Telecommunications: GSA Has Made Progress in Planning Governmentwide Program but Challenges Remain
Published: 2004-09-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The General Services Administration (GSA) has begun planning for a governmentwide telecommunications program known as Networx. GSA issued a request for information in October 2003 that proposed two acquisitions: Networx Universal, which was to provide a full range of national and international network services across the United States, and Networx Select, which was to provide agencies with leading-edge services with less extensive geographic coverage. Contracts under the Select acquisition were to be awarded 9 months after the Universal In February, we testified on GSA's initial plans and identified four key challenges GSA faced in ensuring a successful outcome for the program: structure and scheduling, transition planning, service inventories, and performance measures. GAO assessed GSA's progress in addressing the challenges identified as well as GSA's efforts to address long-standing issues related to billing.
section_title: What GAO Found
paragraphs: GSA has addressed several of the significant challenges facing the Networx program. Work is either planned or underway on other challenges, but additional efforts will be necessary to fully address them. Specifically, GSA has addressed concerns about the structure and scheduling of the two acquisitions, now known as Universal and Enterprise. Instead of a 9-month lag between acquisitions that might complicate agency decision-making, GSA now plans to issue the requests for proposal (RFP) for the contracts simultaneously. In addition, the Universal contracts will now require that offerors provide services only where federal agencies are located, rather than in the entire country, to allow more potential industry participants to compete--a concern raised in prior comments. GSA has solicited for contractor support to assist with the development of plans to transition to the Networx contracts. However, GSA has not yet developed procedures to ensure that lessons from past transitions are applied, or established a transition strategy. GSA worked with agencies to develop a service-level inventory as input into the requirements for the new contracts. In addition, it plans to work with agencies to build a more detailed inventory of currently-used telecommunications services for use during transition. GSA plans to implement performance measures that evaluate progress against the program's goals. However, some of the measures are still under development, and it does not have a strategy for using the measures to monitor ongoing program performance. GSA has reduced the number of billing elements it will track and has begun a study designed to identify potential improvements in the billing process, but it lacks a strategy for addressing agency concerns about the usability of billing data. Until GSA develops and applies strategies for addressing the outstanding challenges facing Networx, it risks not being able to deliver all of the operations and cost improvements outlined in the program's goals.

section_title: Letter
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I am pleased to participate in the Committee’s hearing on the  General Services Administration’s (GSA) next generation  governmentwide telecommunications acquisition program, known  as Networx. As you know, GSA’s planning for this program is taking  place within an environment of tremendous change—in the  telecommunications industry, in underlying services and  technology, and potentially in the regulatory environment. In this  context, the Networx initiative can be viewed as a significant  opportunity for federal agencies—GSA’s customers—to flexibly  acquire and apply innovative telecommunications services offered  by industry to improve their operations.
As you know, GSA issued a request for information (RFI) in October  2003 describing the strategy of the proposed Networx program. At  that time, GSA proposed two acquisitions. Networx Universal was to  provide a full range of national and international network services;  offerors were to provide ubiquitous service across the United States.  Networx Select was to provide agencies with leading edge services  and solutions with less extensive geographic and service coverage  than required by Universal. Contracts under the Select acquisition  were to be awarded 9 months after the Universal contracts. Last  February, we testified on GSA’s initial planning efforts and  identified four challenges GSA faced in ensuring a successful  outcome for the program. These challenges related to the structure  and timing of the proposed contracts, and the need for transition  plans, an inventory of current services, and effective measures of  performance.
In April, you requested that we assess GSA’s progress in addressing  the challenges that we identified, as well as GSA’s efforts to address  long-standing issues related to billing. My testimony today presents  our results to date on these topics.
subsections: section_title: Background
paragraphs: GSA’s Federal Technology Service is responsible for ensuring that  federal agencies have access to the telecommunications services  and solutions needed to meet mission requirements. Currently, GSA  uses a series of contracts intended to meet agency needs for various  services. Specifically, it awarded two large, governmentwide  contracts for long-distance services—one to Sprint in December  1998 and one to MCI WorldCom in January 1999. Under the terms of  these contracts, known together as FTS2001, each firm was  guaranteed minimum revenues of $750 million over the life of the  contracts, which run for four base years and have four 1-year  extension options. If all contract options are exercised, those  contracts will expire in December 2006 and January 2007,  respectively. According to GSA, federal agencies spent  approximately $614 million on FTS2001 services during fiscal year  2003.
Related governmentwide telecommunications services are provided  through other additional GSA contracts: the Federal Wireless  Telecommunications Service contract and the FTS Satellite Service  contracts. The wireless contract was awarded in 1996 to provide  wireless telecommunications products and services to all federal  agencies, authorized federal contractors, and other users. It is  scheduled to expire in November of this year. Satellite services are  provided through a series of contracts for a variety of commercial  off-the-shelf satellite communications products and services,  including mobile, fixed, and broadcast services. These contracts will  expire in 2007.
