Telecom next wave in outsourcing

Network management, which most federal agencies have handled with in-house resources, may be the next candidate for large-scale outsourcing as a number of agencies have confirmed they are considering turning the job over to telecommunications carriers.

Departments with huge telecommunications infrastructures, such as the departments of Justice and Veterans Affairs, are awaiting a modification to the General Services Administration's FTS 2001 long-distance network that would enable them to turn over management of their networks to Sprint. The Treasury Department also is considering such a move, and observers said other agencies may follow.

Outsourcing telecommunications could drastically change the way agencies purchase networking services, said federal telecommunications consultant Warren Suss, president of Warren H. Suss Associates.

"This is a very significant change in the way the government buys and runs its networks," Suss said. "It moves the government into the types of advanced services that users hunger for without agencies having to devote too many people to the job of managing them."

Suss said agencies traditionally have awarded their own contracts worth billions of dollars for private network services such as frame relay and for leading-edge technologies such as Asynchronous Transfer Mode.

But outsourcing this work to telecommunications carriers would enable agencies to get out of the business of buying and managing networking hardware and help them avoid the trap of being stuck with proprietary or obsolete solutions, he said. "It makes sense for the government to outsource this because agencies are not in the business of designing and managing these network services themselves," Suss said.

For example, at the VA, the modification would enable the agency to hand over to Sprint responsibility for the network services ranging from switched voice to ATM as well as responsibility for functions such as configuration management, performance management, fault management, network monitoring, and software and hardware management. Many of these management functions are now performed within the department.

Bob Bubniak, associate deputy assistant secretary for telecommunications at the VA, stressed that the department has not determined whether it will opt for managed network service. But he said such an arrangement could save the department 30 percent of its yearly telecommunications spending and eliminate the need for in-house network management expertise.

"Right now it would appear that most civilian agencies are moving away from private networks," Bubniak said. "I think the outsourcing is being looked at because of the shortages of qualified staff."

Frank Lalley, assistant commissioner for service delivery at GSA's Federal Technology Service, said Sprint's service will enable agencies to customize its FTS 2001 network to their particular needs for bandwidth, security and other services.

"When GSA manages a network like FTS 2001, we manage the whole network," said Lalley, a former associate deputy assistant secretary for telecommunications at the VA. "My view when I was at the VA was that it sure would have been nice if somebody would look at the network from my agency's point of view. This service allows an agency to tailor its FTS 2001 network to its own requirements."

Lalley said the VA may hand over to Sprint the management of its routers, a task previously performed within the agency.

Jim Payne, assistant vice president at Sprint's Government Services Division, said his company's managed network service can save agencies money by eliminating the need for costly private networks and the people who run them.

"It gives you all of the benefits of a private network without paying for a private network," Payne said. "And as part of Sprint managing the service for you, you no longer need the highly trained technical staff."

Sprint has offered the service under GSA's FTS 2000 contract, but only DOJ signed up for the service as part of its effort to consolidate its data networks departmentwide. Lalley said DOJ officials have been extremely pleased with the service and want to continue using it as part of the FTS 2001 contract.

Richard Chapman, director of the telecommunications services staff at DOJ, refused to comment on the department's use of the service. "We're not ready to go public with this story yet," he said.

Jim Dolezal, chief of telecommunications systems at the Interior Department, said he also is considering managed service as a way to supplement the "router expertise" within the department. "We feel very vulnerable that if we lose that expertise, we couldn't recruit replacements," Dolezal said. "Our networks are growing so fast, it's difficult to maintain routing tables, let alone the correct connections to the Internet. And firewall management is a challenge to any agency."

Payne said officials at Treasury also have expressed interest in the service.

Rick Slifer, director of FTS 2001 programs at MCI WorldCom Government Markets, said his company also has submitted a proposal to GSA to offer managed service on FTS 2001 and is waiting for GSA's approval. He noted that MCI has proposed managed service on contracts with the U.S. Postal Service and the Federal Aviation Administration.

"We view it as a necessary service in the FTS 2001 mix," Slifer said. "The main benefit is that it gives [agencies] one necktie to pull for all of their networking issues - not just for the backbone network but down to the user interface as well."

Slifer said some agencies, especially those with specialized networking requirements, will find managed service an attractive option, while others will continue to manage their own networks.

The Environmental Protection Agency is one such agency. George Kranich, the chief of telecommunications services at the EPA, said his staff rejected the idea of managed service. "The network engineers [within the EPA] must control the whole network," Kranich said.

Furthermore, John Okay, president of J.L. Okay Consulting and the former deputy commissioner of FTS, questioned whether agencies ought to turn over management responsibilities to the same vendor that is providing the agency with its network circuits.

"I can envision that in developing a network plan and design and recommending a suite of services, the carrier might make a recommendation that maximizes its revenues without considering what is cost-effective for the agency," Okay said, adding that he was not referring to Sprint specifically.