary; Carla

Hultberg, chief clerk; Marc Johnson and Ophelia Rivas, assistant

clerks; Amy Miller, special assistant; Steven Rangel, senior counsel; Christopher Sanders, professional staff member, Leneal Scott,

IT specialist; Ron Stroman, staff director; Lawrence Brady, minority staff director; John Cuaderes, minority deputy staff director;

Rob Borden, minority general counsel; Adam Fromm, minority

chief clerk and Member liaison; Stephen Castor, minority senior

counsel; and Ashley Callen, minority counsel.

Chairman TOWNS. Good morning. Thank you for being here

today.

This hearing is, of course, on Running Out of Time. The purpose

of today’s hearing is to examine the Federal Government’s delay in

implementing Networx, a Government-wide program for procurement of telecommunications service for Federal agencies at substantial cost savings. The theory behind Networx is a good one. The

Federal Government ought to be able to use the enormous bargaining power to obtain telecom services at a very substantial cost savings. That was the reason the General Services Administration negotiated the Networx contracts on behalf of Federal agencies.

By all accounts, GSA negotiated a pretty good deal, but the best

deal in the world won’t do us any good if the Federal agencies don’t

implement it by transferring their telecom systems to Networx contracts. This is not a small matter. GSA reports that for every

month the transition is delayed, the Government is losing approximately $22.4 million in unrealized savings. By that estimate, when

factoring in previous losses, we may lose between $300 million to

a half billion dollars in unrealized cost savings by next year.

More importantly, when I say we, in this case we are talking

about the taxpayers. This is simply unacceptable.

2

This is not the first time we have looked at this issue. The committee held two hearings, one in 2004 largely focused on planning

and strategy aspects of the program, and another hearing in 2005

to address GSA revised strategy for Networx. In 2005 we were concerned about the sluggish roll-out of Networx. Five years later concern is an understatement. If there is a red flag that has yet to be

thrown, I want you to know that I am throwing it today.

The transition to Networx hasn’t really gone on forever; it just

feels like it. We are now in the ridiculous position of being 3 years

into a 10-year contract that we have not even implemented. What

good are the cost savings if we don’t take advantage of them? It

just doesn’t make sense.

Today I want to get a better understanding of just what is delaying the transition to Networx and what will be done about it. I also

want to look close at the issue of small business, women, and minority subcontracting. The Networx program sets very specific

goals for small business and minority participation. The five major

networks contractors, AT&T, Level 3, Qwest, Sprint, and Verizon,

were required to submit small business and minority contracting

plans. After reviewing the plans, I am concerned that the quality

of the subcontracting plans varies significantly, and I want to make

sure GSA has the information necessary to hold the contractors accountable for their subcontracting plans.

All of these parties should know that I take this issue very seriously, and I want to make sure that contractors maximize their efforts to meet their goals. I want to know that specifically it is being

done to improve small business and minority participation in the

program.

Testifying today are the two key Federal stakeholders involved

in the Networx transition, and, of course, GSA, which is responsible for overseeing the Networx program, and the Inter-Agency

Management Council, which is involved in implementation. We

also have the five Networx contractors.

Unfortunately, we don’t have anyone from the Office of Management and Budget. OMB’s absence is unfortunate, because I think

OMB’s leadership will be a key factor in expediting the transition

to Networx. I am genuinely disappointed that they chose not to

participate today.

Nonetheless, I look forward to a thorough examination of the

Networx transition and I want to thank our witnesses for appearing today, and I look forward to hearing their testimony.

[The prepared statement of Hon. Edolphus Towns follows:]

3

4

5

6

7

8

Chairman TOWNS. Now I yield 5 minutes to the ranking member

of the committee, the gentleman from California, Congressman

Issa.

Mr. ISSA. Thank you, Mr. Chairman. And thank you for holding

yet another hearing on the loss of savings of Federal tax dollars as

a result of the slow roll-out of Networx.

Mr. Chairman, like you, in 2007 I thought we were putting this

behind us. Agencies faced with a choice of saving money or having

better technology available to them, or both, undoubtedly would

quickly implement these changes, but that has not been true. It is

very clear that, in addition to losing $18 million in savings each

month in Federal agencies, that, in fact, the older technology versus newer technology opportunities are being squandered.

Mr. Chairman, as you said earlier, we have most but not all of

the key players here today. The President of the United States is

the Chief Executive Officer of this large corporation. We are ultimately the stockholders, representatives on the board, and the Office of Management and Budget effectively is the chief operating officer, or some might say a combination chief financial and chief operating officer for the Government. It is essential that there be

someone responsible for Networx failure to be implemented, so I regret that we do not have all the stakeholders here today for that

purpose.

Mr. Chairman, the taxpayers expect Government to be different

than the private sector, but they don’t expect Government to ignore

the taxpayers’ dollars as though they are not accountable to anyone. Not implementing new technology, not taking cost savings,

even after they are negotiated using the leverage of our large purchasing power, is unconscionable. Although I expect to have some

reasons for the delay explained to me today, they clearly will not

be acceptable to this committee and they will not be acceptable to

any watchdog for the Federal taxpayers.

This should be the last time we have to have a hearing showing

us that, given a choice of doing nothing or doing something that

will save the taxpayers money, agencies are continuing to do nothing.

It is also very clear that the last administration deserves both

credit for the negotiation of a good contract and blame for the period of 2000 to their departure in 2009 for not having more done.

So I would like to join with the chairman to explain that this is

not a failure of the Obama administration. I don’t even think it is

a failure of the Bush administration. But it is yet another example

where bureaucrats, unseen and seldom known by name, do not care

about the taxpayers’ money enough to save it.

Mr. Chairman, I would ask that all members of the committee

have 5 legislative days in which to place their opening statements

in the record and revise and extend.

[The prepared statement of Hon. Darrell E. Issa follows:]

9

10

11

Chairman TOWNS. Thank you very much for your statement.

Let me indicate that we have to stop at 11 a.m. sharp, of course,

because we have a joint session and we have to shut down, and we

will not want to hold you until after the joint session and then

come back, so we hope to try to finish before so that everybody can

sort of move on with their day.

Mr. ISSA. Mr. Chairman, I would suspect that if we asked leadership, if either of the witnesses would like to attend the joint session

we could arrange for that during their testimony today. If they

would indicate that they could remain, we would see if we couldn’t

get tickets based on their schedule.

Chairman TOWNS. But they would have to return 15 minutes

after the session is over.

Mr. ISSA. No, no. I am only saying that for the 2-hours we are

going to take, Mr. Chairman, we perhaps could allow them to be

there for the joint session. No, no intent to ask them to remain beyond that.

Chairman TOWNS. Thank you.

Let me just ask, first of all, we swear all of our witnesses in, of

course, so we would like to ask you to stand and to raise your right

hands.

[Witnesses sworn.]

Chairman TOWNS. Let the record reflect that the witnesses indicated that they answered in the affirmative.

We will now turn to our first witness, of course, Mr. Stephen

Kempf, who is Acting Commissioner of GSA, Federal Acquisition

Services. And our next witness, of course, is Mr. Bhagowalia, InterAgency Management Council.

Let the record reflect, of course, that they all answered affirmatively.

I ask each witness now to summarize his testimony in 5 minutes.

The yellow light, as you know, means that you should wind up

within a minute, and the red light means stop. The yellow light

gives you an idea that the red is getting ready to come. That will

allow us an opportunity to ask questions. Red means stop everywhere in the United States.

Thank you very much. Mr. Kempf, you may start.

STATEMENTS OF STEVEN J. KEMPF, ACTING COMMISSIONER,

FEDERAL ACQUISITION SERVICE, U.S. GENERAL SERVICES

ADMINISTRATION; AND SANJEEV BHAGOWALIA, CHIEF INFORMATION OFFICER, OFFICE OF THE SECRETARY, U.S. DEPARTMENT OF THE INTERIOR

STATEMENT OF STEVEN J. KEMPF

Mr. KEMPF. Good morning, Chairman Towns, Ranking Member

Issa, and members of the committee. My name is Steven Kempf.

I am the Acting Commissioner of the Federal Acquisition Service

within the General Services Administration.

I would like to thank you for the opportunity to provide the status of the ongoing transition of the Federal Government from the

FTS 2001 contracts to the Networx program’s suite of services contracts.

12

Networx is the third in a series of successful GSA contracts and

the largest telecommunications program in Federal history. These

contracts are an outstanding example of strategic sourcing concepts. Networx leverages the Federal Government’s buying power

to obtain the best value telecommunications services for all Government agencies. It is comprised of two acquisitions, Networx Universal and Networx Enterprise.

Networx significantly exceeds its two predecessor contracts in

technical breadth, pricing sophistication, operational management,

best business practices, and breadth of contractors. It offers five

contractors for agencies to choose from on two separate acquisitions.

Transitioning from FTS 2001 to Networx is a complex and resource-intensive process, and agencies face numerous challenges, as

reflected by the pace of transition. GSA measures the pace of transition by looking at services disconnected from FTS 2001. By May

2008, 1 year into the transition, the Government had transitioned

less than 1 percent of the FTS 2001 services. One year later, we

saw 16 percent of the transition completed. And as of today, 53 percent of FTS 2001 services have been disconnected.

GSA believes there are a number of reasons why the transition

is progressing more slowly than expected.

First, as I have mentioned, the Networx contracts are complex.

They contain a broad range of services and priced items, which require technical knowledge of network services. This complexity has

made it difficult for agencies to understand the contract and to rapidly move forward with the transition.

Second, agencies have issued many more statements of work for

agency-specific requirements than was envisioned by GSA or the

Networx contractors. This has created an enormous amount of additional work for the agencies, GSA, and the Networx contractors,

and has resulted in significant increase in the time for agencies to

make fair opportunity decisions.

Additionally, in some cases sufficient inventory information was

not available for the agencies to make fair opportunity decisions or

to order services. Obtaining detailed inventory data is a labor- and

time-intensive challenge that delayed some agencies in moving forward with the transition.

Further, some agencies would benefit from additional managers

with expert technical skills and background in network services. At

other agencies, the transition would benefit from added technical

depth and contracting resources. This reflects the Government-wide

shortage of acquisition professionals, of which this committee is

well aware.

Contracting officers assigned to support the Networx transition

require familiarity with Networx services’ termination, Networx

services’ terms and conditions, and the roles and responsibilities

under the contract. These contracting officers were also subject to

protest provisions that were added by section 843 of the Defense

Authorization Act in 2008. These provisions and the protests that

ensued also added time to the Networx competitive process.

Last, another area of challenge has been the contractor ordering

systems. Some agencies have experienced difficulties entering orders into the contractors’ online ordering systems. As a result,

13

some agencies have had to rely on contractors to transcribe the ordering data into their systems, which can introduce yet another

source of error and delay.