We have periodically reviewed the development and implementation  of the FTS2001 program and assessed its progress. In March 2001  we reported to you on the delays encountered during the  government’s efforts to transition from the previous FTS2000 to the  FTS2001 contracts, the reasons for those delays, and the effects of  the delays on meeting FTS2001 program goals of maximizing  competition for services and ensuring best service and price. We  recommended that GSA take numerous actions to facilitate those  transition efforts. In April 2001 testimony before you, we reiterated  those recommendations and noted that the process of planning and  managing future telecommunications service acquisition would  benefit from an accurate and robust inventory of existing  telecommunications services. Ultimately, GSA acted on our  recommendations and the transitions were successfully completed.
GSA is now planning its Networx acquisition to replace the  contracts that are expiring. GSA has worked with representatives of  federal agencies, the telecommunications industry, and other  interested parties to lay the groundwork for the new program.  Agencies work directly with GSA and through the Interagency  Management Council (IMC), a group of senior federal information  resource officials who advise GSA on issues related to  telecommunications contracts. GSA and the IMC proposed eight  goals for the Networx program, including an emphasis on ongoing  support and performance-based contracts. The table lists each of  the program goals.
Program Goals Proposed for Networx   Service Continuity: Contracts should include all services currently available under  FTS2001 to facilitate a smooth transition.
Competitive prices: Prices should be better than those available elsewhere in the  telecommunications marketplace.  High quality services: Contracts should ensure a high quality of service throughout the  life of the contracts.  Full service vendors: Vendors should be capable of providing a broad array of services  to avoid duplication of administrative and contracting costs.  Alternate sources: Agencies should be able to choose from a greater number of  vendors and have access to emerging technologies.  Operations Support: GSA should provide fully integrated ordering, billing, and inventory  management.  Transition assistance and support: Contracts should include provisions for transition  support.  Performance-based contracts: Contracts should be performance based and include  service level agreements where possible.
In October 2003, GSA released a RFI describing its initial strategy  for the Networx program. In the RFI, GSA proposed two  acquisitions—Networx Universal and Networx Select. The Universal  acquisition was expected to satisfy requirements for a full range of  national and international network services. According to GSA, this  acquisition was intended to ensure the continuity of services and  prices found under expiring contracts that provide broad-ranging  service with global geographic coverage. Universal offerors were to  provide a full range of voice and data network services, managed  networking services and solutions, and network access, wireless,  and satellite communications services. In addition, offerors were to  provide these services at all locations across the United States.  Consequently, this acquisition was expected to result in multiple  contract awards to relatively few offerors because few were  expected to be able to satisfy the geographic coverage and  comprehensive service requirements.
By contrast, GSA planned to award multiple contracts for a more  geographically limited set of services under the Select acquisition.  These contracts were to provide agencies with leading edge services  and solutions with less extensive geographic and service coverage  than that required by Universal. Awards under the Universal and  Select acquisitions were to be staggered; the Select contracts were  to be awarded 9 months after the Universal contracts.
In February 2004, we testified on GSA’s initial planning efforts in  support of FTS Networx. After reviewing the RFI and the comments  submitted in response, we identified four major challenges that GSA  was likely to face as it proceeded:  ●  structuring and scheduling the Networx contracts to ensure that  federal agencies have available to them the competitively priced  telecommunications services they need to support their mission  objectives;   initiating the implementation planning actions needed to ensure a  smooth transition from current contracts to Networx;   ●  ensuring that adequate inventory information is available to  planners to provide an informed understanding of  governmentwide requirements; and  ●  establishing measures of success to aid acquisition decision  making and enable effective program management.
We noted that addressing these challenges would take solid  leadership from GSA and stakeholder commitment. Without such  actions, we concluded, the potential of Networx may not be  realized.
We have also previously reported on billing difficulties in GSA’s  telecommunications programs. For example, during the transition to  FTS2001, we found that several agencies were billed at improper  rates. Several agencies delayed their transition to the new contract  because resources planned for the transition were redirected to deal  with the billing errors. We recommended numerous actions to  improve the transition process, which GSA successfully  implemented.
section_title: Structure and Timing of Contracts Have Been Revised in Response to Comments
paragraphs: As we testified in February, the responses to the RFI identified a  series of concerns about GSA’s proposed acquisition strategy. Some  respondents commented that only the traditional long-distance  companies would be able to meet the requirements of the larger  contract. Others were concerned that the 9-month lag between  contracts would complicate decision making by asking agencies to  decide on a vendor for the more comprehensive contract before  being able to review the options available under the more limited  contracts.
