Treasury to outsource network services

By the end of the year, Treasury Department officials expect to award what could be the federal government's largest telecommunications contract for managed services.

The new contract will be based on service-level agreements, which private-sector officials increasingly view as the most efficient way of buying telecom services. "We want obviously the best service for the cheapest price, as any organization would," said Mike Parker, acting chief information officer at Treasury.

Department officials said they expect to use the managed services contract to

acquire such advanced network capabilities as IP multicast, IP Version 6, IP telephony and optical-wavelength service. IP multicast is a way to broadcast video signals via networks that use relatively low bandwidth.

The contract will cost Treasury as much as $1.5 billion, but it will get the agency

out of the telecom business. It will no longer own the network assets on which it will depend.

"It's all about managed services that integrate both business and technical aspects of service delivery," said Drew Ladner, who recently left his position as Treasury CIO and is now director of Clasis Capital LLC, an investment company specializing in software and telecom.

Ladner said Treasury's proposed service-level agreements reflect the requirements of the department's business operations. Often, such agreements are too heavy on technical specifications, and the paperwork ends up being a foot high, he said. "That might be good from a legal standpoint, but from an operational and practical standpoint, it's often unsatisfactory," he said.

By opting for managed services, Treasury officials are charting a different course from that which Defense Department officials have chosen, said Warren Suss, president of Suss Consulting Inc. DOD leaders, he said, want to own network assets, including transport lines, to guarantee enough bandwidth for the new generation of weapons systems.

"They're buying dark fiber, they are buying their own transmission gear, the optical switches — it's almost like building their own phone company," Suss said. DOD officials are motivated by the same desire that motivates Treasury officials: "to drive down costs," he said.

Using managed services, Treasury officials think they can reduce their program management costs, which are fairly high under the current telecom contract. But there is also a risk that they may have been too severe in their efforts to control costs, Suss said.

By wrapping virtually all of the bandwidth, encryption, network management, help-desk and reporting requirements into fixed-priced, contract line items, Treasury officials are shifting most of the risk onto the telecom vendor, Suss said.

"It's possible the vendors will try to protect themselves from some of that risk by charging somewhat more than they would for these other related services," he said.

But Ladner said fixed prices are important. "A fixed price introduces and enforces a discipline in the delivery of services that flexible pricing simply does not," he said. Given the tendency of prices to rise with "no market explanation for their going up, a fixed price can be very helpful," he added.

Treasury's 10-year telecom contract with Northrop Grumman Corp. expires in September 2005. It has provided the agency with what is said to be the largest private secure civilian network in the United States. The network has 215 customized system interfaces and more than 4,200 circuits in about 1,000 locations in the United States, Europe, the Bahamas, Bermuda and Guam.

In the new request for proposals, Treasury officials describe the state of the department's networking and what they hope it to be in the future. Moving from a secure network that supports IBM Corp. Systems Network Architecture protocols from the 1980s to a system of network services based entirely on IP will be a challenge for the winning vendor, according to Treasury officials. They envision network services that offer secure remote access for employees who telecommute. The network services must be reliable enough to support the operations of Treasury and its bureaus during a national crisis, which might bring down the public switched telephone network.

The managed IP network services will be used for many department activities, such as bill paying, personnel transactions and sharing information with law enforcement and financial institutions. Treasury officials also plan to expand the range of online transactions they conduct with citizens and businesses, including the filing of tax returns and bill paying with electronic invoices.

Officials are asking for a smorgasbord of managed services that at the upper end includes 10 Gigabit Ethernet service with a 99.99 percent service guarantee or less than 1 percent downtime in a year. They also will require the contractor to ensure that Internet access service has a latency no greater than 150 milliseconds at least 98 percent of the time. Latency, which refers to delays in processing network data, is the amount of time it takes for a packet of data to travel from its source to its destination and back.

The Fed 100

Save the date for 28th annual Federal 100 Awards Gala.

Featured

  • computer network

    How Einstein changes the way government does business

    The Department of Commerce is revising its confidentiality agreement for statistical data survey respondents to reflect the fact that the Department of Homeland Security could see some of that data if it is captured by the Einstein system.

  • Defense Secretary Jim Mattis. Army photo by Monica King. Jan. 26, 2017.

    Mattis mulls consolidation in IT, cyber

    In a Feb. 17 memo, Defense Secretary Jim Mattis told senior leadership to establish teams to look for duplication across the armed services in business operations, including in IT and cybersecurity.

  • Image from Shutterstock.com

    DHS vague on rules for election aid, say states

    State election officials had more questions than answers after a Department of Homeland Security presentation on the designation of election systems as critical U.S. infrastructure.

  • Org Chart Stock Art - Shutterstock

    How the hiring freeze targets millennials

    The government desperately needs younger talent to replace an aging workforce, and experts say that a freeze on hiring doesn't help.

  • Shutterstock image: healthcare digital interface.

    VA moves ahead with homegrown scheduling IT

    The Department of Veterans Affairs will test an internally developed scheduling module at primary care sites nationwide to see if it's ready to service the entire agency.

  • Shutterstock images (honglouwawa & 0beron): Bitcoin image overlay replaced with a dollar sign on a hardware circuit.

    MGT Act poised for a comeback

    After missing in the last Congress, drafters of a bill to encourage cloud adoption are looking for a new plan.

Reader comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group