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Collaborative Marketing399 Main Street

Los Altos, CA 94022650-949-4882

November 1998

Federal GovernmentMarket Opportunity Assessment

A custom research project for GTE Internetworking- Federal Network Systems

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Roadmap: Introduction

IntroductionIntroduction

High Level Findings

Conclusions

Detailed Findings

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Objectives

Objectives• Confirm the Federal Government opportunity - how big is the federal market

for internetworking services and who buys them?

• Which other suppliers of internetworking services have successfully sold these services to the federal government and how did they do it?

• Competitively, what will GTE IS be up against from a price/quality/value perspective?

Deliverables• High level need assessment of top five civil agencies

• Market sizing

• Agency buying vehicles

• Competitive matrix

GTE IS has asked Collaborative Marketing to produce a fact base that will help it to decide how to deploy sales and marketing resources against the Federal Government opportunity.

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Methodology - Current Situation Analysis

Kickoff meeting with GTE management

Kickoff meeting with GTE management

Perform electronic andsecondary research

Perform electronic andsecondary research

Top Agency AnalysisTop Agency Analysis

Competitive AssessmentCompetitive Assessment

This diagram illustrates the path Collaborative Marketing followed to achieve the objectives of the project.

Synthesis and AnalysisSynthesis and Analysis

Final ReportingFinal Reporting

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FedGov Project Fact Base

Agency Websites &

Virtual Procurement

Library

FedSources

AFCEA

GovCon

Federal Computer

Week

Federal Marketplace

CBD & Contract Search

Government Procurement

News Dialog DBs

GovExec.com

Federal Contractor Interviews

FederalAgency

Interviews

Washington Technology

Online

GSA-FSS Procurement Information

Center

Schedules

INPUT GOVBNA Federal Contracts

Federal Technology ReportABI/INFORM

DMS/FI Contract AwardsTrade & Industry

Information Sources Used

FedCenterSEC

10K

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Contacts - Primary Research Interviews

FedGov Interviews Competitor Interviews

Other Interviews

GTE - Griff Harrison, Business DevelopmentGTE - Jim Raffa, LawyerGTEI - Kevin Gordon, Account Executive, Mid-Atlantic RegionGTEI - Larry Correy, Regional Sales Director, Mid-Atlantic RegionGTE - Randy Richman, Business DevelopmentGTEI - Frank Doherty, Sales (Fomer MCI)GTEI - Susan Hartman, Sales (Former MCI)

GTE Interviews

Consultant - Bob Zabloki, Federal Government ConsultantConsultant - Tom Buckholtz, Deputy CIO (Regan Administration)Federal Sources - Bob Dornan, Senior VPStampMaster - Craig Ogg, Software Architect

Computer Sciences Corp. - Joe Konapka, DirectorConcentric Network - John Lawler, Director, VPNCSC - Wayne Kelly, Office of the PresidentDigex - Bob London, VP MarketingBay Networks - Tom Seutie, Director, Business DevelopmentIBM - Dave Bolan, Program Manager, CINEMAIndus Corp - Michael Mullen, Director, Business DevelopmentKhera Communications - Prakekesh Shaw, PresidentMCI - Edie Dobbs, SalesPatriot - Tom Fines, VP, Sales & MarketingSprint - Marianne Adams, Sr GSA Contract ConsultantUS West Fed Svcs - Mike Peterson, Procurement, Subject Matter ExpertUS West Fed Svcs - Shirley Menish, Director, Mktg & Business Development

Dept of Agriculture - David Alderdice, Office of the CIODept of Agriculture - Ron Anderson, Office of the CIO / NITCDept of Agricuture - Steve Gay, Telecommunications PolicyDept of Defense - Frank Sovieszcyk, Director, Defense Acquisition UniversityDept of Defense - Gary Claypoole, IS Manager, Defense Tech Info CtrDept of Defense - John Whitty, CCS Operation Network Sys, Naval Res LaboratoryDept of Energy - Michael Raizen, Purchasing Services (Electronic Commerce)Dept of Energy - Rick Hall, Engineering, TelecomDept of Energy - Robert Wilson, Office of the CIODept of State - Jay Fields, Computer SpecialistDept of Treasury - Scottie Banks, Liason to Jim FlizikEPA - Dwight Rogers, Project OfficerFCC - Bill Allison, Integration SpecialistGAO - Bill Wright, IS ManagerGAO - Marcia McWreath, EvaluatorGAO - Tom Schultz, Regional ManagerGSA - April Ramie, Program Director, CINEMAGSA - Peter Schultz, Director, Business Development, FTSGSA - Rick Kellett, Division Director, Emerging TechnologiesGSA - Wayne Brady, Deputy Program Manager, WITS2001HHS - David Davidson, Director, Nat’l Board of ExaminersHHS - Paul Cromwell, IT Acquisitions, Office of Info Resource Mgmt ServicesHHS - Peter Alterman, Dir of Operations for the Office of Extramural Research, NIHNTIS - Don Johnson, Director (Former)NTIS - Karen Cummins, Director, FedWorldSocial Security Admin. - Bob Meekin, Procurement (FTS2000)Social Security Admin. - Jeane Kotoski, Branch Chief, Systems OperationsSocial Security Admin. - John Sabo, Internet ServicesUS Postal Service - Barry Zeal, CommunicationsUS Postal Service - Bill Morrison, Manager, Telecommunications ServicesUS Postal Service - Carrol Dobbs, Team Leader, Internet ServicesUS Postal Service - Dan Lord, Information-Based Indicia ProgramUS Postal Service - Dave Cullen, Program Manager, Shipping OnlineUS Postal Service - Terry Downer, Headquarters Purchasing (IT)VA - David Kubaci, IT Management Analyst, Financial Center

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Roadmap: High Level Findings

Introduction

High Level FindingsHigh Level Findings

Conclusions

Detailed Findings

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Competition Buying Vehicles / Channel

Market Size / Readiness

• Government Agencies are spending between 0.5% and 5% of theirIT budgets on Internet-related expenditures.

• The market is small today and will be large in the future.

Top FedGov Agencies

DOD, NASA,Commerce, EPA, Agriculture, Interior, Energy, HHS, Transportation, Labor, Treasury, SSA, USPS

• No single ISP dominates this market in the minds of the agencies. It’s not too late for GTE to establish a position.