In response to these challenges, GSA developed and implemented

a wide range of measures to help agencies accelerate their transition from FTS 2001 to Networx. The full extent of this assistance

is included in my written testimony. I would like to highlight the

fact that during the past year GSA has offered to provide any assistance to any agency which requires in completing the transition

activities. In addition, GSA is providing direct assistance to all

small agencies in an effort to virtually conduct the transition for

the agency. We continue to be dedicated to doing anything possible

to help agencies complete this effort.

Current indications of progress and reports to GSA demonstrate

that agencies are now highly engaged and are doing everything

possible to meet transition schedule deadlines. Through the help of

this committee, OMB, and the involvement of senior agency executives, transition is well underway and will be completed.

The Government will benefit enormously from lower prices and

the ability to procure better technical services.

Based on GAS’s assessment of the progress of transition to date,

GSA believes that most agencies will complete the transition by

June 2011. Some large data networks that are still awaiting fair

opportunity decisions may not be fully transitioned for 2 years or

more. GSA will continue to do everything possible to maintain the

current transition momentum and to assist agencies in

transitioning as much service as quickly as possible to Networx

contracts in an effort to realize maximum value from the Networx

program.

Thank you for the opportunity to testify before the committee. I

am happy to answer any questions you may have regarding the

Networx program.

[The prepared statement of Mr. Kempf follows:]

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

Chairman TOWNS. Thank you very much, Mr. Kempf.

Mr. Bhagowalia.

STATEMENT OF SANJEEV BHAGOWALIA

Mr. BHAGOWALIA. Good morning, Chairman Towns, Ranking

Member Issa, and members of the committee. I appreciate the opportunity to appear before you to discuss the Networx transition.

My name is Sanjeev Bhagowalia, and I am also known as Sonny.

I am the Chief Information Officer for the U.S. Department of the

Interior.

I play two roles regarding the Networx program. First, as the

DOI CIO I am responsible for leading the DOI’s transition to

Networx. Second, as of September 2009 I am the Chair of the

Inter-Agency Management Council Executive Steering Committee,

and I serve in an advisory capacity to GSA in the development, coordination, and oversight of the telecommunications program of the

Government, including Networx. It is important to note that I am

not the Chair of the IMC. The GSA Assistant Commissioner for Integrated Technology Services, Federal Acquisition Service, is the

Chair of the IMC, as noted in the charter. If the Chair is not

present at the IMC meeting, I support the meeting as the senior

ranking Executive Steering Committee Chair.

I have chosen to highlight three reasons why there are some continued delays in Networx in my capacity as the Executive Steering

Committee Chair. Networx is the largest telecommunications program in the history of the Federal Government. It is more varied

and flexible than the FTS 2001 contract, with more than 7,000 requirements and 28 million line items, an increase of almost sixfold

over FTS 2001.

Second, given the scope of the program and the many competing

priorities that agencies are faced with, it is likely that many agencies were, and simply are, overwhelmed by the task at hand, which

had slowed initial progress. But, thanks to the recent efforts of the

IMC, the Executive Steering Committee, the GSA, OMB, and agency CIOs, Federal agencies are now highly engaged in the transition

process, and progress is accelerating. We have achieved the 53 percent mark in the last 7 months.

Ironically, this acceleration is now impacting the ability of vendors to respond to the large volume of agency procurements. I have

reviewed the GSA process and believe that GSA’s overall procurement process and steps were clear and well laid out in the common

process areas, although the tailoring part was too accommodating,

adding complexity. In my analysis, I agree with GSA’s assessment

that there are three problem areas experienced by agencies to conduct their transition: insufficient inventory data, complexity of the

Networx offerings, and challenges in the fair opportunity process.

As the Executive Steering Committee Chair, I have taken five

steps to improve the effectiveness and efficiency of the program. I

placed Networx on the agenda of the Federal CIO Council, and it

has remained as a standing monthly agenda item on the CIO

Council’s agenda, with visibility and metrics. I focused considerable

attention on ensuring that agencies’ issues and voices regarding

the Networx transition were brought to the attention of the IMC,

the GSA management, and the Federal CIO.

30

I believe in the maxim ‘‘what gets measured gets done.’’ I champion the concept of more-detailed transparency in metrics, and now

most of these metrics are available on the GSA Internet site.

I have helped establish the Networx data to provide senior Government executives, Networx transition managers, and key industry Networx service providers with an overview of the Networx contract and an urgency to completing this transition.

I have partnered with GSA and OMB in a relentless followup

with each agency currently below the benchmark on a regular basis

to verify process, assist with issue resolutions, and bring senior executive commitment to the CIO level to verify that resource allocation exists to get the job done.

I would like to highlight three steps vendors and other stakeholders can take to expedite the transition of Networx.

The single most important step is adopt a like-for-like transition

approach. That focuses the transition on existing services through

the Networx contract.

Second, agencies should have a solid handle on verifying the inventory of the FTS 2001 services, because an up-to-date inventory

is critical to allow for like-to-like transition approach, and agencies

should have dedicated resources, including a full-time contracting

officer, to get the job done.

Vendors also need to adhere to a allocated time for proposal development. When vendors ask for extensions, this introduces delays

into the aggressive transition schedules. In some cases this is due

to inadequate statement of work specificity from the Government;

in other cases it is also lack of preparation or inadequate specificity

from vendor responses.

The Federal Government should capitalize on three things that

have worked well. The biggest reason that the pace of the transition is accelerating is the new commitment of the senior leadership

at GSA, OMB, and the agencies and the use of metrics in a trust

but verify framework to verify that, indeed, we are making

progress. This has been proven in the last 7 months, with an

achievement of almost 37 percent improvement in the metrics.

An important tool that also supports transition inventory activities is the Networx inventory application tool developed by GSA.

This tool is excellent. This tool allows GSA and agencies to audit

inventory records throughout the duration of the contract, and

agencies should use this tool to ensure the Networx inventory is

complete and accurate.

Finally, the efforts of the IMC Transition Working Group has

been invaluable. They help provide a wide variety of support for

the overall programs and agencies’ defining requirements, helping

transition guides, and creating guidelines for bureau transitions.

In conclusion, I am committed to supporting this initiative and

will continue to collaborate with GSA, all agencies involved in the

transition across Government. I welcome your support and attention to the program and I believe it is providing the needed focus

and attention to all agencies to start expediting and energizing

their commitment to getting the job done.

As I have described before, it is in the best interest of the Government to continue our momentum and finish the task at hand.

We have just passed the 53 percent mark, thanks to our recent

31

focus. Now all the stakeholders need to remain committed and focused, which will save money for the taxpayers, as indicated by

GSA and yourself, and utilize the other features and benefits of the

50 other services available on this program.

This concludes my testimony. I am happy to answer any questions that you may have.

[The prepared statement of Mr. Bhagowalia follows:]

32

33

34

35

36

37

38

39

40

41

Chairman TOWNS. Thank you for your testimony, both of you.

Commissioner Kempf, is this program voluntary or mandatory?

Mr. KEMPF. This program is voluntary, but I think almost every

agency is participating in it. I think for most of the services, it really is the contract of choice, and every agency is participating in it.

Chairman TOWNS. The reason I ask, I wondered if that was a

reason as to why it was moving so slowly.

Mr. KEMPF. No. I think most of the agencies have worked with

GSA for years on their telecommunications. I think there was one

agency early on that wasn’t going to be part of it but has come into

the fold. All of agencies are buying their services through this contract, or will be buying a good deal of their services through this

contract.

Chairman TOWNS. Let me ask you, if agencies are not 100 percent transitioned by the final deadline, I think June 2011, what

will really happen? In other words, are we going to allow Government phones to go dead, or will GSA be forced into expensive solesource contracts? What will happen?

Mr. KEMPF. First we will look at what is left to transition. We

are at the expectation that there will be little left to transition or

there will be a known amount of work left to transition that we are

watching move through the pipeline. At that point, or actually we

will probably have to start the negotiations quite a bit before June

2011, we will have to anticipate what will be still left over at 2011

and then do a sole source contract, a bridge contract, to allow the

rest of that work to transition, because we can’t afford to have the

lines drop dead in June 2011.

Chairman TOWNS. Mr. Bhagowalia, I am tempted to call you

Sonny.

Mr. BHAGOWALIA. Sonny is fine, sir.

Chairman TOWNS. Given that the program has had extensive

schedule delays and there have been millions of dollars in unrealized cost savings, why has the program not been flagged by OMB

for an official comprehensive review?

Mr. BHAGOWALIA. Well, sir, I got involved in September 2009,

and OMB, the new Federal CIO, got involved immediately right

after when we informed them as to what was going on. They have

been involved ever since, with basically monthly reviews of the

Federal CIO Council. We have also had a followup with all of the

agencies that are below the benchmark, with regular followup

through GSA and OMB. And OMB also has been participating in

the IMC Executive Steering Committee and the IMC, itself, to followup and see what metrics are indicating who is behind and why

is it behind and so on and so forth.

So all I can talk about is since my involvement, working within

partnership with GSA and OMB and the other agencies, OMB is

focused and helping and has been of great help to us coming forth.

Chairman TOWNS. Can you explain why the transition seems not

to be a priority for the agencies?

Mr. BHAGOWALIA. Well, sir, this is a very interesting question. I

have a day job. I am a CIO of the Department. I was just watching

basically a struggle going on in terms of potentially a train wreck,

as you mentioned, in terms of savings. But I think all of us want

to do the right thing here, and we have been working very hard

42

to kind of make sure that we can fix this and make sure we are

going to get there. So the agencies have some challenges. Sometimes it is not on the priority list. They have many competing priorities, in my view, that I have looked at. I think somewhere that

prioritization requires senior executive commitment and leadership, and I believe your committee’s focus also has helped in making sure that people are taking this very seriously, and they have.

Second, I believe that there has been a lot of challenges within

the agencies, themselves, in terms of a lot of turnover and attrition

going on in some of the procurements and other things, which are

not normally in the CIO’s office. With that, there have been some

challenges in terms of what has gone forward.

Third, this is a very complex program. As I have mentioned before, it is six times larger and more complex than FTS 2001, and

it is the largest telecommunications program in our history.

I just find that in some instances, because of the aforementioned

reasons, that the lack of commitment or leadership and oversight

in some areas, perhaps we have slipped behind. But I am happy

to report that since November 2009 we have gone from 16 percent

to 53 percent, which is more than the last 21⁄2 years before that,

so I believe we are on the right track, thanks to the oversight provided here and our involvement, ourselves, of our own volition, that

is improving this process.

Chairman TOWNS. Let me raise this with both of you. What is

the key thing that we can do right now today and tomorrow to

speed this transition? What can we do? I want to get both of you,

Commissioner Kempf also.

Mr. KEMPF. I would say that the only thing, I think GSA is doing

everything it can identify that was useful to moving forward. I

think your continued attention to the matter, we have been up

talking to both this committee staff and continue to speak with

them, provide information on progress, status, and continued attention to the matter will keep senior agency officials focused on the

goal.

