The Networx contract is a good deal for Federal agencies – but that good deal isn’t doing agencies much good. So says House Oversight and Government Reform Committee Chairman Edolphus Towns. He says the “theory behind Networx is a good one: the Federal government ought to be able to use its 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…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 the 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!”

So Congressman Towns asked GSA and vendor representatives to attend a hearing called “Running Out of Time: Telecommunications Transition Delays Wasting Millions of Federal Dollars” last Thursday. But Chairman Towns didn’t get a witness from the one agency he really wanted to hear from: OMB. “OMB’s absence is unfortunate, because I think OMB’s leadership will be a key factor in expediting the transition to Networx. I’m genuinely disappointed that they chose not to participate today.”

OMB’s response to the hubbub over Networx will be the key to watch, according to Angela Styles, former Administrator for Federal Procurement Policy at OMB and my guest on In Depth today. “Really, OMB is the one that carries the hammer around, because they have the budget. If you start seeing budget consequences for not implementing Networx, that will make a real difference. That’s really what you should watch for: is this something they’re [OMB] going to engage in? Are they going to enforce this, or is this going to be left to a less effective interagency management council?”

Ms. Styles adds that the leverage of large buying power Congressman Towns cited at the hearing isn’t always as strong as it looks at first glance. “What each agency buys can often be very different. There are a lot of assumptions about the price and cost savings that I think are somewhat overstated. Just because you’re the largest buyer doesn’t mean it’s not very complicated and a costly way to buy when you have to modify a particular contract vehicle to fit an agency’s needs.”

You can hear my entire conversation with Angela Styles by clicking the audio link. Watch the entire hearing below:

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