• Competition is quickly waking-up to this ripening market• Top competitors have been MCI WorldCom, AT&T, IBM, BTG/Epoch.

• ID/IQ, BPA, MAS, Large Contracts, Cinema, GSA• Resellers, NTIS, GSA Advantage

• Enter this market aggressively and swiftly - If GTE wants to be there in the future, it must be there now since past performance is key.

• GTE must choose to position itself as an ISP, SI, or Prime - Positioning will be vehicle dependent.

• Quickly put up GSA schedule and sell hard against it• Educate agencies about what to buy and how to buy. Agencies don’t all

understand what is possible.• Participation in Pilots is an important way to establish past performance• NTIS can be a channel for Internet solutions - This DC-based part of the

Dept of Commerce operates on a “fee-for-service” basis and serves as an incubator for some FedGov agencies

• Buying vehicles don’t sell themselves and must be marketed• Hidden opportunity - replacing private networks with VPN

RecommendationsRecommendations

High Level Findings

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Source: GAO

Market Size Estimate - Federal Government Internet Spending

Dept of Defense48%

NASA7%

Dept of Commerce8%

EPA5%

Dept of Agriculture4%

Dept of the Interior4%

Dept of Energy3%

Dept of Treasury2%

Dept of Trans.2%

Dept of HHS2%

Dept of Labor1% Other

14%

The GAO study can serve as a proxy for how Internet spending spreads across agencies

Estimated Market Size

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

FY1997 1998 1999

$ (billions)

5% of IT Budget

GAO Extrapolation

1% of IT Budget

FY 1996 FedGov Internet Expenditures ($182M)

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Market Size Estimate - Federal Government Internet Spending

• Internet Spending is estimated at 0.5 to 5.0% of Agencies’ IT Budgets - At the low end, SSA claims to spend less than 1% of its IT budget on Internet services - just $4M out of its $600M IT budget. At the high end, GSA (Division Director, Emerging Technologies) estimates total FedGov Internet spending at 5%+ of total FedGov IT budgets. Several FedGov agencies (e.g., USDA and Treasury) estimate that they currently

spend less than 5% of their IT budgets on Internet services. • Extrapolating GAO figures would suggest 1998 Internet spending of approximately $700M.

• Internet Services include more than ISP services - Consultants, Staff, Content Development are included, much is left out.

• Traditional sources do not accurately track these numbers - Federal Sources and Input do not track FedGov Internet spending. Beyond the 1997 GAO report, no interviewees were aware of any study tracking FedGov Internet spending. GAO report was limited and only covered direct costs for Internet access for 42 FedGov agencies.

• Agencies do not track Internet spending as separate line item - Low awareness and much confusion about what would be included in Internet spending and do not break out Internet spending as separate from other telecommunications.

• Services through resellers are hard to quantify - Vendors in this situation (e.g. UUNet) have a hard time quantifying FedGov sales.

• Internet expenditures are a function of how interactive and customer facing agencies are with the public as well as other government agencies.

1998 Federal Government Internet spending estimated at between $140M and $1.4B1998 Federal Government Internet spending estimated at between $140M and $1.4B

Source: Collaborative Marketing Interviews with senior FedGov staff (e.g., Office of the CIO)

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Top FedGov Agencies for Internet Adoption

Department Per GAO Report

FY94-96 Total

Per GTE Per Interviews

Dept of Defense $146 M X X

Nat’l Aeronautics and SpaceAdmin

$30 M X X

Dept of Commerce $25 M

Environmental ProtectionAgency

$18 M

Dept of Agriculture $15 M X X

Dept of the Interior $13 M

Dept of Energy $12 M X X

Dept of Health and HumanServices

$7 M X

Dept of Transportation $6 M

Dept of Labor $6 M

Dept of Treasury $5 M X X

Social Security Administration $2 M X

Postal Service NA X

The GAO study completed in 1997 takes a very limited view of federal internet spending. We used itprimarily to rank the agencies but incorporated additional input into our evaluation.

The GAO study completed in 1997 takes a very limited view of federal internet spending. We used itprimarily to rank the agencies but incorporated additional input into our evaluation.

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Who is the Competition?

GTE faces three types of competitors (1)Network Service Providers, (2)Large Systems Integrators, and (3) the Federal Government itself.

• Network Service Providers - • MCI WorldCom• AT&T• IBM• BTG/Epoch• Sprint• Erol’s Internet Services• I-Net• DLT Solutions

• Systems Integrators - winning large procurements and ID/IQ contracts include:• CSC• PRC• Lockheed Martin• EDS

• Federal Government - FedGov organizations like NTIS and NITC compete directly against GTE providing IT services to other FedGov agencies.

No single ISP dominates this market in the minds of the agencies - it is not too late for GTE to establish a position. Wait a year and it will be too late.

No single ISP dominates this market in the minds of the agencies - it is not too late for GTE to establish a position. Wait a year and it will be too late.

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Total FY97 Federal Telecommunications Purchases: $13 Billion

Parent Company Amount ($000s) Market Share

AT&T 810,999 6.29

GTE Corp. 562,719 4.37

ITT Corp. 527,488 4.09

IBM Corp. 445,355 3.46

Motorola Inc. 346,875 2.69

Litton Industries Inc. (PRC) 320,382 2.49

BTG Inc. 290,526 2.25

MCI Communications Corp. 229,557 1.78

Sprint Corp. 217,323 1.69

Bell Atlantic Corp. 209,571 1.63

TRW Inc. 160,792 1.25

Computer Sciences Corp. 97,220 0.75

General Electric Co. PLC 96,927 0.75

(Expected Growth 5% CAGR for FY98 and FY99)

Source: GovExec Top 200 Federal Contractors ‘98

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Competitive Matrix

ItemMCI

WorldcomAT&T Sprint IBM

FederalRevenues

15% of $19.2 Billion(estimate)

$292 million GSA Revenues: $8.2Million

$748 million - $1.2billion

Size ofSalesforce

• 55,000Employeesworldwide

• UUNET has nooutside sales butare building one.

127,000 EmployeesWorldwide

FedGov internetsales TBD

• 180 FederalSystemsEmployees

• 105Sales/Marketing

• 3 GSA ScheduleContractConsultants

• 7,000 SalesForce World-wide

• 6,000 CustomerEngineers @ 50service centers

• 2 CINEMAEmployees (1Tampa & 1 D.C.)