GSA recently revised its contracting strategy in response to these  concerns. GSA still intends to meet the proposed program goals  through two sets of contracts. The first, known as Networx  Universal, requires offerors to provide 39 services everywhere a  federal office is locate, as well as anywhere else the company offers  those services commercially. Required services include toll-free  telecommunications, Internet services, and cellular services. Ten  other services, including satellite communications and paging  services, can be offered but are not required. The second, now  known as Networx Enterprise, requires offerors to provide nine  mandatory services in nearly 300 locations nationwide specified by  GSA; another 42 services can be offered at the option of the  company. The services required under the Enterprise contracts  focus on Internet-based offerings and related security and  management services. GSA intends to structure the contracts so that  the Universal offering meets the program goals of service continuity  and full service vendors, while the Enterprise contracts meet the  goal of providing alternative sources. Both sets of contracts are  intended to meet the other five goals, and each is planned to run for  4 years with three 2-year options.
The main difference between its current strategy and the plan  outlined in the RFI is that the geographic coverage requirements for  the Universal contracts are less stringent. Instead of having to offer  services in the entire country, service providers need only offer  service where federal offices are located (as well as where the  provider offers the service commercially) to qualify to compete for  the contracts. This change resulted in a 76 percent reduction in the  locations carriers must serve to be eligible to compete for the  contracts. In turn, this increased the percentage of the anticipated  service area that carriers could reach with their own networks.  According to program officials, they discussed the changes with  industry representatives, who are satisfied with the changes. In  addition, industry representatives did not raise any questions about  the new structure at the August industry forum.
GSA has also addressed the concern over the time between  contracts, by changing the proposed 9-month lag between the two  types of contracts. GSA currently plans to issue the requests for  proposal (RFP) for both the Universal and the Enterprise contracts  simultaneously. This table lists the key dates from the old and new  contract schedules.
Current schedule  (both contracts)
Factors contributing to delays in that transition included a lack of  data needed to accurately measure and effectively manage the  transitions, inadequate resources, and other process and procedural  issues. In testimony before you in April 2001 we stated that the value  of that critical program to customer agencies would be improved  through the application of identified lessons learned. Those in  industry who commented on the Networx RFI also noted the need  for strong and comprehensive program management to ensure a  successful transition, including issues such as the availability of  accurate inventories and well-defined contractor and government  responsibilities.
The IMC has established various subgroups to assist it in carrying  out its responsibilities. One of these subgroups—the Transition  Working Group—looked at transition issues from past transitions,  and in April 2003 identified 22 lessons learned. Some of the lessons  identified include the need for accurate inventory information and  the need to be flexible in transition planning. The group also drafted  a document intended to clearly define the responsibilities of GSA  and the agencies for transition-related costs, with the goal of  eliminating some of the confusion experienced in the past  transition.
However, GSA has not yet developed procedures to ensure that  lessons from past transitions are applied, nor has it established a  timeline of actions needed during the transition process. GSA  released a request for quotations on August 16 to solicit contract  help with developing a transition plan, including procedures  intended to prevent the types of errors that happened in the  previous transition. GSA expects to award a contract to the selected  contractor by October. According to program officials, GSA will be  able to make more progress on this issue when the contractor  begins. They also agree that a transition timeline is an important  management tool, and that they will begin developing such a  timeline soon. GSA believes that with almost 2 years until agencies  are scheduled to choose carriers under the new contracts, there is  still time to plan for an effective transition. However, until GSA  completes these planned actions, it risks repeating the transition  problems experienced in the past. To prevent such an occurrence,  and to ensure that transition plans are developed with adequate time  to be implemented, we are recommending that GSA develop a  transition timeline and procedures to prevent the reoccurrence of  identified difficulties from previous transitions.
section_title: GSA Has Developed an Inventory of Current Services, and Has Begun Planning for a More Detailed Inventory
paragraphs: We testified in February that it is important that GSA and its  customer agencies have a clear understanding of agency service  requirements in order to make properly informed acquisition  planning decisions. According to our ongoing research on best  practices in telecommunications acquisition and management, clear  understanding comes at least in part from having an accurate  baseline inventory of existing services and assets. More specifically,  an inventory allows planners to make informed judgments based on  an accurate analysis of current requirements and capabilities,  emerging needs that must be considered, and the current cost of  services. In addition, the FTS2001 transition lessons learned  document identified the lack of a good starting inventory as the  cause of problems in a number of areas and a contributor to the  slow start on the FTS2001 transition. Specifically, the IMC’s  Transition Working Group identified accurate inventories as a  requirement for conducting an efficient transition.
