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5 DEVELOPMENT OF THE FINAL SPECIFICATION AND RFP RELEASE: 1986 In which the final specification is developed, the vendor teams come together, and the RFP is released. CONTINUING DEVELOPMENT OF THE RFP Meanwhile, as the blue-ribbon panel process was leading to accord with OMB, GSA pressed on with developing the RFP. Releasing the strawman in October 1985 had been the first milestone to draw vendors into the project. It was significant enough to lead industry to believe FTS replacement would happen and vendors began to spend resources on bid and proposal preparation. The first vendor to publicly state its interest in the program was Martin-Marietta, in March 1986. Its enthusiastic public approach to bidding was a major asset in building up momentum (Note 1~. Another major event was a public announcement by Martin-Marietta in July 1986 of a special teaming relationship with the Bell Operating Companies (BOCs) and Northern Telecommunications. They immediately set out to establish themselves as a credible bidder by meeting with agencies, presenting their credentials to bid on such a large contract in an area in which they were not particularly well known, and discussing with the agencies their probable future requirements. GSA had always felt that a common carrier would be at the heart of each bid, whether or not they were the prime contractor. GSA anxiously watched the activities of MCI, GTE Sprint, U.S. Telcom, Satellite Business Systems, and U.S. Transmission Systems, which, together with AT&T, represented the only companies with significant national nPtwnrkc tithe rnmn~ni I: in the rommon-~nrri or h~in~.c:.~ wart Hi ther `~ ~ ~ ~ _ ~~ . ~ _~` _ _ .~_` ~ _~^ ~~` _~^ Hi__ _ _. _ ~ ~ ~ _~ ~ ~ ~ ~ _ ~ ~ _ _~ _ resellers or niche carriers with small specialized networks. Studies by GSA to assess competition indicated that the industry would probably shake out with mergers taking place between participants, so GSA also watched anxiously for such moves. The first merging move happened in December 1985 as IBM sold SBS to MCI and took a 16.5 percent position in the resultant company with an option co increase this to 32 percent. ~ ~ First, it put GTE Sprint in an awkward position facing a much more powerful adversary in MCI. MCI not only had SBS's network assets and customers but had the financial backing of IBM. This merger did two things. . . 31

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32 The second thing that the MCI/SBS merger did was take IBM out of the picture. GSA had hoped that one of the results of-divestiture would be that IBM would become a strong competitor against AT&T and that each would begin to present major head-to-head competition in each other's markets. IBM formed a multidivision team to examine the bidding opportunity that FTS2000 represented and seriously wished to bid, win, and establish itself in one move as a major player in the government telecommunications market. However, a realistic analysis of the inventory of the corporate skills to undertake such a large voice communications proposal brought IBM to the conclusion that it could not be the best bidder. IBM met with GSA to announce informally that it would not be bidding. At that meeting, IBM discussed candidly with GSA the results of their strategic analysis including probable prices and major strategic issues. This was most helpful to GSA, particularly in confirming its estimates of prices and its competitive analysis. The MCI/SBS merger was followed by GTE Sprint and U.S. Telcom merging to form US Sprint. For the FTS2000 project, this turned out to have both positive and negative influences. The U.S. Telcom team had had a corporate commitment to building a national common-carrier fiber network. Its bidding team seemed smart, informed, well organized, and aggressive. The team of GTE Sprint, meanwhile, had-not compared well with other companies in meetings with GSA. The GSA teem privately felt that, based on its showing, GTE Sprint could not organize a bid. However, the merger with U.S. Telcom created a stronger company both in terms of network assets and finances and it also merged U.S. Telecom's bidding team with GTE's. - On the down side, U.S. Telcom and GTE Sprint became immersed in the details of implementing their merger and so did not really pay attention to the FTS2000 REP development process in 1986. So, they did not take advantage of the opportunity GSA presented to all vendors to resolve specification issues early. US Sprint did not address the importance of the opportunity until the REP was issued in 1987. In addition to being concerned about who would actually bid, GSA was equally concerned with who would decide not to bid and who might decide that a strategy of upsetting the procurement was more to its market advantage. The most obvious vendor who might adopt this strategy was MCI, which showed little overt interest in bidding yet seemed to have much to lose. GSA worried for several months until MCI was announced as one of Martin-Marietta's teaming partners in September 1986 (Note 2~. As with the announced participation of all companies, GSA took this as only a positive signal, not necessarily the whole picture. In procurements of this size with so much at stake, GSA recognized that "double agent" games were possible where companies with market interests could both appear publicly to support the procurement yet work assiduously behind the scenes to stop it.~ GSA watched carefully for any such signals. But in general the response by vendors to the strawman specification was as expected and companies began to come into GSA to submit formal comments. They took part in long meetings with GSA discussing points. Thus, they became part of the broad government and industry team that was collectively to accomplish the procurement.