Mr. BHAGOWALIA. I would just add that we need to focus on,

first, the matter at hand. There are 50 services available in

Networx and we should certainly look at that, but we should first

focus on a like-for-like transition. That is No. 1, and I think we

should do that, because you focus on one thing and get the job

done.

Second is we need to make sure that we have the chief acquisition officers involved more, because on most of the side that we

have the Federal CIO Council, the chief information officers have,

as one of the 12 core competencies, acquisition, but the real acquisition warrant and responsibility lies with the chief acquisition officers. So perhaps they could also help, and we have reached out to

them through GSA and OMB, and working with them I think the

focus in trying to lift the matter from not only the CIO perspective

but also the CAO perspective will certainly help.

Third, as Steve has mentioned, your continued oversight of this,

along with what OMB is doing, is really helping us, and our regular followup is really producing results, because people are looking

at this and saying, Let’s get it done. We are making progress. Now

43

we have hit the 53 percent mark, we can probably get this done,

so let’s go ahead and do it.

I think that is the kind of momentum and leadership that we

need.

Chairman TOWNS. Thank you.

I now yield to the ranking member.

Mr. ISSA. Thank you, Mr. Chairman.

Mr. Kempf, I would hope that I don’t ever imply that I am disappointed in GSA. I give some credence to the fact that you are a

service organization, a little bit like the buffet at the restaurant.

If you put all the right things out and people do not bother to take

their vegetables, it is not your fault when their diet is imbalanced.

But at the same time, do you have regrets that this contract was

not envisioned initially to be one in which you spoon Federal the

agencies, provided the dollars in a complete service, so that what

you indicated in your opening statement you are now doing in some

cases wouldn’t have been done at the front end several years ago,

where you could have provided the implementation service? That

is the first half. And I think I know the answer to that.

And the second half is the whole idea that you are having challenges when people are going through the process of essentially

awarding a contract that you have already awarded. That is a little

different than when I used to order pens in the Army from GSA.

I didn’t have to worry about anything except buying the service, because it had been pre-done.

It appears as though the contract complexity is partially based

on the fact that you haven’t pre-cleared the absolute right of an

agency to buy from this buffet that you are offering them without

a series of protests and delays.

Can you answer those two for me, please?

Mr. KEMPF. Sure. Let me start with the first part about what we

might have done differently at the beginning. I think we did a good

job of trying to identify lessons learned from the last transition,

and I think GAO did a report, I think it was in about 2008, looking

at all of the processes we had put in place to support the agencies

moving forward into the transition. The Networx services team

within GSA did an enormous amount of——

Mr. ISSA. Mr. Kempf, because the time is limited and other Members are now coming in and out, I just want it to be fairly short.

If you don’t think that you needed to do it, that is fine. If you do

think you needed to do it, it is more just almost a yes or no on the

first question, please.

Mr. KEMPF. I think we have done everything we could and accelerated our support and services, including direct support, as we

saw agencies struggling more and more, first part.

Mr. ISSA. And the more difficult one, the next time we go around,

do we need to create an environment in which basically agencies

can make decisions without essentially having one contractor slow

roll the process of moving if they don’t win?

Mr. KEMPF. Well, I think we tried to do that with the prices that

we had developed, which would provide a much more transitioned

and smoother process to moving forward. The other thing that we

did that I think will help next time is in this contract is the seeds

of the corpus of what the agencies will be buying next time, so esVerDate 11-MAY-2000 14:10 Feb 15, 2011 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\63039.TXT KATIE PsN: KATIE
44

sentially they will be able to develop their requirements, or they

will have a list of what they already have to transition. I think that

was a problem, identifying just what you needed to transition.

They didn’t have their inventory well at hand when they started.

Mr. ISSA. OK. And before I go to Mr. Bhagowalia, or Sonny as

we are choosing to call you, the administration has a lot of things

they could do, and certainly OMB’s absence here speaks very loudly, but this committee also has an ability. Currently these contracts

are being bridged at the higher cost. I am assuming that these administration agencies would not like this committee, always in

need of money to offset some of our other programs, to simply say

you shall only negotiate at the lower amount per the contract, even

if it is a bridge, and take that money, something that we could do

that would give us some portion of $18 million a month for offsets

that the chairman and I need for our programs.

So, knowing that we could do it, knowing that it would be irresistible, and knowing that your agencies would then lose those revenues, does that help the agencies, if they are clear that we could,

would, and should do that, to move quickly toward getting these

bridge loans at the lower amount and taking those moneys and

using them for other uses within the agencies? Is that a helpful

tool?

Sonny, of course, has already responded in the non-verbal manner, but if you would, please.

Mr. KEMPF. Well, I think that would give the agencies a lot of

impetus to move forward, but it would also create a lot of havoc

in some of the agencies, as they would have to determine what

things to turn off, whether that be their Internet service, their telecommunication service.

Mr. ISSA. No, no. If they are simply unable to convert over today

but they are bridging and that contract is currently at the higher

cost, even though the company they are bridging with has a contract with us at a lower cost for the same services, to me if somebody says there is a better price and I will give it to you if you give

me an annual contract, and we say, Yeah, but it will take a while

to do it, if they don’t give me that better price today that they are

giving the guy down the road during that bridging period, then I

am going to make my decision faster, much faster.

So I am assuming that agencies who said I can only, and we can

make it statutory, I can only write bridge contracts at the lower

rate that you have already agreed with GSA to, that if they are

held to do it, either by saying that Congress will act or that Congress has acted, that they would get those lower prices.

Sonny, I guess I will go to you, since you actually are where the

rubber meets the road on this.

Mr. BHAGOWALIA. I think it would help. There are certainly obviously some extenuating circumstances, as Steve has mentioned, but

I think it would help. I think sometimes you have to push a little

bit to make sure everyone understands that we are serious. And I

would like to note that OMB did issue a memorandum, MO8–26,

stating that all agencies are required to transition from FTS 2001

to Networx, and that new services must transition to Networx unless a business case justifies otherwise.

45

So I think there was something that was provided, and there is

obviously a lot of tailoring and flexibility that is also available in

the contract, and I think GSA has done a great job trying to have

a standard approach but also a tailoring approach, but if there are

too many options it adds complexity, and complexity equals cost. So

in my view, a little bit of commitment, follow-through, and making

sure that there is some push would certainly help.

Mr. ISSA. Mr. Chairman, if I could ask just two questions for the

record.

Chairman TOWNS. Sure.

Mr. ISSA. First of all, if you would respond for the record as to

those savings that those contracts, those bridge contracts in place,

would achieve if they had been at the rate negotiated by GSA for

the services that they would receive if they were to make a final

determination. We would like to know just how much the chairman

and I could bank on for other uses if the agencies can’t move.

[The information referred to follows:]

46

47

Mr. ISSA. And then, second of all, Sonny, because it is off topic

a little bit, I would appreciate your comments back on the Department of Interior’s ability to determine, at the Mineral Management

Service, the correct revenues we are supposed to receive from our

off-shore oil and other resources. In previous hearings this committee has been told that we only know that we get the check, we get

the wire transfer, and then we have to wait for the actual oil company to tell us how much it is for and what site. I would appreciate

an update on that from your perspective of whether that agency

deep down in Department of Interior has improved, for the record.

Mr. BHAGOWALIA. I will check the status for you on the second

item that you had mentioned. Obviously, I am not in that particular department, in that section of the Department, but I will get

that information for you.

Chairman TOWNS. We will hold the record open for it.

Mr. BHAGOWALIA. Yes, sir.

And on the first part, I think the question was in terms of helping out and going forward I think it would certainly be helpful, in

terms of what you are saying, in providing a little bit more focus

in the area that you have suggested here.

Chairman TOWNS. I now recognize the gentleman from Virginia,

a very active member of this committee, Congressman Connolly.

Mr. CONNOLLY. Thank you, Mr. Chairman.

I would ask that my opening statement be entered into the

record, if there is no objection.

Chairman TOWNS. No objections.

Mr. CONNOLLY. Thank you, Mr. Chairman.

[The prepared statement of Hon. Gerald E. Connolly follows:]

48

49

50

Mr. CONNOLLY. I also want to welcome Don Herring from AT&T,

who will appear on our next panel. I had the opportunity to visit

AT&T in Oakton in my District about a month or so ago, and very

much appreciate the work he and his colleagues at that facility are

doing, often on behalf of the U.S. Government.

Mr. Bhagowalia, we have had substantial delays in the transition

to Networx, and in some cases the delays have been, from my point

of view, extraordinary, where the talent, the capability inside the

telecommunications talent is very limited. In one case there was

one Federal agency where we had two people and they died, and

when they died the capability died with them. It brought everything to a standstill at a large Federal agency.

Help me understand how we can be so hollowed out in terms of

capability on something as important as telecommunications, and

especially when we knew that we needed to implementation

Networx.

Mr. BHAGOWALIA. Well, sir, I can only talk about the fact, when

after I took on the new role as the Executive Steering Committee

Chair as of September 2009. My observations are that there has

been some attrition and turn-over in some of the procurement corps

that exists in a lot of agencies, and along with that goes some talent and some movement and continuity issues that happen on the

contract.

I would also say to you that obviously there is some incredible

talent in the agencies, but it is uneven in some areas, so clearly

some departments perhaps are behind, but in some other areas

they are fantastic. I can safely say that in my department the acquisition corps, but more importantly also the technical corps folks,

are very, very qualified. Similarly, I found that GSA has been the

same thing.

But, taken in totality, I find that, again from my experiences,

that in the Government there is a lot of responsibility that has

gone over to the acquisition corps, and when there is attrition or

movement or turnover or they leave for other jobs, a lot of institutional knowledge goes and tacit knowledge goes with them, and

that is perhaps some of the issues that you were talking about.

That does exist. Unfortunately, that is something that we are trying to improve with the new human resources processes and training that will improve that process.

Mr. CONNOLLY. Well, I just have to tell you I have worked for

some large companies in the private sector. There is transition in

the private sector. People go and take other jobs, people get promoted, people move to other departments, but the hollowing out of

an entire capability, especially one as sensitive as telecommunication, I never saw it in the private sector.

Mr. BHAGOWALIA. If I could answer that I, myself, was in industry for 141⁄2 years in the Boeing Co., I chose to come to Government

for service, and I can safely tell you that there are many, many

folks who are coming from industry to serve, and we are getting

a new infusion of talent, as well, but there is also good balance in

terms of the training that exists within our own corps.

My biggest concern is attrition and the institutional knowledge

that people have, and that continuity remains, as you said, a big

concern.

51

Mr. CONNOLLY. Let me just say on that I think that this isn’t

only about making Networx work, finally, but, frankly, it raises a

broader question about the technical skill set and competence we

have within Federal agencies. I think we have to address that, because there are lots of other things that this committee has looked

at, like cybersecurity.