GSA is addressing the need for inventory information in two ways.  First, GSA developed an inventory of the services currently used by  its customers by reviewing the existing contracts, modifications to  them, and billing information. Agencies then verified this  information to ensure the listed services meet their current and  anticipated future needs. According to GSA officials, this inventory  was used in acquisition planning, for example, to justify its decision  on which services to include in the proposed Networx contracts and  which to make mandatory. Second, GSA is planning to work with its  customer agencies to develop more detailed inventories for  transition purposes. For example, the transition inventory would not  only identify which services are used, but it would also identify  where those services are used and how much. According to program  officials, GSA plans to provide agencies with initial information  based on billing and ordering data in November. Agencies will then  verify the GSA data using their own data sources. Because service  changes are expected to continue to occur, GSA expects this  process to continue until January 2006. Program officials also told  us that once it is in place, the inventory process could be used as an  ongoing management tool.
section_title: GSA Is Developing Performance Measures, but not a Strategy for Applying Them
paragraphs: Our research into recommended program and project measurement  practices highlights the importance of establishing clear measures  of success to aid acquisition decision making as well as to provide  the foundation for accountable program management. As we  testified earlier in the year, such internal measures define what must  be done for a project to be acceptable to the stakeholders and users  affected by it; these internal measures enable measurement of  progress and effectiveness in meeting objectives. Further, in  keeping with the principles of the Government Performance and  Results Act (GPRA), programs can be more effectively measured if  their goals and objectives are outcome-oriented (i.e., focused on  results or impact) rather than output-oriented (i.e., focused on  activities and processes).
According to agency officials, GSA plans to measure its  performance against each of the program’s goals. For some of these  goals, GSA has already determined how it will measure progress.  For example, GSA will measure progress towards the goal of  competitive prices using the same process it currently uses—a  direct comparison of contract rates to market rates. For other goals,  GSA officials stated that performance will be evident from the  contract selections. For example, the outcome of the goal of using  full-service providers will be known when the providers are  selected. However, for some goals, GSA has not yet determined how  it will measure progress. For the goals of high quality service and  operations support, GSA officials stated that specific metrics are  still in development as part of their efforts to develop service level  agreements for vendors.
While the approach described by program officials seems  reasonable, GSA has not determined when it will finalize the  measures still under development. In addition, GSA has not  developed a strategy outlining how it will use key measures to  monitor ongoing program performance. Until GSA develops a firm  strategy, it lacks assurance that the required program measures will  be in place at the appropriate time. As a result, its measures may  have limited effect as a program management tool. We therefore  recommend that GSA finalize its efforts to identify measures to  evaluate progress towards program goals and develop a strategy for  using those measures for ongoing program management.
section_title: Number of Billing Elements Has Been Reduced, but Other Billing Issues Are Unresolved
paragraphs: Clear, accurate, and complete billing records are an important  internal control: they record the detail of each telecommunications  transaction for later verification and management oversight.  However, bills and billing systems have been a problem in the  current generation of FTS programs and thus continue to be a  concern for their proposed replacement. In addition to the previous  experiences discussed earlier, both the telecommunications carriers  and GSA’s customer agencies have more recently raised concerns  about billing. Carriers asked GSA to address inconsistent and  sometimes conflicting billing requirements in different regions.  Some also questioned whether the number of billing elements—the  data fields tracked in the billing system—was excessive. Agencies  commented that the way in which they currently receive billing  information hampers their efforts to reconcile invoices and  produces inaccurate and incomplete bills. A few agencies  commented that billing difficulties have cost them hundreds of  thousands of dollars.
In response to industry’s concern about the number of billing  elements, GSA reduced the number of elements required under the  Networx contracts. In its RFI, GSA proposed the use of 513 billing  elements. Working in collaboration with the IMC and the Industry  Advisory Council, GSA reduced the number of billing data elements  to 196 (a reduction of 62 percent), with 54 elements being  government specific. In response to the concerns about the  accuracy of billing information, GSA plans to introduce service level  agreements with the carriers to hold the carriers accountable for the  accuracy of the billing data they provide.
GSA has also begun examining potential alternatives to the way it  currently consolidates carrier billing data and provides it to some  agencies. The study is considering several options, including the  option of contracting out bill consolidation, and the potential costs  and benefits of the options. According to program officials, one of  the goals of the study is to identify potential savings in  administrative costs.
However, GSA has not undertaken any similar efforts to identify the  causes of agency difficulties in billing and address them. GSA  officials attributed part of the uncertainty over future billing  procedures to a lack of consensus among industry on how to  improve the process. Regardless of the plans of industry, if GSA  does not develop a billing process that better meets the needs of its  customers, the agencies are likely to continue to experience  difficulties in managing their telecommunications costs. To better  address this challenge, we are recommending that GSA develop and  implement a strategy for addressing the billing data issues raised by  its customer agencies.
section_title: Contacts and Acknowledgements
paragraphs: Should you have any questions about this testimony, please contact  me by e-mail at koontzl@gao.gov or James Sweetman at  sweetmanj@gao.gov. We can also be reached at (202) 512-6240 and  (202) 512-3347, respectively. Other major contributors to this  testimony were Jamey Collins, Samuel Garman, and Nancy Glover.