AgenciesPenetrated

USPS, FAA, NationalAir SpaceCommunicationsSystems, DISN, StateDept., NOAA, NSF

DOD, GSA, SSA,IRS, NASA, FAA,Navy, Army, AirForce, DISN

DOD, GSA, DOE,DOC, DOI and Navy

DOE, DOD,Veteran’s Affairs,TVA, FHA, SSA,GSA Seat Mgmt.,USDA, NIH, NASA

Breadth ofOffering

• Data services• Mission-critical,

mission-sensitiveoperations

• BackboneNetwork Servicesfor Internet2

• FTS 2000 (voice,data & videoservices)

• EDI• End-to-end long

distance & localtelecommunications services

• VideoConferencing

• Long-distancetelephony

• ElectronicCommerce/EDI

• Integrated datacommunicationsservices

• High-performancecomputing

• Digital imaging• E-business• Desktop Seat

Management• ADP Services

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Competitive Pricing

BTG(ISP services by EPOCH)

IBM Global Network (formerly Advantis)

IAS, EM & EC/EDISetup/Monthly

CommercialPrice

Setup/Monthly

IAS, EM & EC/EDIMonthly

CommercialPrice

Setup/Monthly

Analog Dial-up(56K) $25.25/$21.21

$0/$19.95incl. 60 Hrs.+ Hrs. $.03

$122/$18.86$0/$19.95

incl. 100 Hrs+Hrs. $

ISDN BRI Dial-up $25.25/$41.41 $100/$250 $0/$$85.58 $2K/$1K

Dedicated DS0 $0/$363.00$350/$25 per port

+ $.09 per MB$0/$388.00 $2K/$1K

Fractional T1 (256K) $0/$666.00$2.K/$100 per

port+$.02 per MB

$0/$712.00 $3K/2.3K

Fractional T1 (512K) $0/$1,040.00$2.K/$100 per

port+$.02 per MB

$0/$1,131.00 $3K/$2.8K

Fractional T1 (768K) $0/$1,570.00$2.K/$100 per

port+$.02 per MB

$0/$1,707.00 $3K/$2.9K

T1 (1.544M) $0/$2,080.00$2.K/$100 per

port+$.02 per MB

$0/$2,358.00 $3K/$3K

T3 (45M) $0/$41,410.00 $7.3K/42K $0/$42,243.00 ---

MCI pricingDiscounts 20-30% off commercial price list and varies by service. Sample pricing:

Government Commercial• Fractional T-1 128Kb $905 / mo. $1,295 / mo.• T-1 $2,025 / mo. $2,700 / mo.

Cinema Pricing Overview

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FedGov Usage of Different Procurement Vehicles

Buying Vehicle Today FY 2000GSA Schedule 5 - 30% 10 - 35%Blanket Purchase Agreements 0 - 30% 10 - 30%In-House ID/IQ Contracts 5 - 80% 15 - 80%In-House Non-ID/IQ Contracts 10 - 80% 10 - 65%Government-Wide ID/IQs <5 - 5% <5 – 25%

• GSA Schedules - Will play a larger role in acquisition of IT products and services. Vendors are increasingly offering services (e.g., integration and maintenance) on schedules must make FedGov agencies aware of the buying vehicles that they have. GSA Advantage will become increasingly important. Agencies that have implemented mandatory buying rules based on existing in-house ID/IQ vehicles will see only minor increases in schedule use. Others expect to satisfy their needs via schedules. In 1994 GSA schedules were 20% of federal IT spending, by 1997 they had grown to 51%.

• ID/IQ Contracts - Popular and expected to remain so.

Source: Input and CM interviews

There is a general trend towards procurement vehicles that take less time and that provide commodity solutions.

There is a general trend towards procurement vehicles that take less time and that provide commodity solutions.

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Buying Trends

• Challenging Market for New Entrants - 85% of all contracts (GSA schedules and negotiated bids) are renewed.• GSA Schedules are “Table Stakes” - Schedules, along with competitive bids, are major buying vehicles for the FedGov.

GTEI does not currently have a schedule in place - GTEI’s sales and marketing organizations are very concerned about this issue.

• Shift in Focus from “Unique” Projects to COTS - To keep costs low and to increase efficiencies, FedGov agencies are moving to “industry-standard” IT solutions whenever possible. This is key as outside parties increasingly access legacy agency databases and applications via extranets and the Internet.

• Incumbency / Past Performance are Extremely Important - Agencies report that up to 95% of Internet access contracts are renewed. FedGov suppliers are touting their past successes in bidding for new business. Successful incumbents have a very strong position. Alternatively, missteps by prime contractors are harshly punished to the extent of refusing to do business with specific companies (e.g., GTE) in some instances.

• Importance of Pilots - FedGov suppliers are actively participating in a range of pilot programs - often taking a financial “hit” in hopes of being better positioned for upcoming contracts. These firms are also involved in setting project performance parameters in conjunction with agencies. By helping define what an Investment Review Board (e.g., Treasury) measures, a supplier can make sure that its efforts are viewed in the best possible light - setting the stage for follow -on business.

• Push Towards Outsourcing - This appears to be growing trend, but issues like union considerations and expected reliance on internal staff to maintain and modify legacy systems may slow outsourcing adoption.

• Typically lags commercial sector (except for DOD), longer buying cycles

• Intranet deployment is more widespread

• Behind in supplying Internet access to most employees

• Extranet initiatives is very limited

• “IP enabling” old private networks and upgrading from terminals to PCs

How is the Federal Government Different ?

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Private Sector Internet Application Evolution

Stage 1 Stage 2

Stage 1 Stage 2

Stage 1 Stage 2

-Web Presence

-Email

-Databaseaccess

-Databasedriven

-Online ordering-Server sideapplications

-eCommerce-Securetransactions

Level 1Publishing/ Presence

Level 2Database Integration

Level 3Commerce

CommerceInteractiveInformative

Most agencies are at level 1 with plans to be at level 3 -- Process can take 2-3 years

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How is the Federal Government’s use of IT Solutions Changing?

FY 1998 FY 2000

Electronic Mail

Electronic Funds Transfer

FACNET

GSA Advantage!

All Agencies

Transactions > $100K

All Levels-Primarily DoD

Transactions < $100K

All Agencies

All Agencies

Will be phased out

Transactions < $100K

Activity

Source: INPUT Gov and OMB

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Agency Vision Applications

Current Situation Vision Applications

• Internet awareness and deployment across the FedGov varies widely

• Early Stage - USPS, State• Advanced Stage - DOD, USDA

• Nearly all agencies have developed web sites and are using e-mail internally.