As you look at what I call the demographic imperative, the Baby

Boom generation that is working its way through the Federal work

force, they are going to be retiring, and along with those retirements goes huge skill sets. So this is the canary in the mine shaft,

it seems to me, and we have to use this to not just look at this specific task, but, frankly, the whole question of do we have the resident expertise we need moving forward in the Federal Government,

and if not, how do we build it in so that we are not so vulnerable

to transitioning by individuals or, God forbid, somebody passing on

and with them goes the capability. That is just not acceptable in

serving the American public.

Commissioner Kempf, speaking of capability, GSA has had to resort to helping agencies write their statement of work. How is it

that Federal agencies don’t have the professionals capable of writing their own statements of work for Networx?

Mr. KEMPF. Thank you for that question. I think one of the

things that we have seen, I think you hit on it very early here, was

that each of the agencies has their own struggles with personnel,

and in some agencies, particularly the small agencies, there just

aren’t enough people with the expertise to do the requirements.

In that instance we have stepped in for particularly those smaller agencies and actually done the work for them with respect to the

requirements, and even supported them very aggressively with

their contracting. I think this committee is well aware of the contracting issues across the entire Federal Government, and the depletion of that contracting corps and the competing demands for

their time and service to get things done.

Mr. CONNOLLY. Yes. Mr. Chairman, I see my time is up, but if

I may just observe, again I think this is a broader issue than just

being able to write statements of work, although that is troubling

enough, but it raises the question of whether we have the technical

expertise within the Federal agencies to manage large, complex

contracts, systems integration contracts, telecommunications contracts, cybersecurity, Mr. Chairman, as you pointed out, and I just

think we have to get to that, because otherwise we are going to

find our ability to even manage the contracts we outsource will be

degraded over time.

Thank you.

Chairman TOWNS. I thank the gentleman from Virginia for his

comment.

I now yield 5 minutes to the gentleman from Missouri, Mr.

Luetkemeyer.

Mr. LUETKEMEYER. Thank you, Mr. Chairman. I am a little

under the weather this morning so I am going to pass and I will

yield back.

Mr. ISSA. If the gentleman would yield for a second.

Mr. LUETKEMEYER. I will yield my time to the ranking member.

Thank you.

52

Mr. ISSA. Thank you.

Just briefly, Sonny, because you came from the private sector

and the gentleman from Virginia had sort of alluded to that, isn’t

the greatest, in your opinion, I am hoping it is, isn’t the greatest

problem that there is, as far as people retiring and things not being

able to be done going forward, the tendency to have legacy software

and hardware; that the faster the pace of modernization, the less

often you end up with somebody being critical because they are

part of legacy?

Mr. BHAGOWALIA. Yes. Absolutely. I mean, Moore’s law is 18

months technology changes full-scale, and sometimes it takes us

that long to go through the acquisition process, so it is already obsolete by the time you are going through technology change. I think

the balance between faster acquisition and more smaller, agile

processes is the answer.

Mr. ISSA. OK. So I guess for both sides of the aisle here, the most

important thing for us to do is to give you the impetus to move

faster so that less often will you have somebody who is mission

critical but on life support.

Thank you. I yield back.

Chairman TOWNS. Thank you very much. The gentleman yields

back.

Mr. CONNOLLY. Mr. Chairman, would my colleague yield?

Mr. ISSA. He controls the time.

Mr. CONNOLLY. I wanted to ask the distinguished ranking member a question, if I could do that.

Chairman TOWNS. The gentleman from Missouri controls the

time.

Mr. CONNOLLY. Would the gentleman yield?

Mr. LUETKEMEYER. Sure.

Mr. CONNOLLY. I appreciate it. Thank you.

Mr. Issa’s point is very well taken, but one of the practices that

is going on right now is in the desire to catch up, Federal agencies

are raiding small- and medium-sized companies, as well as large

companies, for their expertise. That is having a devastating impact

on small- and medium-sized Federal contractors. We don’t solve

this problem of addressing the hollowed-out capability we have by

hollowing out theirs. That can have a real problem impact on their

ability, frankly, to compete with Federal business and provide the

expertise that they have that we need.

So in solving the problem I think we have to move forward and

be very sensitive to how we are dealing with the private sector.

Thank you for yielding.

Chairman TOWNS. Thank you. Does the gentleman yield back?

Mr. LUETKEMEYER. Yes, I will yield back. Thank you, Mr. Chairman.

Chairman TOWNS. Commissioner Kempf, has GSA calculated the

total amount of unrealized cost savings to the American taxpayers?

Did you look at it?

Mr. KEMPF. I don’t believe we have done that yet, but I believe

Congressman Issa has asked us to at least give you part of that

response back.

Chairman TOWNS. Good.

53

Mr. Bhagowalia, I know you worked with the Federal Chief Information Officers on the transition. How can we leverage the participation from the Chief Financial Officers’ community and Chief

Acquisition Officers? How can we leverage that?

Mr. BHAGOWALIA. Sir, I think in the OMB there is a tremendous

partnership that has happened between the Federal CIO, the Federal CFO, the Federal CAO, Mr. Gordon, and the Federal CFO, Mr.

Werfel, and Federal CIO, Mr. Kundra, and the Federal CTO to

work together on these common problems. I think from that standpoint we need to bring it to their attention, and we have.

We are also following up with the CAO, even though that is not

within my domain, but making that suggestion, and we have provided that suggestion to your staff, as well, that if the three parties

were to get together from that side, and then likewise we have a

concomitant sort of process at the CIO Council, the CFO Council,

and the CAO Council, and a regular exchange of metrics on a regular basis of one set of metrics that can be viewed by all three.

And then also the CFO Council and the CAO Council, just like

the Federal CIO Council is following up with every agency, they

could do likewise with the other part of the CFO and CAOs that

exist within the departments and agencies. We can solve this issue

by triangulating and making sure there is enough oversight and

participation, because basically everyone now knows that they have

to get this done, and I think that is what is driving the momentum.

And thanks for the oversight, as well. I believe that is the only

way we will get this job done. I have recommended that the CAO

and CFOs should be involved in this process.

Chairman TOWNS. Thank you very much.

Mr. Ranking Member, do you have any other additional questions?

Mr. ISSA. Not at this time.

Chairman TOWNS. Let me first thank both of you for your testimony. Of course, we look forward to continuing to work with you

to try and move this process forward.

Of course, if any Members have any additional questions, you

can submit them.

Thank you very, very much Mr. Bhagowalia, better known as

Sonny, and Commissioner Kempf. Thank you so much for your testimony this morning. Thank you.

Mr. BHAGOWALIA. Thank you.

Mr. KEMPF. Thank you.

Chairman TOWNS. We will now move to our second panel: Ms.

Susan Zeleniak, group president of Verizon Federal; Mr. Don Herring, senior vice president at AT&T Government Solutions; Diana

Gowen, senior vice President and general manager of Qwest Government Services; Edward C. Morche; and Bill White, vice president of Federal programs at the Sprint Nextel Corp.

As with the first panel, it is the committee’s policy that all witnesses are sworn in, so if you would please stand and raise your

right hands as I administer the oath.

[Witnesses sworn.]

Chairman TOWNS. Let the record reflect that all the witnesses

answered in the affirmative.

Let me begin with you, Ms. Zeleniak.

54

STATEMENTS OF SUSAN ZELENIAK, GROUP PRESIDENT,

VERIZON FEDERAL, INC.; BILL WHITE, VICE PRESIDENT OF

FEDERAL PROGRAMS, SPRINT NEXTEL CORP.; DIANA L.

GOWEN, SENIOR VICE PRESIDENT AND GENERAL MANAGER,

QWEST GOVERNMENT SERVICES, INC.; EDWARD C. MORCHE,

SENIOR VICE PRESIDENT, FEDERAL MARKETS, LEVEL 3

COMMUNICATIONS; AND DON HERRING, SENIOR VICE

PRESIDENT, AT&T GOVERNMENT SOLUTIONS

STATEMENT OF SUSAN ZELENIAK

Ms. ZELENIAK. With a last name like Zeleniak, I am not used to

being first, so thank you.

Chairman TOWNS. With a last name like Towns, I can really relate to that.

Ms. ZELENIAK. Mr. Chairman and members of the committee,

thank you for the chance to speak with you today about the status

of the Networx transition. My name is Susan Zeleniak, and I am

the group president of Verizon Federal.

The benefits and cost savings of Networx can still be achieved.

Verizon will continue to work closely with our customers to make

the promise of Networx a reality.

First a word about Verizon. In addition to being an industry

leading wireless provider and our FiOS services, Verizon serves 98

percent of the Fortune 500 and virtually every Federal agency. We

have the largest global network of any U.S. carrier, serving 2,700

cities and 159 countries around the world. And we are a recognized

leader in cybersecurity.

Let me begin by recognizing GSA for their vision in conceiving

the Networx program. Networx will bring the Government the best

technologies at the lowest prices. Many cutting-edge solutions, like

cloud computing and virtualization, can be delivered today through

the Networx contract. GSA got it right.

Several factors have contributed to the prolonged transition, as

agencies have taken more time than expected to determine their

requirements, evaluate their fair opportunity proposals, and make

their awards.

The situation is understandable, given the complexities of many

of the agency IT programs. We would prefer to be further along in

the transition process but recognize that some agencies are taking

additional time to make certain that their transition is done right.

So far the biggest lesson that we have learned is that the most

successful agencies have dedicated a level of resources required to

a smooth and timely transition. Take, for example, the Department

of Homeland Security. DHS has one of the largest and most complex networks, and yet it is almost done with transition. Why? Because early in the process DHS committed the resources to getting

the job done.

Allow me to describe three steps Verizon has taken to speed up

transition. We invested millions of dollars in a back office transition program that automates the transition of our existing customers to Networx so that they more quickly realize the savings.

We established a network users forum to meet with our customers

to discuss any issues that are impacting their transition. And earlier this year we hosted our own seminar focused on moving agenVerDate 11-MAY-2000 14:10 Feb 15, 2011 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\63039.TXT KATIE PsN: KATIE
55

cies from transition to transformation. A standing room only crowd

at that event told me that agencies are as anxious as we are to

move beyond transition.

Clearly, the transition process has proven to be far more complex

than anticipated. Thankfully, both GSA and the IMC have taken

steps to expedite the transition. GSA’s transition credits and funding for contractors have helped move the process forward. I urge

agencies to take advantage of this assistance.

In addition, the IMC should continue to provide leadership in

identifying and solving transition problems.

I am confident that the promise of Networx will become a reality.

When it does, the benefits will extend well beyond Federal agency

users. It will have a meaningful impact on how American citizens

interact with their Government, and it will help drive solutions to

social problems that are important to all of us.

In March the FCC issued its national broadband plan. That plan

showed how agencies can use broadband services to both improve

their performance and generate social benefits. Networx will enable

a smarter use of broadband and improve the delivery of Government services. Your constituents will enjoy a faster resolution to

matters they have with Federal agencies.

