Telecom Muddle

Treasury revives a procurement fraught with protests.

The Treasury Department's August request for another round of bidding on its telecommunications procurement left some industry observers perplexed, but at least they have reason to believe it's not dead yet.

"There's nothing normal about this process," says one telecommunications executive, who, with other industry sources, would speak only on condition of anonymity. The procurement in question is the Treasury Communications Enterprise, a solo effort to procure departmentwide data, voice and video technology. In an earlier solicitation amendment, Treasury told bidders to assume a contract award date of June 30, with transition from the agency's existing voice and data contracts beginning by Oct. 1. The evaluation process is taking longer than expected due to political and industry pressures, observers say. The latest proposals were due Aug. 28. A Treasury spokeswoman says the department can't comment on the contract while it remains in the evaluation process.

Earlier this year, the Treasury inspector general called on the department to consider canceling the procurement. On Capitol Hill, Rep. Tom Davis, R-Va., repeatedly has threatened it, either by saying he might block it through the appropriations process or by asking the Office of Management and Budget to bar the contract.

Most recently, Lurita Doan, the new head of the General Services Administration, has made several public speeches calling for Treasury to use Networx, GSA's governmentwide telecom procurement, suggesting in multiple venues that there is a strong likelihood that one of Treasury's providers will be a Networx awardee. Two incumbent telecom providers at Treasury that also are bidding as prime contractors on Networx are AT&T and Denver-based Qwest Communications.

GSA officials did not respond to e-mails or calls requesting clarification about whether other bidders have a strong probability of winning a Networx contract. One industry source says Doan's statements should not be taken literally. She has come under some criticism for making careless remarks in public, the executive says, and it's likely that her characterization of some companies' chances of winning a contract was another example. "She said something she perhaps didn't mean to say," the source says.

Meanwhile, industry ex-ecutives also are closely monitoring Treasury for clues to the future of TCE. The procurement's story assumed epic proportions after Treasury's December 2004 decision to award TCE to AT&T. Competitors successfully protested the award to the Government Accountability Office, and Treasury revoked it, promising to use GSA's Networx. Or so everybody thought, only to be surprised when in August 2005, Treasury said it would resurrect the solicitation and allow previous bidders to recompete.

Many allege a bias in favor of AT&T. Treasury "will fall over themselves to give this back to AT&T, but that's not what they're going to say," says another industry executive. AT&T has provided voice communications service at Treasury's Internal Revenue Service for many years, despite initially not winning a spot on FTS 2001, GSA's current government-wide telecom procurement vehicle. "There's a good bit of history with IRS that's favorable," the executive adds. An AT&T spokesman says the company cannot comment on TCE.

It's likely that no matter the outcome, the final award will lead to another round of objections, according to many industry officials. "The competition already is writing the protests," the executive says.

A May 1 article in The Washington Post announcing that AT&T had won TCE had many scratching their heads. Although the item was incorrect and the Post ran a correction, its publication is a matter of preoccupation for many, especially because it happened around the time Treasury had requested another round of bids. "Was that an indication of bad behavior, or was that just something stupid?" wonders another industry executive. The Post said it received the information from its subsidiary publication Washington Technology, although the editor, Nick Wakeman, says it "didn't come from us."

The fear of some industry players, the former executive says, is that Treasury is asking for multiple bids until it receives the right set of numbers enabling it to award the contract to AT&T.

Other observers urge caution. "My advice would be for all parties to wait for the award and wait for the contracting officer's debrief," says John Okay, a former GSA executive who is now a partner with Topside Consulting Group in Vienna, Va. The multiple rounds of best and final offers are not out of the ordinary, he says: "It's not unusual to have at least a couple . . . rounds for the purpose of getting even better prices."