• Very limited VPN deployment today

• Simple intranets are becoming common but Internet access is not.

• Security / privacy concerns are hampering deployment of sensitive Internet and extranet applications

• Deployment of extranets and secure, database-driven transaction applications (both financial and informational) is limited

• Consolidate Internet access / services within agencies

• Build on or initiate video conferencing / streaming multimedia applications for training (Cuts travel cost and saves time)

• USDA - very interested• DOD, Defense Acquisition Univ - Pilot started

now

• Expand electronic commerce efforts• DOE - Move from VANs t o true Internet EC• USPS - Sell postage and money orders online

• Grow secure, database-driven applications• USPS - Generate and mail letters from the

location nearest your intended destination (regardless of where you are)

• SSA - Access to earning benefits and history

• Build VPNs and managed network services / extranets to enable interagency communications and remote access. IBM is very interested in supplying this

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Adoption Drivers

• Private Sector Success

• Paperwork Reduction Act of 1995

• Electronic Freedom of Information Act Amendments of 1996

• Telecommunications Act of 1996

• National Performance Review• Customer Service Orientation• Customer-Facing Push• One Face to Industry

• Outsourcing Initiatives

• Presidential Decision Directives• May 1998 PDD 63 requires FedGov agencies to inventory computer systems and physical assets• Agencies must develop a plan to protect from “cyberattacks” the systems deemed as critical to the

agencies’ operations.

• IP-Based Model Advocated - GSA advocates migration to an Internet / Intranet-based procurement model using digital signature technology (designed around PKI) given its superiority in terms of process flow, cost, and security over paper-based models and credit cards.

• Procurement Time Savings - GSA tracked different process flow in different procurement models (flow charts follow) and found that Internet-based models were approximately 1/6th as expensive as paper-based processes and that processing time dropped from nearly 40 days to fewer than five.

• Key, Enabling Technology - As PKI standards solidify, Internet-based procurement models will become increasingly important to the FedGov.

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Obstacles to Internet Deployment

• Education - Many FedGov Contracting Officers with IT / networking responsibilities are not “IT aware” and confused about applications and services. According to vendors (e.g., IBM and Bay Networks), this is the major issue slowing FedGov agency Internet deployment.

• Heavy Congressional Oversight and Guidance - are slowing Internet adoption.

• Key Vendors Not Clearly Known - Key personnel in FedGov agencies have limited vendor awareness. Senior-level staff often do not know which firms supply Internet access for their agency and don’t know which firms might be able to supply Internet solutions. This is changing as vendors get their acts in gear.

• Buying Vehicles are Hard to Use - The purchase process for Internet services can be very complicated for FedGov agencies and not all buying vehicles are available.

• Slow Implementation of Public Key Infrastructure (PKI) - Adoption of PKI standards will serve as a key building block for growing FedGov Internet services with strong security requirements.

• In 1997 USAToday surfaced security issues by exposing the vulnerability of the SSA site.

• Key players in this area (e.g., IBM and Sterling) are advising and supporting FedGov PKI efforts.

• Failure to supply sufficient security can push back Internet deployment efforts. SSA had to “pull the plug” on its web site that formerly provided individuals’ earning histories.

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What is the Federal Government Buying with its Internet Dollars?

• ISP Spending is only one part of Internet-related spending. Internet spending includes: access, hosting, security, application development and hosting, professional services, and personnel.

• The government’s concept of Internet spending has not included conversion of private networks to IP networks.

• Testing New Technologies - GSA, the Federal Public Key Infrastructure (PKI) Steering Committee, and other government electronic commerce-affiliated groups are actively evaluating and testing encryption, digital signature, PKI, and smart cards to improve costly, paper-based procurement processes.

The 1997 GAO study only captures expenditures for access, site development, and hosting. It does not include indirect costs or expenditures for application development (e.g., intranet or extranet applications).

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So, you want to buy a T-1 … Theory vs. Reality in Federal Acquisition

Procurement Vehicle Theory Reality

GSA Schedules

Any agency can buy against any existing MultipleAward Schedules (MAS)negotiated by the GSAas the Federal Government’s Purchasing Agent.

Hard to use - Most IT providers with serious plansto sell to Fed Market have developed schedules.No easy way to know who sells what.1994 - 20% of FedGov IT spending1997 - 51% of FedGov IT spending

GSA Advantage

Online catalog of all GSA schedules providingone-stop shopping for federal employees throughsecure, shopping-cart-based EC website.

Only a few of the GSA’s schedules have actuallybeen added to the database/catalog to date.Currently only, Metricom and Wang FederalSystems offerings for IAS are listed.1997 Overall Sales - 28 million1998 Overall Sales - 62 million

CINEMAProvides consulting on requirements and needsassessment before directing agency personnel toIBM or BTG/Epoch

Pricing for IAS via ISDN, dial-up, or DedicatedTransmission services between IBM and BTG iscomparable with the exception of analog pricing.

FTS2000Makes available integrated data and voicetelecommunication services for all agencies.Incumbents: AT&T and Sprint hold contracts thatany agency can order against.

AT&T is suing GSA for $170 Million, representinglost revenue due to Dept. of Treasury’s non-participation in FTS2000 services.

ID/IQ

Several dozen major Indefinite Delivery contractsexist across several agencies (e.g. DOE, DOJ,NIH, DOT, etc.). Agency-specific contracts thatMAY be available to other agencies. Providevendors with some certainty of sales volume.

You go with a contract or vendor that you alreadyknow. Mindshare is important. Many ID/IQ carryrestrictions and come with SOW and task ordersthat are meted out competitively.

Blanket PurchaseAgreements (BPA)

Should I buy from any enrolled vendor there’s anexpedited and routine process for ordering and arelationship established.

Guaranteed price with no certainty of sales. Forbuyer it means guaranteed prices and lots ofchoices, but no guaranteed availability.

Sole SourceFirm-fixed pricing and guaranteed availability. Moving away from this vehicle type. Infrequently

used for IT. However, USWest has some of thesewith BLM and Forest Service for remote, ruralareas out west.

Government-WideAcquisition Contracts

(GWACS)

Contracts available to all Government agencies. Difficult to determine actual offerings. Requiresheavy marketing.