Let me just give you two examples of this.

As your constituents conduct business with Federal agencies online, it will create one more reason for American citizens to adopt

broadband. Greater broadband adoption is terribly important for

education, job training, and health care, just to name a few.

Also, each online solution means one less car on the road. That

means less traffic congestion, reduced energy consumption, and less

pollution.

In conclusion, despite transition delays, Networx will provide

Federal agencies with advanced technologies at the lowest prices.

It is important for all agencies to allocate greater resources to the

effort and to take advantage of incentives that GSA and the IMC

are offering to help with transition.

Once the transition is complete, Networx will improve Government efficiency and performance, deliver cost savings to taxpayers,

enable new online services for our citizens, and help drive

broadband solutions for social problems.

Thank you for the opportunity to speak.

[The prepared statement of Ms. Zeleniak follows:]

56

57

58

59

60

61

Chairman TOWNS. All right. Thank you so much for your testimony.

Mr. White.

STATEMENT OF BILL WHITE

Mr. WHITE. Good morning, Chairman Towns, Ranking Member

Issa, and members of the committee. My name is Bill White, vice

president of Federal programs for Sprint Nextel Corp.

Sprint appears before the committee today in the unique position

as being the only provider to have served FTS 2000, FTS 2001, and

the Networx contract for the past 20 years. Sprint has worked very

well with GSA over these years to provide billions of dollars in

highly reliable telecommunications services and solutions to Federal agencies.

Sprint has many lessons learned from the last large Federal telecommunication transition, FTS 2000 to 2001, that we bring to the

current challenge.

I am here today to present Sprint’s views on the ways to expedite

the transition in order to save the Government time and money

and bring about greater competition in the acquisition of telecommunications services.

A March 4, 2009, Government contracting memorandum plainly

states, ‘‘the Federal Government should perform its functions efficiently and effectively, while ensuring that its actions result in the

best value for taxpayers.’’ While I have much respect for the hard

work that has been done by the GSA to date, I have serious reservations about the efficiency and effectiveness of having two overlapping Networx contract vehicles.

I submit that best value is achieved by maximizing competition.

Simply put, the Networx enterprise contract offers lower prices and

more competition than the universal contract. Accordingly, and for

the reasons further stated, Sprint recommends that the Government either combine the Networx contract vehicles into one contract or at least direct agencies to Networx enterprise.

The two Networx contracts, universal and enterprise, overlap

considerably, creating unnecessary complexities resulting in delays

and lost savings. Some examples are, first, the complexity of the

Networx contract has created millions of unique price points resulting in confusion and delays. Second, duplicative services offered on

both contracts are priced differently, also causing confusion and

delays. Third, terminology changes between the old contract and

the new grind the gears of transition to a halt.

It is in the Government’s best interest to open competition to all

five Networx contractors to achieve best value, save money, and

complete the transition by the mid-2011 deadline.

It is well accepted that greater competition leads to better value

for consumers, industry, and Government. All five Government contractors represented today hold Networx enterprise contracts; however, there are only three Networx universal vendors. As such, solicitations issued under Networx universal by definition are subject

to less competition. Collapsing the contracts, or at least directing

agencies to the lower-cost Networx enterprise will facilitate a faster

transition.

62

Additionally, over 95 percent of the current FTS 2001 inventory

of services installed at agencies is available on enterprise.

All parties would benefit if GSA combines the Networx contracts

or directs agencies to the lower-priced network enterprise vehicle.

By collapsing the contracts, agencies would have a clearer and faster path to traditional services and transformative capabilities like

unified communications, mobile integration, and 4G. GSA would

have a more streamlined administrative effort, lower cost to manage contract modifications, reporting, and the contract oversight

process. The universal vendors would also have reduced labor and

administrative efforts required to support the duplicative contracts.

These resources can be reinvested in expediting transition.

Finally, I think it is important to emphasize that the longer it

takes to merge or direct traffic to one contract, the more difficult

it could be to transition services at the end of Networx.

Sprint also has invested millions of dollars in Networx and is

better prepared for the transition based on lessons learned from

our prior FTS 2001 transition experience.

To highlight some of the progress to date, Sprint has moved over

423,000 voice lines from FTS to Networx, and an average of 11⁄2

days per project and over 400 Internet protocol services at an average of 21 days per project. No contractor is better prepared or more

experienced than Sprint for this transition task.

Simplifying the contract platform would go a long way to reducing transition complexity and ultimately accelerate transition.

I thank you for your time and am happy to answer any questions

you may have.

[The prepared statement of Mr. White follows:]

63

64

65

66

67

68

69

70

Chairman TOWNS. Thank you very much, Mr. White, for your

testimony.

Ms. Gowen.

STATEMENT OF DIANA GOWEN

Ms. GOWEN. Chairman Towns, Ranking Member Issa, members

of the committee, good morning. My name is Diana Gowen. I am

the senior VP and general manager of Qwest Government Services.

We are an awardee of both Networx universal and enterprise.

I will begin by addressing some of the root causes of the network

transition delays. Networx was designed to be more innovative,

cost-effective, and transformative than prior contracts. Industry

and the agencies welcomed this change. Unfortunately, the new

contracts were so vastly different from the two predecessor contracts that agencies had to learn new complex pricing and service

structures.

With the loss of key contracting and technology staff, heightened

focus on OMB compliance issues, and a 42-month extension of FTS

2001, Networx transition fell to the bottom of the pile.

Incumbentitis and comfort with the status quo set in. Agencies

heaved a huge sigh of relief, let their inventories grow stale, and

had no incentive to plan or to move forward.

All of these issues could have been overcome if OMB and GSA

had helped agencies simplify the procurement process. They did

not, and, unfortunately, we are here after more than 3 years with,

by my calculation, almost $1 billion in lost savings, and continued

lost savings accruing, as I heard this morning, $221⁄2 million per

month. A lot of technical and contracting help could have been provided for the cost of doing nothing during that time.

Exacerbating all of these issues were two unfortunate choices

GSA made. In 2006, before Networx was awarded, was the decision

to extend the FTS 2001 contracts for 42 months. The legacy contracts marched full-speed ahead, with no fixed date for stopping

new orders. Unbelievably, FTS 2001 continues to have more new

orders than Networx.

Second, GSA measured transition progress by a flawed metric,

counting things disconnected rather than dollars moved from the

old contract to the new. This creates an illusion of progress.

Under Networx, the procurement process has been too complex,

with too few knowledgeable procurement and technical resources.

Agencies have not made fair opportunity decisions quickly. So we

should focus on steps that would create momentum: increase agency/industry dialog, compare pricing, or issue requests only for pricing, and if proposals are necessary at this stage, make them oral.

Transition like-for-like, transform later. For those agencies that

have proposals in hand, the evaluation criteria should be rigorously

followed and decisions made. For transition, agencies should build

a project time line and stick to it. Hold folks accountable.

I am encouraged by GSA Administrator Martha Johnson’s focus

on transparency, innovation, operational excellence, and customer

intimacy. In the long run, this vision will push GSA to make better

customer support decisions. In the short term, we need GSA’s continued collaboration with all of the stakeholders.

71

Qwest has made every effort to assist in the transition, investing

tens of millions of dollars in tools, in people, meaning jobs, for proposals, for contracting, for program management, for training staff

and educating agencies. Despite these efforts, the delays continue.

The cost of Networx bids and the delays in transition are leading

to a death spiral of costs chasing declining revenues and profitability. There is real economic harm.

These problems have been largely ignored by several oversight

agencies since the award of Networx. OMB, the GAO, the CIO

Council, GSA should not feel good about where we are to day.

Oversight such as that provided by your hearing today is vital.

We recommend Congress and OMB encourage GSA to extend the

Networx contracts 5 years until 2022 and to freeze the rate structure at today’s rates until at least 80 percent of the dollars on FTS

2001 have been moved to the Networx contract. It is time to make

some basic changes to the program to ensure that Government gets

the best deal, industry is treated fairly, and agencies get the

chance to transform to modern technology at world class pricing.

Thank you for the opportunity to present our views on this important program, and I look forward to your questions.

[The prepared statement of Ms. Gowen follows:]

72

73

74

75

76

77

78

79

80

81

82

83

Chairman TOWNS. Thank you very much for your testimony.

Mr. Morche.

STATEMENT OF EDWARD MORCHE

Mr. MORCHE. Good morning, Chairman Towns, Ranking Member

Issa, and members of the committee. As a Networx carrier, Level

3 Communications would like to thank you for the opportunity to

testify about the delays in implementation of the Networx contract.

My name is Edward Morche, and I am the senior vice president

of Level 3’s Federal Markets Group.

Broadly speaking, there are five major work elements involved

within the transition process. Agencies must: one, obtain the current inventory of their services; two, choose between the Networx

enterprise or universal contract; three, convert their legacy inventory to Networx-based CLINs; four, conduct fair opportunity; and,

five, evaluate the carrier responses.

Each one of these steps affects an agency’s resources and has the

potential to introduce delays to the process. It is the opinion of

Level 3 Communications that these principles could be minimized

through a combination of the following principles: A, reduce agency

workload where possible by out-sourcing actions to the carriers; B,

parse out the services to be transitioned into narrower scopes; and,

C, eliminate as many decision points as possible.

For many agencies, obtaining an inventory of current services is

a time-consuming and difficult task. It is further exacerbated by

the fact that services are continually evolving as the needs of agencies change. As a result, it is very challenging to assemble an inventory that is 100 percent complete and accurate.

Rather than seeking to establish a comprehensive inventory prior

to transitioning services, agencies could focus on gathering information that is easily available and then use that sub-set of information to perform fair opportunity. This incremental approach to

transition will also build necessary skills at every step in the process through repetition and experience.

For the first time ever, agencies are now required to choose between two contract vehicles, either a Networx enterprise or

Networx universal. In an effort to eliminate as many decision

points as possible, agencies could be instructed to use both contracts simultaneously or, alternatively, they could be instructed to

use the more competitive Networx enterprise contract as the default contract vehicle.

For all intents and purposes, there are no differences between

the two contracts except that Networx enterprise has more vendors

and, for most services, lower prices. In fact, the Networx enterprise

contract supports 96 percent of the total number of services offered,

while Networx universal has only 92 percent of the services.

Furthermore, an analysis of pricing on the public Networx unit

pricer shows that agencies can realize substantial savings on the

most popular services by using the more competitive Networx enterprise contract. I have included specific examples in my written

testimony.

Making Networx enterprise the default contract could save the

Government an incremental $1 billion over the 10-year life of the

84

contract. Despite these facts, the vast majority of fair opportunity

awards have been made under the Networx universal contract.

Converting legacy information to the Networx CLIN structure

could easily be outsourced to the carriers. All five of the Networx

carriers have personnel with expertise in taking basic network configuration information and putting that into the framework that is

required to provide it ‘‘under Networx.’’