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33 There were rumors in July 1986 that AT&T would be teaming with Boeing, but it remained until December before there was any kind of formal announcement (Note 3~. US Sprint made no public announcement at all that year, but indicated to GSA that it was considering to bid. A CHANGE IN THE GSA TEAM At the end of 1985, with the strawman specification behind them, Bushelle resigned to return to Chicago. At the time, this looked like a severe blow to the project. Bushelle's creativity had been essential to getting FTS2000 structured and started. He appeared at the right time and was the right person to do the job. It is hard to imagine what would have happened to the FTS if he had not joined GSA when he did. Replacing him would be a problem, but the project was now at a different stage and hence it was a different kind of problem from when he had been hired. In his two-year tenure as head of Network Services, Bushelle had not only put in place the FTS2000 replacement strategy, but had also mapped out the possible initiatives that should be undertaken to extend the life of the current network. So he left GSA with a legacy of an interim plan as well as the strawman specification and FTS2000 strategy. So after the initial shock of his resignation, GSA's problems were reduced to needing: . . 0 A good implementing manager to run the old system, to carry out the cost-cutting and quality control program to extend the system life, and to begin to prepare the organization for FTS2000. This person did not need to be a strategist or even an engineer. The most important thing was the ability to carry out a plan. Part-time access to Bushelle as a consultant to review any remaining changes to the FTS2000 strategy and to help think through integration problems. A talented manager who could continue the development of the FTS2000 REP. This person had to be a cut above normal, open to innovation, but did have to possess Bushelle's creativity. The first need was filled internally within GSA by an established line manager. The second need was easily filled by assigning Bushelle as an expert-consultant on the administrator's staff. This allowed him to work part time for GSA. For the third need, serendipity provided the right person at the right time. This was Walter Irvine, who had been recently hired as a key manager in a longer term project concerning meeting agencies requirements once the FTS2000 service was available. Irvine's key contribution to the project was developing a first-class REP according to schedule. As with Bushelle, Irvine was also an early retiree from

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34 the Bell system, although unlike Bushelle his background was at AT&T rather than the Bell operating companies. Most recently he had been on AT&T's Datanet-1000 service team. He was a mature manager, experienced, hard working, knowledgeable about data and voice services, privy to AT&T service strategy, and he carried himself well -- perfect for the job. EVENTS CONVERGE TOWARD RELEASE OF THE RFP As 1986 progressed, development of the RFP continued as GSA worked with any vendor organization that wanted to discuss the project, provide input and criticism to draft specifications, or in any way contribute to the development of the RFP. GSA fully intended that the final RFP would represent the efforts and interests of the anticipated competition and that consequently award would flow smoothly. GSA did expect some jockeying and positioning as the vendors suggested changes to the specification, but in general the concerns espoused were common to all and rarely did GSA have to take on the role of tie breaker. The rapid progress of 1986 was later to prove misleading. Two of the three main contenders had not been paying much attention and missed items in the specification that were later to cause them and GSA great concern. The year 1986 saw another major participant added to the GSA team as the MITRE Corporation was brought in to fill an important and expanding role. One area of concern that they were to address was the bid evaluation process, including the identification of evaluation factors, scores, and the evaluating scheme. The evaluating scheme consisted of a wide variety of tasks, from the organization of a team to the computerized cost evaluation models. There was also the question of bid security and how bid materials would be controlled. Early estimates had indicated that as many as 50 people would be required for the evaluation team, and GSA had asked the FTS2000 Interagency Steering Committee to provide resources for the evaluation team. The customer agencies indicated that they could not release people of sufficient calibre and recommended that GSA seek outside support. The MITRE Corporation as a noncompetitive entity was a candidate for such support because of its isolation from potential conflict of interests. In October 1986, one year after releasing the initial strawman, GSA was ready to release the final draft RFP. Allowing vendors access to drafts and concepts throughout the development of the document produced a specification of exceptional quality and one that was a pioneer in the industry in the way it addressed buying services, not hardware. The RFP spelled out specifications for all types of services from voice to data to video, it specified packet and circuit switching services as well as dedicated transmission, and it specified a service oversight center. With no surprises for the vendors in the final draft, 30 days proved adequate for review, allowing GSA 30 more days to make changes (Note 41. l

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35 This was a delicate stage for GSA. Someone could emerge at the last minute and either stop the project or use the threat of stopping the project to negotiate some kind-of major change. However, the only manifestation of outside interest apart from GSA's continued dialog with OMB was from the National Communications System. Its representatives appeared on November 24 with a demand that GSA include in the specification the requirements for their National Emergency Telecommunications System (NETS), a multibillion dollar effort. This request was described in approximately two paragraphs of technical specification and there was no identified source of funds (Note 5~. This was addressed without delay as agreement was reached to omit NETS from the FTS2000 RFP. GSA reached the final days of agreement with OMB and on December 1, 1986, GSA presented the program to Joe Wright, deputy director of OMB, as part of his program of major system reviews. With the exception of very minor concerns, he indicated he was prepared to let GSA go ahead. Agreement was quickly reached with OMB staff. On December 22, in a final letter from GSA to OMB, Golden indicated that agreement had been reached on all.items and that he intended to issue the RFP. .. THE RFP IS RELEASED The team had committed to Golden a year earlier that GSA would have -. the RFP ready for release before the end of 1986 and it was ready and printed for release on December 31.. This was due to the exceptional efforts of Irvine, his team, and MITRE,.all of whom worked through the Christmas holiday to ensure the release. . All of the efforts with the customer agencies, the vendors, the press, OMB, and other interests had paid off. GSA was ready to release a first-class RFP for one of the most complicated replacement projects - in the history.of Computerland telecommunications just.two years after publicly announcing its intention to do so. The specification had been formed by means of a debate between all interested parties including the users, the vendors, and the central oversight agencies. The. remaining schedule called for proposal submission in six months and all the expected teams, AT&T, Martin-Marietta, and US Sprint, had indicated that they could meet it. The submission of bids was to be followed by a six-month evaluation and award cycle.leading to an award in January 1988. In the euphoria of having met the schedule for releasing the RFP, GSA felt that nothing could stop them meeting the award schedule. Administrator Golden called a press conference for January 7, 1987, at which the RFP was released officially and made available to the ; bidders (Note 6~. . - .