In reality Buying Vehicles are not as easy as people think

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Buying vehicles are not marketing vehicles

• The Buying Vehicles must be marketed - Vendors must make FedGov agencies aware of the buying vehicles that they have available.

• GSA Schedules are Hard for Vendors to Implement - Given restrictive “lowest price” requirements and product content regulations, some vendors opt to not sell to the FedGov via GSA schedules. Gathering sales price information (direct and indirect) to prove the “lowest price” is being offered on the GSA schedule is a time-consuming and costly process.

• ID/IQ Contracts Offer Major Advantages for FedGov and “Team” Members - For the FedGov, ID/IQ contracts offer low prices and a high level of flexibility. They are also a key selling vehicle for contract “team” members and don’t entail large sales / marketing costs once the contracts are established. The prime contractor, however, must organize the team and manage the process and costs.

• Resellers are a major channel for FedGov Internet Sales - FedGov Internet providers (e.g., access, hardware, etc.) use resellers extensively to sell to the FedGov. Key resellers include: Anixter, Presidio, Lucent, BTG, and CSC. As a result, the suppliers are not sure themselves how much they are selling to the FedGov because they are shielded from the enduser by the reseller.

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Revenue Certainty

Selling Effort

Required

Buying Vehicles -- Post-Award Comparisons

High

Low

HighLow

ID/IQ Contracts

GSA Schedules

BPAs

FTS 2000

GWACs

CINEMA

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The Five Prong Market Assault

GTE Federal Systems StrategyGTE Federal Systems Strategy

IIDDIIQQ

&&

BBPPAA

LARGE

PROCUREMENTS

PP

II

LL

OO

TTSS

&&

NNTTIISS

RREESSEELLLLEERRSS

GSA ScheduleGSA Schedule

This 5 prong program creates an underlying sales infrastructure and uses the strengths of GTE to build up near term opportunities to establish past performance to win larger long term opportunities

This 5 prong program creates an underlying sales infrastructure and uses the strengths of GTE to build up near term opportunities to establish past performance to win larger long term opportunities

The market is small today but will be large in the future. If GTE wants to be there in the future, it must be there now. Past performance is key.

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GTE Positioning

Vehicle Positioning Value Proposition

ID/IQs andBPAs

• PrimeContractor

• Sub-contractor

• Strongengineering withISP capability

GSA/FSSSchedules

• InternetServiceProvider

• Best Value• Co-Marketing

GWACs

• PrimeContractor withStrong 8(a)relations

• Past Performance• Agency

Experience• Best Value

EC PilotProjects

• Value-AddingPrimeContractor

• Full-ServiceISP

• End-to-End COTSSolutions

• IntegratedManaged NetworkServices

• Security

Postioning should match vehiclePostioning should match vehicle

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Education: How do Federal Agencies Learn about New Technology?

Product

Solutions

Price

Policy

Channel

+ C.O. Market Research+ C.O. Tech Rep Consultation+ Federal Agency Peers+ Trade Shows, Conferences & Expos

+ Vendor Oral Presentations+ IMC & GSA “Best Practices” Notices+ Vendor Websites+ Vendor Marketing Materials+ Agency CIOs

+ GSA Schedules+ GSA Advantage+ ID/IQ Contract Program Mangers+ GWAC Program Managers+ FSS Schedules

+ Interagency Management Council+ Inter-Agency Internet Council+ Office of Federal Procurement Policy+ Office of Management & Budget+ Administrative & Agency Directives+ Federal Acquisition Regulations+ Legislative Mandates (e.g. FARA, FASA)

+ Vendor EC storefronts for Contract Vehicles+ GSA Program Managers for CINEMA, WITS,

FTS2000+ Incumbent Systems Integrators and Vendors

“Making Life Easier for Contracting Officers by

providing them with useful and pertinent information about IT

solutions is a great way to gain MINDSHARE and

GOODWILL.”

(source April Ramie, Cinema Program Director)

Opportunities to help educate and inform Agency Personnel increase as the journey from VISION to IMPLEMENTATION

progresses.

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Department of Agriculture• Food and Consumer Services Electronic Benefits Transfer• National Finance Center Trusted Certification Authority at the

National Finance Center

Department of Commerce• National Institute of Standards and Technology Purchase Order

Request System • National Institute of Standards and Technology Root Certification

Authority Reference Implementation• National Technical Information Service Secure Web and

Certification • Patent and Trademark Office International Patent Document

Exchange Project• Patent and Trademark OfficeElectronic Patent Application Filing

System (EPAFS)

Department of Defense• Defense Information Systems Agency Defense Travel

Management System• Defense Logistics Agency/AQAC Standard Procurement System• National Security Agency Multi-Level Information Systems

Security Initiative • Department of Energy Electronic Research Administration

Demonstration

Department of Energy• Lawrence Livermore National Laboratory Badges and

Security Clearances• Department of Energy/Lawrence Livermore National

Laboratory Public Key Infrastructure

Department of the Treasury• Secure Electronic Messaging System• US Customs Service North American Trade Automation

Project

Department of TransportationFederal Railroad Administration US Electronic Grants

Federal Bureau of Investigation (FBI)• Internet Communications Security• Investigation Secure E-mail

National Science FoundationCollaborations in Internet SecurityGeneral Services Administration

Paperless Federal Transactions for the Public

National Aeronautics and Space Administration Public Key Infrastructure

National Institutes of HealthElectronic Research Administration/ Public-Key Infrastructure

Small Business AdministrationElectronic Lending Program

Social Security AdministrationAnnual Wage Reporting (AWR) Pilot

Pilots are one way to build Past Performance

The following is a sample of PKI pilots being run by Federal Agencies The following is a sample of PKI pilots being run by Federal Agencies

Successful pilots help the FedGov get comfortable with new technology and give supporting vendors an inside track

Successful pilots help the FedGov get comfortable with new technology and give supporting vendors an inside track

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NTIS’s new role deserves attention

• NTIS Handles Traffic-Intensive and Cutting Edge Internet Applications for FedGov Agencies - At its high security facility, NTIS is currently or has hosted “most cabinet-level agency sites.” Service examples range from hosting all of the IRS public access servers which on April 14th this year got 18 million hits to hosting a sophisticated distance learning application for the Defense Acquisition University which will ultimately link 170,000 DOD acquisition employees and provide them with text-based and streaming multimedia content. Senior sources (DOD, NTIS, FedSources) tout several factors why NTIS is chosen to provide Internet services for their applications:

1) Impressive security2) “Big pipe” to the web3) Ease of doing business given “inter-agency agreements”4) Demonstrated professional capability

Of these items network security is the key reason why outside service providers were not chosen.