In regards to the fair opportunity process, agencies could eliminate the decision on whether or not to use the unit pricer by

issuing requests for proposal to all five of the Networx carriers and

let the carriers do the work of putting together the best price solutions to meet the Government’s needs.

Delays in the evaluation phase of transition can be reduced by

making the award process simpler and establishing lowest price as

the single and only decision criterion. All five Networx carriers

have been vetted by GSA and offer the same set of well-defined

services with common service level agreements. As a result, agencies could use a single decision criterion to make their selection.

In closing, Level 3 Communications believes that each step in the

transition process could be accelerated in the following ways: one,

parsing out the legacy service inventories into smaller pieces; two,

making Networx enterprise the default contract or issuing all requirements on both contracts simultaneously; three, using the expertise that exists within the carriers to translate legacy service information into Networx CLINs; four, issuing all requirements as

requests for proposal; and, five, establishing lowest price as the

sole decision criterion for transition.

Level 3 Communications would like to thank the committee for

the opportunity to testify, and we look forward to answering any

questions.

[The prepared statement of Mr. Morche follows:]

85

86

87

88

89

90

91

Chairman TOWNS. Thank you very much, Mr. Morche, for your

testimony.

Mr. Herring.

STATEMENT OF DON HERRING

Mr. HERRING. Good morning. Thank you, Mr. Chairman, Ranking Member Issa, and members of the committee, for the opportunity to share AT&T’s observations about Networx transition.

I am Don Herring, and as the leader of AT&T’s Federal Government business I am actually energized by the potential of Networx

to transform the way the Government operates and interacts with

its citizens.

AT&T, as you may know, is a premier supplier of global network

and information services. We bring a highly reliable, resilient, and

secure network infrastructure to support the advanced needs of our

worldwide customer base. The AT&T business unit that I am fortunate enough to lead, AT&T Government Solutions, relies on talented staff members who focus on the IT needs of the Federal Government. This team of AT&T professionals is committed to the success of Networx.

Transitions the size and scope of Networx are demanding, but we

have a vast base of both commercial and government experience to

accomplish these efforts in a timely fashion. AT&T is already

transforming several agencies’ networks to secure and cost-effective

technologies. At one agency, for example, we are deploying a virtual private network to over 250 remote locations, and together we

are exploring the addition of wireless sensors and satellite enhanced mobility services.

At another agency, we were selected to transform its entire communications network of over 1,000 agency sites to deliver technologies ranging from traditional voice to secure data networks to

mobility services.

And at another agency we are providing cloud-based information

distribution services to improve their constituent communications.

The scope and scale of Networx allows us to deliver the full

range of AT&T’s innovative technology and services to the Federal

Government.

Networx transitions have an extraordinary number of moving

parts that require rigorous coordination. This is true regardless of

the network’s size or scope, and it is not a small task for agency

procurement and CIO teams. In many cases the challenges faced

by the transition teams have been compounded by external factors

that demand attention and divert agencies’ resources away from

Networx.

Cybersecurity, improved transparency, and social media policies

to support a more-connected and mobile employee base are extremely important, as they enable us to deliver today’s and tomorrow’s technology to the Government. However, these efforts do impact the time, resources, and expertise that can be directed to the

Networx effort.

Agency staffing complications also impact Networx transition.

Because transition efforts of this magnitude are a once-in-a-decade

occurrence, many agencies lack the staffing resources necessary to

92

manage the technical and logistical details associated with an

agency-wide transition.

There are, however, steps that can be taken to quicken the pace

of Networx transition. To reduce risks associated with the anticipated surge in orders as the deadline approaches, agencies, GSA,

and Networx service providers should coordinate to develop and adhere to specific, disclosed, and harmonized time tables for releases

of requests for proposals and subsequent awards.

Second, supplementary resources should be provided to agency

teams that are struggling to make and implement informed choices

as they move to Networx. To that end, the Government should consider dedicating resources to support transition, whose responsibilities include: one, establishing a centralized pool of experts to deploy within agencies to manage and complete transition; two, working directly with individual agencies to craft detailed transition

strategies with contingent milestones; and, three, creating a repository of agency strategies and schedules to share with other agencies and industry.

Finally, we recommend the Government consider providing incentives to agencies to create comprehensive transition plans and

adhere to them. Specifically, we suggest the Government review

the timing and the structure of the transition reimbursement credit

program to support thoughtful agency transition planning and execution. This recommendation should in no way be interpreted as an

effort to slow transition, but rather to reflect our strong believe

that an improved planning process should ultimately speed transition.

In summary, there is a great deal to be gained from Networx.

Significant financial efficiencies, enhanced technology services,

Government operations transformation, and AT&T is committed to

the success of Networx.

Thank you, Mr. Chairman, for holding this important hearing. I

am happy to take any questions.

[The prepared statement of Mr. Herring follows:]

93

94

95

96

97

98

99

100

101

Chairman TOWNS. Thank you, Mr. Herring, for your testimony.

Let me just, before I move from you, when you mention supplemental and incentives, what do you actually mean by that?

Mr. HERRING. So today agencies are eligible for a transition reimbursement credit from GSA if they submit all of their orders. In

fact, there is a deadline now by August 31st of this year. That is

an important step in a milestone; however, it is not the only step.

We believe at AT&T that the way you achieve ultimate goals and

implement large projects is to break it down into smaller projects,

milestones that are held closely, that folks are accountable for, and

that you would then incent agencies to meet those many milestones

along the way.

So giving orders to the Networx carriers is a very important step.

It is not the only step. And I would suggest the Government looks

at that so that we can chunk this, if you will, into smaller bites

but still get toward the ultimate transition goal of having everything transitioned by June of next year.

Chairman TOWNS. Right. I asked this of the first panel, but let

me ask you, too. What is the single greatest thing that we could

do today, right now, to speed up this transition? I just want to go

right down the line. Why don’t I start with you, Ms. Zeleniak?

Ms. ZELENIAK. Thank you. I think it is pretty much come across.

Agencies need to dedicate the resources to getting the job done, so

I think that the single biggest thing would be to call on those agencies who have to go through transition and have them identify who

will be leading their transition and what is the team that they are

going to put in place to make it happen.

Chairman TOWNS. Mr. White.

Mr. WHITE. What I would suggest is that, for the agencies that

have not made their decisions, to put together their statements of

work, get that process going, because that is the front end of the

process. Until they make their evaluation on who they want to do

business with going forward, nothing else occurs, so I would encourage the agencies to get their paper out to the five carriers and

allow us to move forward.

Chairman TOWNS. Ms. Gowen.

Ms. GOWEN. Well, I think I said this in my testimony. I will repeat it. I believe that, first, the agencies do need to make their decision on who their vendor is. They can do that by opening a dialog,

by looking at pricing tables, by having pricing bids. If they feel

they really have to have a statement of work, have oral responses.

That will quicken the process, and then make a decision.

There are many agencies who have responses from us in-house.

They have had them in house for months and months. So if they

would rigorously follow their evaluation criteria and make a decision, that is a great step forward.

Last, those who have made decisions, if they will put a project

plan together, put the resources against it, and stick to it, then we

could all be successful.

Chairman TOWNS. All right. Mr. Morche.

Mr. MORCHE. Thank you. Ideally, the agencies outsource as much

of the work as possible to the carriers. We have heard quit a bit

today about how the agencies are under-resourced with the right

kinds of individuals. High-level activities such as converting the exVerDate 11-MAY-2000 14:10 Feb 15, 2011 Jkt 000000 PO 00000 Frm 00105 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\63039.TXT KATIE PsN: KATIE
102

isting CLIN structure for their inventories to the new Networx

CLIN structure——

Mr. CONNOLLY. Excuse me, Mr. Chairman. We cannot hear the

witness.

Mr. MORCHE. Sorry. Having the carriers do the conversion work

from the FTS 2001 contract structure to Networx is something that

we are all capable of doing. Encouraging the agencies to not try to

complete a 100 percent inventory of the current services but to

complete inventories based on regions, based on sub-agencies,

based on types of service, and move those out in smaller, more

manageable statements of work.

Also, to eliminate the confusion about which contract to use. We

believe firmly that more competition is better, but lower pricing is

better and that is recognized by Networx enterprise.

Chairman TOWNS. All right. Thank you.

Mr. Herring.

Mr. HERRING. Yes. Thank you, Mr. Chairman. We believe going

forward the biggest single thing that could happen is ensuring predictability. That is, when does an agency plan to transition their

service from FTS 2001 to Networx. And to get predictability you

have to ensure that a full and complete plan is done. Milestones,

that is across agency, GSA, and the folks at this table, as well. Predictability will allow all of us to identify where the problems are.

A milestone plan will allow us to identify where the future problems will be. I think that will ensure speedy transition, more

speedy transition on to Networx.

Chairman TOWNS. All right. Thank you very much.

I now yield 5 minutes to the ranking member, Congressman Issa.

Mr. ISSA. Thank you, Mr. Chairman.

I want to thank you all for being here. I find myself in an odd

situation. I recognize that I have the five premier suppliers of telecommunication services in the country, but I have a contract that

doesn’t seem to match.

Let me just try to go through a couple of questions. We had the

GSA here a moment ago. I said nothing ill of them, but perhaps

you will.

For Sprint and Level 3, is there any reason that you couldn’t provide, if you were allowed to under the ‘‘universal contract,’’ the

same services the universal contract has? More or less a yes or no.

Could you, in fact, bid and meet, under the universal contract, all

of its requirements?

Mr. MORCHE. We could.

Mr. ISSA. Mr. White.

Mr. WHITE. We bid universal and we lost that contract some

years ago. Currently we hold the Networx enterprise contract and

we can provide all the capabilities that are listed on the enterprise

contract, which meets the large majority of the requirements of the

agencies.

Mr. ISSA. So if I understand correctly, if the GSA simply said you

can say I want a universal contract but I want the enterprise

prices and terms that you two offer on your enterprise contract,

you could do that? You could meet the same prices? I noticed that

the other three vendors, they offer the same price on both contracts. Would you do the same, I guess is the real short question?

103

Mr. WHITE. Sprint would, and I think part of the confusion for

the agencies today is that there is duplicity of services. There are

also examples where prices for services are not the same, and that

has created the structure where there are literally millions of pricing items, which causes a lot of confusion and delays.

Mr. ISSA. Sure. And, of course, I am, like most Members of Congress, given Cliffs Notes of specific examples, so the examples I

have in front of me are dedicated, non-dedicated, high-speed

broadband lines going from 10 MIP through AT&T. After T3 I

never bought anything faster than that, so the rest of them are just

kind of interesting to me.

But, Mr. Morche, on behalf of L3, you are, in the case, in my

notes, at least, both dedicated and non-dedicated T–1 lines or 1-

MIP lines. You are dramatically lower on the Networx enterprise

than your competition. You simply are the least expensive. Are

those prices good if you were on universal?

Mr. MORCHE. Absolutely. There is no reason for us to have higher pricing.

Mr. ISSA. OK. So one of the questions for this committee to send

back to GSA in our followup would be why wouldn’t you be allowed

to comply with those contracts based on the bid. In other words,

say if somebody wants universal, it is all five of you, just as if

somebody wants enterprise it is all five of you. From the two of

you, that is OK, right?

Mr. MORCHE. Absolutely.

Mr. WHITE. Absolutely.

Mr. ISSA. Well, I have three others here at the table. Is there any

reason that the customer that you are now sitting in front of, we

are a consumer, too, wouldn’t be better off, I’m not sure if your

companies would be, if GSA simply said you can choose to have

this ‘‘universal,’’ but you can still get these other two and their existing prices, no re-bid. Is there any reason that, from my standpoint, that isn’t fair for me to try to do? Ms. Gowen.

Ms. GOWEN. There was initially a fundamental difference between Networx universal and enterprise, and Networx universal

was supposed to be the continuity of operations contract, had every

single thing the predecessor contract had in it.

Mr. ISSA. Yes.

Ms. GOWEN. Enterprise did not. And I don’t believe that has

changed. So once you got initial transition done, then you could

open up the whole idea of merging the contracts.

Mr. ISSA. OK.

Ms. GOWEN. But you would have to get to the point where you

had the continuity accommodated.

Mr. ISSA. OK. Then let me go through this. I guess a couple of

you have bridge, Verizon and Sprint.

Ms. ZELENIAK. Yes, that is correct.

Mr. ISSA. So people are negotiating bridge contracts right now?

Ms. ZELENIAK. Well, not right now. We are on the bridge contract

right now.

Mr. ISSA. You are on the bridge contract.

Ms. ZELENIAK. We are moving to continuity of service.

Mr. ISSA. But they are paying a higher price for it?

104

Ms. ZELENIAK. They are paying a higher price for some services

than Networx.

Mr. ISSA. Why? Why should I pay a higher price for the same

service if you have said you can deliver them with a profit at the

lower price?

Ms. ZELENIAK. Sure. When we were competing for Networx and

we build a lot of our back office systems and processes we put a

lot of automation into the process, created tools that are specific for

Networx that don’t work for FTS 2001. So part of the way of reducing prices was to introduce automation into the process, and so

that is one of the reasons clearly why the rates are different.

And in terms of the two different contracts, under Networx universal we had to comply with the requirements for 39 mandatory

services. On enterprise I think it was something like 13. So there

is a difference on what you were required to do in universal.

The other thing is the prices can change on the contracts all the

time, so prices I think, since the contracts have been awarded,

have been lowered repeatedly on both contracts. So if an agency

really wants to look at all five, they already have enterprise to do

it.

Mr. ISSA. I guess I go back to the same question. My time is expiring. Why is it universal really is necessary today? I understand

this idea that you bridge once and then you are able to bridge better, but now we are talking about taking until 2011. The contract

is half over by the time somebody takes the baby step in some

cases. Am I missing something, or is that correct?

Mr. HERRING. If I may, sir?

Mr. ISSA. Yes, sir.

Mr. HERRING. I will give you our opinion on this, as well. I don’t

believe that the cause of the delay thus far for Networx is caused

by having two contracts. I don’t think it is a major decision for an

agency to decide between A or B, in this case universal or enterprise. Instead, we should really focus the agencies on making that

initial decision, not a difficult one on which one to choose. It is in

plain black and white on what people can buy and services, what

the prices are, and instead concentrate on what are the milestones

to get you transitioned to whatever agency and whatever carrier

you choose.

Trying to address whether we should have one or two contracts,

which is now a 7-year-old issue, takes time away and energy and

distraction from really the task at hand for all of us, which is to

transition to Networx.

Mr. ISSA. OK. Well, I am going to ask all of you to give me one

answer for the record. Be as lengthy and complete as you can.

From our standpoint sitting up here, Networx is less expensive,

and it is where we are going to. Please answer for the record as

completely as possible why this committee should not look toward

moving all of Government to a less-expensive, more-competitive solution through interim legislation.

In other words, we are looking and saying you guys are getting

these roll-outs fairly slow. We do not have to wait. We do not have

to maintain Networx to its ending date. We can, in fact, look at

new legislation for new opportunities that pushes agencies toward

better, cheaper, faster.

105

So please give me your answers from each of your companies’

perspectives why this committee should not begin the process of

moving us toward a unified Networx solution type re-bid that

would envision that if it is going to take until 2011 to get everybody ‘‘up to this baby step,’’ that we shouldn’t look at 2011 as an

implementation of the next step.

Thank you, Mr. Chairman.

Chairman TOWNS. Let me remind the gentleman that this hearing has to be over at 11 a.m.

Mr. ISSA. I am done.

Chairman TOWNS. OK. Thank you.

Mr. ISSA. I only wanted those answers for the record. It would

take way too long to do it any other way. Thank you.

Chairman TOWNS. I now yield to the gentleman from Virginia.

Mr. CONNOLLY. Thank you, Mr. Chairman.

Ms. Gowen, in your written testimony you talk about the problems with the slow transition to Networx and you said it could

have been overcome if GSA had simplified the procurement process

and helped individual agencies. I wonder if you could elaborate on

that? Is the procurement process the villain of the piece here, or

is it a big part of the problem?

Ms. GOWEN. There are many villains here. My statement there

was simply GSA is doing that now. They are helping agencies and

bringing resources to bear to help them get their decisions made,

their transitions made. Early on in the process that did not happen. As far as procurement simplified, once again, in our mind it

was a matter of resources, technical and contracting, and if OMB

and GSA had helped agencies figure out if I save money here I can

afford to hire some contractors to help me get there, and to develop

that business case and move forward. And early on that did not

happen.

Mr. CONNOLLY. But I take it from your testimony that, nonetheless, there are some streamlining ideas you have about the procurement process in general, keying in on this experience that you

might have us consider.

Ms. GOWEN. For future issues, well, that is a fascinating question.

Mr. CONNOLLY. I guess what I am getting at is clearly this has

been a problematic situation. What are the lessons learned moving

forward? We need to fix this, but there are lessons to be learned

moving forward, and I was intrigued by your comment on the procurement process being at least one big piece of that.

Ms. GOWEN. Well, that is this whole fair opportunity process, and

it has been very complex for agencies. I think many of us sat here

and said initially if agencies had done a like-for-like transition and

made decisions on like-for-like, we would have been much further

along. Instead, and many of us encouraged this, because we have

a contract that allows for it, we encouraged agencies to look at

transformation and adopting new technologies, but that is a complex process, and most of them initially stopped their dialog with

industry and said, you know, I have a procurement process going

on. I can’t talk to you.

106

I think if agencies had kept a dialog up with industry, we could

have helped them simplify what these statements of work could

have looked like. We could have helped quicken the process.

So I think that is a big lesson that we all could learn is somehow

or another to get the contracting shops throughout the Government

to understand that having dialog with industry is not a bad thing,

it is a helpful thing and should happen up front.

Mr. CONNOLLY. I certainly concur.

Mr. Herring, did you want to comment?

Mr. HERRING. Yes, thank you, Mr. Connolly. I appreciate your

comments earlier today.

I agree with the comments that more open dialog within the parameters of the Federal acquisition regulations, of course, would be

helpful. Oftentimes this goes back to my point of making sure there

are milestones and a project plan, if you will, and that includes in

the procurement process. When will an RFP, request for proposal,

be issued? When do you expect to make an award? That just parlays into the transition effort, as well.

But if I could expand my answer, as well, onto a slightly different topic but an issue that seems to be a common theme here,

which is let’s go ahead and do like-for-like transition, I do believe

that will speed the transition up. However, I think we should not

be short-sighted in what this contract called Networx can do.

We talk about price. Very important component. We talk about

speed. Very important. Getting to the June date of next year, as

well. But I think something that should have equal importance, as

well, is making sure Government agencies can take advantage of

the advanced technologies that are on the Networx contract. To go

like-for-like is essentially saying buy the same service you bought

10 years ago.

We all know how much technology has advanced in the past 10

years and is advancing each and every day and each and every

month. So looking at ways to both speed the transition, lower costs

for governments and therefore helping our citizens, but also keeping in mind technology advancement, which is what this contract

is designed to do. In fact, it is very flexible on what new technologies you can add to it.

I think we should make sure we look at the entire picture.

Thank you.

Mr. CONNOLLY. Thank you. I see my time is up. If I had more

time, I would go on from the procurement process to ask you about

the personnel challenge, because you heard the testimony in the

previous panel. I mean, to me it is stunning——

Chairman TOWNS. I will yield the gentleman an additional 2

minutes before he takes it.

Mr. CONNOLLY. I thank the chairman.

All right. Let me ask, because you heard the testimony about

agencies even needing help on statement of work from GSA, and

simply did not have the capability in-house, and even in some large

agencies, frankly to move forward, and if somebody passed on or

transitioned out the capability went with them.

From your point of view as carriers, how much of an impediment

is that, too, in moving forward successfully?

Mr. HERRING. I will start and thank you.

107

I do believe it is an impediment at the moment. I believe there

are resource drains, not necessarily in quantity, although that is an

issue inside of agencies, but sometimes in the skill set, as well. And

it supports the point that I made just previously, which is if we are

short-sighted enough to only look at the speed and go like-for-like,

we will be more reliant upon people who have had those skill sets

for the last 10 years and maybe even beyond and not allow new

technology automation to help with some of that, or if people can

change their skills then and focus on the agency’s mission.

Thank you.

Mr. MORCHE. I think the fact that we are here 3 years later talking about transition is somewhat appalling. We started this whole

conversation years ago about how can we transform Government to

be on par with private industry. I would compare our commercial

side of our business to the Government side of our business and

say there is a 3- to 5-year gap in technology. Looking at the lack

of resources inside the agencies, the ability to re-engineer and rearchitect what is there has put a great deal of pressure on the

agencies, where we have now fallen back to a point where we will

accept a transition of like-for-like.

At this point, getting the transition done is a step toward transformation. I think we have come to a realization that transformation in one fell swoop is just overwhelming at this point for

the agencies.

That being said, transitioning like-for-like, we should still take

advantage of every opportunity we have for Government to have

access to the lowest prices and greatest networks that our country

avails.

Ms. GOWEN. I have to harken back to the dialog with industry.

I think industry can help the agencies work through this process.

I think probably every one of my peers feels that way, as well. You

have to do it before you are into a very formal procurement process, but I think if they do that well ahead we can all sit down and

help them with transformation. I agree with that. We are all saying like-for-like now because we are so late in this process. If we

were 3 years ago and we could have agencies in full dialog with all

of us, you know, I think it would be a different world, but we can’t.

We have to move forward from today.

Mr. WHITE. Obviously, human capital is a growing issue. As technology changes, it is going to become even more exacerbated.