• NTIS and NITC Compete with Vendors but also Can Serve as a Channel - In addition to NTIS, the National Information Technology Center (NITC) is a key player influencing FedGov IT/Internet efforts. NITC functions as a key integrator and IT resource within the USDA. NITC also counsels other FedGov agencies on IT issues (e.g., hosting) and bids on government contracts. NITC won a $250M FAA contract. Senior level FTS2000 staff came from NITC.

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The Status of Outsourcing

• Shift towards Outsourcing - FedGov agencies are increasingly outsourcing IT functions and relying on COTS-based solutions. FedGov staff reductions / workforce downsizing combined with NPR initiatives and the need to cut costs are driving this trend.

• In Addition to Private-Sector Firms, FedGov Agencies are Outsourcing with NTIS and NTIC - NTIS develops applications and hosts sites for several FedGov agencies (e.g., IRS). Similarly, NITC won a $250M+ FAA contract.

• Complex/Nonstandard Legacy Systems Slow Adoption - Expected reliance on internal staff to maintain and modify legacy systems may slow outsourcing adoption. SSA uses 2000 COBOL programmers to maintain benefits databases.

• Union Pressure to Limit Outsourcing - Issues stemming from FedGov employee unions and associated Congressional pressure will impact the shift to outsourcing when job cuts are involved.

• Service Market Growth - FedGov spending on systems integration services is growing - expected to grow from $3.9B in FY 1997 to $5.2B in FY 2002. (Source: Input)

• Seat Management Contract with IBM is being closely watched - as a model for future outsourcing.

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An Organization Designed to Address this Market

Business Development at the front end to prime the pump • Top Down - establish senior relationships with primes to get portfolio discussions

• Bottom up - When you are selling at the application level you understand the visceral applications.

Agency Focused Organization• Find applications• Find buying vehicle• Look for new procurements over the next 24-36 months• Form bidding strategy

Prime - who are my subs and why is my team different?Sub - as a sub you want people dying to be your partner

Let’s take a look at how other companies have structured their sales and marketing organizations to address the FedGov opportunity

Let’s take a look at how other companies have structured their sales and marketing organizations to address the FedGov opportunity

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Telco/ISP: MCI WorldCom Government Sales Organization

M C I W o r l d c o m G o v e r n m e n t M a r k e t s O r g a n i z a t i o n

E x e c u t i v e D i r e c t o rD o D / N I I N e t w o r k s

D i a n a G o w e n

E x e c u t i v e D i r e c t o rD o T / U S D A / C A N e t w o r k s

M i k e S e r b o u s e k

D i r e c t o r F T S P r o g r a m sR i c h a r d S l i f e r

D i r e c t o r C i v i l i a n N e t w o r k sT o n y B a r d o

D i r e c t o r V A N S y s t e m sN a n c y C o l l i n s

D i r e c t o r U S P S N e t w o r k sW a y n e D a v i s

D i r e c t o r P r o g r a m M g m t .C r a i g H e n e s s y

D i r e c t o r P r o p o s a l M g m t .W i l l i a m A d e

D i r e c t o r I n t e r n a t i o n a l G o v ' t .R o b e r t S a h a g u n

D I S N D S / B M S - C D e p u t y P r o g r a m

S r . V PJ e r r y E d g e r t o n

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Systems Integrator: BTG Sales Organization

B T G O r g C h a r t

G r o u p V P S y s t e m s E n g .D e f e n s e a n d I n t e l l .

C a l S h i n t a n i

V P S a l e s a n d M k t g .J e f f W i l s o n

G r o u p V P a n d G MM i k e G e n e b a c h

B u s i n e s s D e v .J a m e s S c a m p a v i a

S r . V P C o m m e r c i a l S v c sM i d - A t l a n t i c

L i n d a H i l l

S a l e s R e p .R o b G r e y

S a l e s R e p .S t e v e L e c h o l o p

D i r . H e a l t h c a r e I n f o S v c s .J o h n S c a r c e l l a

V P t , I D / I QK e v i n A p s l e y

D e e R u s s e l l

G S A S c h e d u l eS h e r y l M c C u r n i n

J a c k L i t t l e yS r . V P S t a t e g i c I n i t i a t i v e s

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VAR: GTSI Sales Organization

A r m y

A i r F o r c e

M a r i n e s

N a v y

C a b i n e t L e v e l I n d e p e n d e n t A g e n c i e s

C i v i l i a n A g e n c i e s P r i m e C o n t r a c t o r s

G T S I S a l e s O r g a n i s a t i o n

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Telco/ISP: Sprint Sales Organization

S a l e s R e s o u r c e sA s s i g n e d b y A g e n c y

F T S 2 0 0 0 S a l e s

S a l e s R e s o u r c e sA s s i g n e d b y A g e n c y

C i v i l i a n A g e n c y S a l e s

S a l e s R e s o u r c e sA s s i g n e d b y A g e n c y

D o D S a l e sT y p e t i t l e h e r e

S p r i n t G o v e r n m e n t S y s t e m s D i v i s i o n

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Competitive Selling Strategies for Marketing the Buying Vehicles

IBM Fills the Information Gap

• IBM’s Institute for Electronic Government provides online resources and links to state and federal governments and initiatives furthering the IT revolution in government.

• Given the paucity of information on Government IT Policy, IBM’s IEG site provides needed information on policy and technology issues to help educate customers.\

• The IEG website (http://www.ieg.ibm.com/) provides information on IT policy and implementation issues relating to state and federal governance and operation.

US West Marketing Past Success

Epoch Battles for Mindshare

• Realizing the increased importance of “past performance” in contract award evaluation processes, US West helps COs keep track of its past successes by highlighting past awards and project milestones online (www.uswest.com).

• Past performance narratives stress US West’s core competencies in rural areas and in total network management.

• Profiles highlight good working relationships with the DOE, DOI and BLM.

Sprint Takes Charge of its GSA Schedule

• After unsuccessfully nudging GSA Advantage staff to incorporate Sprint schedule information online, Sprint decided to put up its own catalog/price list on an IMPAC card-enabled storefront through DCC’s FedCenter portal.