I think one of the things that we should be focused on is how can

we simplify the administrative side of the equation so that the people that are in the jobs today can do a more effective and efficient

job by simplifying the contract environment so they don’t have to

wade through millions of different contract line items in order to

figure out which direction they should go in.

So from my perspective it is all very simple in that the more

focus and the easier we can make it for the agencies by collapsing

the contracts, the faster the whole process will move forward.

Thank you.

Ms. ZELENIAK. And from our perspective, we do see that the lack

of acquisition officers is a big issue, and there just aren’t as many

as there used to be. And on the other side of the aisle the Federal

contracting process has become more complex, so when you put

108

those two together you definitely are going to run into some roadblocks.

So simplifying the actual statements of work, breaking up the

procurements into smaller pieces might be a good way to go for

Government.

Chairman TOWNS. Thank you very much.

I now yield to the gentlewoman from California.

Ms. WATSON. Thank you, Mr. Chairman, for this hearing.

I think you are addressing several of the concerns that I have,

but I want to state them, and you can then write to the committee

as a whole your responses, because I think I am hearing the answers but let me just place it out there.

As you know, we have a joint session and we need to get down

there.

There are worries that as the final years of transition approaches

there will be a surge in orders by agencies straining to meet the

deadline, and this surge could put a significant strain on vendor resources and ultimately jeopardize the success of the transition.

Here are the questions: What are all of you doing to ensure that

you will not be overwhelmed during the final months of the transition if there is a surge in orders? I think I have heard some of the

responses, but this will help you frame your response to the committee.

What should the agencies, GSA, and OMB be doing to coordinate

the timing of orders and to reduce the risk of this occurring?

What do you think are the key check points agencies should have

in any plan, and how would their implementation be measured?

And don’t you think it is a little late in the process for agencies

to just now be forming a detailed transition strategy?

All of you have been referencing those questions. I would like to

have them in writing, Mr. Chair, rather than take the time for

them to respond as they have been doing.

Chairman TOWNS. Without objection, so ordered.

Ms. WATSON. If they could get the gist of what we are asking.

I would appreciate it.

Thank you so much, all the witnesses, for being here.

Chairman TOWNS. Let me just ask one quick question before we

conclude.

Can you provide a real-world example of how the transition delay

has affected your business? Just right down the line. Start with

you, Mr. Morche.

Mr. MORCHE. I am happy to go first.

Chairman TOWNS. Sure.

Mr. MORCHE. We have talked about this amongst each other and

publicly. The challenge that a publicly traded company has is we

have to manage our operating budget, which is head count. We

manage that based on, as Don said, milestones and expectations of

when business demand is going to come our way. When we expect

a tsunami of orders and they don’t come, and then we expect another tsunami of orders and they don’t come, and we expect another tsunami of orders and they don’t come, it is very, very difficult for us to ensure that we have the right people in place at the

company at the right time and to be prepared for the day when

they do finally come. It is extremely taxing in terms of our budgets

109

and our planning. And on top of that, it is the capital budget for

where we need to augment all of our networks relative to new technology.

Mr. WHITE. I would add that this is all about a business case,

so there is the promise of lower prices on Networx. We are delivering that to agencies that have transitioned today. But the promise

of lower prices was built on some basic assumptions in the business

case, so that really is the risk as it exists today, that we are not

seeing the return that we had projected. We have invested at

Sprint millions of dollars in building online portals to be easier to

do business with to support new technology and services, so that

is the feedback I would provide, Mr. Chairman.

Ms. GOWEN. And I would echo both of my colleagues on both

sides. We have, as I said, hired people ready to get orders and respond to statements of work. We have had three different occasions

when we expected tsunamis of statements of work, hired up, ready

to go, and had a little swell and that was it and agencies relaxed

again.

I expect exactly the same thing with orders. So it is building up

a cadre and then stopping.

And the other piece is exactly what Bill said. We have invested

millions and millions, tens, hundreds of millions in systems that

have not been used to date, and there is little return.

Ms. ZELENIAK. I would totally echo my colleagues, as well, and

just add that what is expected to be done between now and June

2011 just might be impossible. I think it needs to be recognized

that no matter what actions are taken, the volume of activity yet

to be done is staggering. I think we have all agreed among ourselves that our ability to actually accomplish all that by June 2011,

given the current status, is going to be quite difficult, and so that

is one of the challenges for our business.

Mr. HERRING. Thank you, Mr. Chairman.

We have the same financial pressures as everyone else at the

table. We invested millions of dollars, as well, up front, and that

is a real concern.

Maybe a bit of a softer concern but one that is real to us and real

to the way we think about how we are trying to help the Federal

Government and its citizens is thus far, because many decisions

have not been made to transition to Networx, we haven’t been able

to offer the best that AT&T can offer to agencies so far. We are trying to help agencies transform the way they achieve their mission,

the way they help citizens, not just transition from one contract to

another. So I worry that this time pressure that we are now under

doesn’t allow all of us, including AT&T, to put our best foot forward

to help serve the citizens.

Chairman TOWNS. I yield to the ranking member.

Mr. ISSA. Thank you, Mr. Chairman.

Often one round leads to an even better set of questions in the

second round, and these will probably be ones that again I am

going to ask you to primarily submit for the record.

Before I came to Congress I ran an electronics company and I

stay in touch. I am still on the board of the company, so I get to

see their price-downs, who is supplying services, and so on. I also

get to see the very short period of contracts with no protest that

110

we have. We bring all of you in, we bid it, we make our decision

based on a package of price and services and delivery, and we

make our decision and that is the end of it and the purchasing

agent has to tell four out of the five we are really sorry but, you

know, next time.

It appears as though part of the reform that this committee

should be looking at with GSA is what I talked about earlier in the

statement, which is that when I go to a buffet I can make a very

quick decision. I may not take the vegetables they planned, but I

can make a quick decision. This contract or series of contracts has

enjoyed protest after GSA has done the primary bidding in the

process. It has enjoyed a tendency for you to, if you will, all of you,

to be part of the slow-down, not just part of the frustration that

it is going slow.

So I am going to ask each of you, if we go back to GSA and we

say we want to have this whole process changed, would each of you

support a process in which the selection by the agencies would be

very much more like a buffet? They would be able to make the decision among you as vendors with a price structure in place and effectively not have to go through the level of bidding that they are

going through, because all day today we have been hearing that in

a sense we don’t have the capability to know what we want, we

don’t have the ability to write it, and then, of course, after we make

a decision one of you that doesn’t get it protests the process that

somehow the work wasn’t properly defined.

If anyone disagrees, please speak up now and we will save time

if there is minimum disagreement. Yes, sir?

Mr. HERRING. Yes. I disagree that going back to not allowing protests to happen——

Mr. ISSA. I am not saying not allowing protests; I am saying that

GSA would streamline the process so that more of the decisions

would be made in the GSA process so that an agency could choose.

For example, assuming that an agency said we believe we fit GSA

table No. 2, for example, and as to this particular potpourri of services, and we fit this as to voice services, and of course they have

their own internal transition costs because you are not supplying

all of the hardware. If, in fact, GSA pre-screened this to where as

long as, if you will, a safe haven in the bidding process, as long as

an agency said, yes, we reasonably believe we fit under GSA X, we

then can make that decision without a protest, just the same as

somebody walks up and says, yeah, I think this will work for me,

period.

It appears as though, and all of you have been involved in the

protest, the protest capability is generated by an absence of certainty by an agency that if they choose something that was pre-selected they have a safe haven. It is just implemented.

Do you still disagree with that?

Mr. HERRING. I do agree that streamlining would be very helpful

and, frankly, oversight from GSA I think is also what we are talking about here would be helpful. We do not support, though, getting rid of the protest capability in general.

If I could just expand for 1 second, I recognize the time is——

111

Mr. ISSA. We are assuming that you would protest at the GSA

if they felt that their schedule or block things agency could pick

from were inappropriate, but go ahead.

Mr. HERRING. That capability we would welcome. AT&T has protested four awards thus far. In three of the cases, the Government

has decided to take remedy and has agreed with our position to go

change, either re-bid the process, etc. I think it falls back to what

we talked about before, which is the skill set and the personnel inside of an agency is sometimes lacking in understanding the procurement process in general, understanding the details of it, so

oversight and help from GSA would be recommended.

Mr. ISSA. Ms. Gowen, you appear to have your finger at the

ready. We are frustrated because we would like to see agencies

making accurate decisions, but we would also like to see as much

of it pre-determined so that those decisions would be within the capability of the agency. But go ahead, please.

Ms. GOWEN. Well, first of all, your whole analogy of the buffet,

you know, I think the contract is a buffet. One of the issues from

my perspective is that agencies have unduly complicated choosing

from the buffet.

As vis-a-vis protests, the big problem is when you do a complex

RFP statement of work and you set out an evaluation criteria and

then you don’t follow it, you get into trouble. I don’t care whether

it is Networx or full and open somewhere else, agencies have to do

that.

Mr. ISSA. We will just use a re-fueling tanker as a hypothetical

example.

Ms. GOWEN. Right.

Mr. ISSA. Thank you.

I guess quickly, so the chairman can——

Mr. MORCHE. If I could make one point just for the record, Level

3, we have never made a protest, so I think we are the only one

of the five.

I would highlight I think one of the problems we all see is the

statements of work that are coming out are so large, if somebody

was to lose it and they feel it was for the wrong reason, this once

in a lifetime opportunity goes by the wayside. It puts an enormous

amount of pressure on carriers to want to protest that. If the statements of work RFPs were much smaller, more reasonable for us to

digest, I think the pressure on a carrier to want to protest a loss

of that size is diminished significantly. As long as all five of us

have access to the same thing, I think everybody benefits.

Mr. ISSA. And I think I see heads both in first row and second

row shaking.

Finally, you get the closing word.

Ms. ZELENIAK. Thank you.

I think that one of the things the agencies are doing is putting

together very complex statements of work to make sure they don’t

have to do another fair opportunity later. Really. I think that they

are trying to get everything into one to say, OK, now I can buy this

and all the follow-on services I will ever need.

I think, once again, if we simplified, you know, let’s buy this

much now and do another fair opportunity once you get past transition, we might be able to get this thing moving a little faster.

112

Mr. ISSA. Thank you, Mr. Chairman.

Chairman TOWNS. Let me thank all of you for your testimony

and to say to you that we really appreciate it. Our concern on this

side is that if there is an opportunity to save money and to cut

down on cost, that is our interest, that is our concern. Of course,

we would like to see it move as quickly as possible. This is why

we have these hearings, to sort of see in terms of what we might

be able to do and also to get information coming from you as to

how we might be able to facilitate it.

I want to thank all of you for your testimony, and this hearing

is adjourned.

[Whereupon, at 10:59 a.m., the committee was adjourned.]

[Additional information submitted for the hearing record follows:]

113

114

115

116

117

118

119

120

121

122

123

124

125

126

127

128

129

130

131

Æ