• The new website was launched in early November in partnership with DCC and has already logged 10,000 inquiries.

• Sprint’s example has prompted the CINEMA Program Director to explore the possibility of doing the same for the CINEMA schedules to increase sales and profitability which YTD is about 1% .

• Epoch attempts to win mindshare among federal employees by offering them discounted internet access services under a program named GovDial.

• Service is available to federal employees for $14.95 per month: includes mail pop account and personal web page and access to special resources for acquisition information.

• Service is in support of CINEMA contract under BTG’s prime leadership.

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Case Study: Sprint

• Headquarters: Kansas City, MO• 1998 GSA Revenues: $8.2 Million (Total $15 Billion)• Number of Employees: 48300 world-wide

Gov’t. Systems: 180 Total; 105 Sales/Marketing; GSA Contract Consultants 3

• Primary Procurement Vehicles: GSA Schedules (since 1996) and FTS2000

• Principal Competitors: MCI, AT&T and GTE• Key Competencies: Video conferencing services, data

security and encryption and LD services.

Snapshot

75% Telecom Services25% Value-added Professional Services

• 50% of Revenues come from Video Equipment & Services (DoC and DoD)

• 30% Security & Encryption (DoD primarily)

Sprint is actively seeking 8(a) partners for multimedia streaming technology and content

management to add to GSA/FSS.

• Services: Video Conferencing and Multimedia content management and transmission services

• Driver: Interagency activity and Increased procurement activity expected from beyond Beltway regional Procurement Offices

• IAS is seen as a commodity but increased sales expected in COTS Communication Services, especially E-Mail Migration Technology

• EC adoption by Civilian Agencies is not expected to grow much for the next two years because of Y2K issues

• E-mail and messaging migration is high on agency contacts’ minds and discussion during monthly Sales force visits.

• Strong Management commitment to Total Customer Service initiatives: Salesforce has recently received training in TCS and Relationship Selling

• DoD is seen as an early adopter and champion of EC and IAS projects and intiatives

• Civilian Agencies suffer from high COTR turn-over and painfully slow adoption of online procurement channels like GSA Advantage for IT

• Sprint has yet to make it onto GSA Advantage database because of agency foot-dragging and incompetence

• In response to slow GSA response to online availability of Schedule info, Sprint has contracted with DCC’s FedCenter for an online store front launched in late October ‘98.

• While GSA schedules sales are relatively small, management feels it can’t afford not to be there to gain mindshare beyond FTS2000 phase

Expected Areas for Sales Growth

1998 GSA Revenues $8.2 Million (YTD)

Marketing & Sales to Fed Gov’t: Relationships are Key!

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Case Study: IBM Government Industries

• Headquarters: Tampa, Florida• 1998 Federal Revenues: $758 Million (Total $78 Billion)• Number of Employees: 7,000 world-wide• Primary Procurement Vehicles: GSA Seat Management,

CINEMA and GSA Schedule• Federal Sector Head: John Nyland• CINEMA Program Manager: Dave Bolan• Global Government Head: Ken Thornton• Principal Competitors: Sprint, MCI, AT&T and BTG

Snapshot

9% Systems Operations & Maintenance

15% PC/Desktop Managment

25% Professional IT Services & Business Process Re-engineering Service

23% Software

28% Hardware

45% of all current sales through IDIQ contracts

• Driver: Desire for inter-agency communication and collaboration & dissatisfaction with x.12 EDI solutions

• Services: VPN, Managed Network Services and Seat Management

• IAS is seen as a commodity, big push planned for integrated managed network services, especially for outside Beltway locations.

• Single Biggest Problem: Marketing to agency COs and Technical Reps, who have high turn-over rates

• Salesforce for CINEMA is highly frustrated with long sales cycle and eligibility confusing on GWACs and IDIQs

• 110 Federal Government Sales and Marketing Organization • CINEMA Team: 2 FTE (1 in D.C. Marketing Mgr. And 1

Program Mgr. In Tampa• Current Marketing Initiative focuses on Agency Customer

Education through Product Demos and Oral Presentations• IBM has a 100% award renewal rate

Expected Areas for Sales Growth Marketing & Sales to Fed Gov’t: Deep-sea Fishing

1998 Federal Sector Revenues $758 Million

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Case Study: US West Federal Services

Federal Agency Contract Value Performance Period Services or Product

Department of Defense(Air Force)

$1,600,000October 1994-September

1999Self Healing Network Services at Hill Air ForceBase, Utah

Department of Energy $47,500,000 October 1991-October 2001Total Managed Network Services for the Hanford,WA site's Integrated Voice & DataTelecommunications System

Department of Energy $108,000,000

May 19943yrs implementation10yrs operations &

maintenance

Design, installation and management of FederalIntegrated Communications Network at OakRidge, TN Facility

Department of Treasury(IRS)

$38,000,000 May 1991-September 2000IRS Midwestern Region TelecommunicationsSystem

General ServicesAdministration

$30,500,000January 1992-September

1999

Integrated digital voice and datatelecommunications service and equipment toestablish a centralized Western Region TMS.

UC-Los Alamos NationalLaboratory

76,000,000November 1992-November

2001

Complete installation of a new 5ESS CO switchand three remote switch modules, outside plantdistribution system, all new inside plantdistribution facilities, and the installation of 400ISDN sets

• Headquarters: Englewood, Colorado• 1998 Revenues: $125,000,000 • Number of Employees: 175• Dedicated Campus Personnel: 3 Three-person teams at 3

DOE facilities and dedicated personnel at Treasury, Interior (BLM & BIA), Air Force and US Postal Service

• Civilian Agencies account for 75% of Revenues• Defence Agencies account for 25% of Revenues• Primary Procurement Vehicles: GAS-MAS, IDIQ Sole,&

FSS-IT

Snapshot

Internet and Data Services currently Provisioned to Fed Market through IT/GSA Schedule

Internet ServicesDSL/ADSLDomino HostingElectronic CommerceISDN Primary Rate ServiceISDN Single Line ServiceLotus NotesMegaBit ServicesWeb Services

Data/Access Services DS1DS3DSL/ADSLDigital Data ServicesDigital Switched ServiceFrame Relay ServiceISDN Primary Rate ServiceISDN Single Line ServiceMegaBit ServicesSONET Services

1997 Internet/Data/Access Revenues $37.5 M

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Case Study: Computer Sciences Corp.

• Headquarters: El Segundo, CA• 1998 Revenues: $1.7 Billion (Total $7.5 Billion)

estimates for 1999 $7.8 Billion, for 2000 $9.3 Billion• Number of Employees: 16,000 (44,000 Total)• Primary Procurement Vehicles: 20 current IDIQs and DoD

Schedules• Reorganized Federal Sector into two units: Defense and

Civilian w/ Milton Cooper as Fed Sector President• Principal Competitors: EDS, UNYSIS, SAIC, Lockheed• Key Competencies: Security, Legacy DB Extraction, RAD

and commercial workflow process management

Snapshot

10 %Systems Operations & Maintenance

60 %Systems Integration

20% Professional IT Services

10 %Business Process Re-engineering Service

50% of all current business comes from 20 current IDIQ contracts

No specific Internet Services provisioned currently to any agency.•Dept of Defense: InteliLINK•NASA: Center for Excellence, E-commerce site at Marshall Space Center•NAIS: Electronic Acquisition Information Management System for Vendors•Grater Atmospheric Research Center: Grant Management System

•Currently Bidding for IRS’s Prime Systems Integration Services Contract

•Key Competitor: Lockheed Martin

•Award Size: $8 Billion over 15 years

•Differentiation: Expertise in commercial outsourcing and workflow management

Expecting over $16 Billion in Fed Sector Revenue through March 2000

1998 Federal Sector Revenues $ 1.7 Billion

Current Contracts

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Case Study: Bay Networks Federal

Experience Selling to Federal AgenciesSnapshot

Growth Expectations:Competitive Outlook

• Federal Market Revenues: $110 Million (1997) $147 Million (1998)

• Sales Growth of 15% expected for 1999

• Civilian Agencies account for 60% of Revenues;

• Defense Agencies account for 40% of Revenues

• Federal Sales Force of 27: 16 (civilian); 8 (defense)3 on campus in Hawaii

• Currently not on GSA Schedules and also without ID/IQs

• Sales come primarily through VARs that list Bay products on their schedules with GSA

• Three VARs account for 80% of Sales: Presidio, Anixter, and Lucent Technologies

• Uninterested in getting on any GSA schedule themselves, will let VARs and SIs continue to push products

• Schedule sales require too much by way of content regulations and discount monitoring: prefers to avoid

• Main competitors: Cisco, Lucent and AT&T

• Product Mix: 60% product; 40% service

• Frustrated by experience: little support from HQ, especially after Merger

• Sales force churn is quite high: 60-70% per year• Frequently encounters Contracting Officers who know

very little about the technology they are purchasing and sometimes even less about the true work requirements from Statements of Work

• Sales forces provides a great deal of customer education about products on visits to sites

• Agencies are contacted about twice a month about upcoming requirements and needs

• Sales teams comprised of two members: one technical, the other sales/business process oriented

• Joint client calls with VARs and SIs are very common

• Sees greater opportunities in outsourcing and leasing, especially in DOD and DOE

• Not much leasing activity currently but hoping to expand offerings in this area since Agencies are quite interested in leasing arrangements in order to mitigate risk in technical obsolescence and maintenance costs

• Expects leasing to account for 40% of business in next 3 years

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Case Study: The Experiences of two 8(a) companies:

• Supplier of Internet and Extranet Services, primarily web site hosting and site management

• Special Competencies: web-enablement of legacy RDBMS, Geographical Information Services and WAN operations

• 1998 Sales to Fed Market: $4 Million

• Local DC area firm with 20 employees

• Accounts: DOC, ARMY, Border Commission

• Channels: actively seeks prime-sub relations with SAIC, EDS and BULL

• Currently sales are through sole-source contracts for web site design and hosting

• Listed on GSA schedule as SAIC subcontractor

• Supplier of Internet and Intranet applications development services

• Special competencies: Graphics design, legacy DB extraction and web-enablement

• Provides hosting for GovSales Net through DOC ID/IQ for $1 Million

• Local DC area firm with 8(a) status through 2003

• Channels: no current GSA schedule, sub-contractor for BTG only

• Currently sales of $2 Million are through work outsourced through BTG though ID/IQ with DOC

• Looking to enter IAS service domain in partnership with local ISP

Commonalties of Experience

• Experienced a great deal of difficulty establishing relationships with SI Prime Contractors, in each case it took more than two years to consolidate relationship, even with 8(a) certification

• Sales growth has been limited due to not being on the GSA schedule

• SBA has been less than helpful

• Primes have been actively disinterested and frequently dismissive of alliances

• Both firms expect more outsourcing of intranet and internet services, but see this activity taking place very slowly and cautiously

Indus Corporation Khera Communications

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Agency Presence of Selected IT Solutions Providers (1)

VENDORCONTRACT

NUMBERPRODUCT or SERVICE AGENCY

AT&T DAAB0797CD604Prof. SVCS / Engineering TechnicalServices

Army, Dept of The

AT&T DACW179C0046Telephone and-or Communications SERRadiotelephone Communications

US Army Corps ofEngineers - Civil Pro

AT&T DFTA0190D00009ADP Central Processing Unit-Digital, ElectronicComputers

United States CoastGuard

AT&T DTFA0193D00054Other Professional SVCSEngineering Services

Federal AviationAdministration

AT&T DTFA0496C20015Telephone and-or Communications Services,Telephone Communication, EXC. Radio

Federal AviationAdministration

AT&T DTFA0694C30019Other Professional SVCSMeasuring & Controlling Devices, NE

Federal AviationAdministration

AT&T F0560392C0002Other ADP &Telecommunications SVCSTelephone Communications, EXC. Radio

Air Force, Department ofThe (headquarters)

AT&T F1963088D0005Maint-Rep of ADP Eq & SuppliesComputer

Air Force, Department ofThe (headquarters)

AT&T F1963088D0005Maint-Rep of ADP EQ & SuppliesComputer Repair & Maintenance

Air Force, Department ofThe (headquarters)

AT&T M6700496C0007ADP SVCS – Telecomm & RESComputer Repair

Navy, Department ofThe

AT&T N0060094D0344ADP SVCS/Telcomm & TransmissionCommunication Services, NEC

State, Department of

AT&T N00600D0344SDP SVCS/Telecomm TransmissionCommunication Services, NEC

State, Dept. of

AT&T TIR910057Other ADP & Telecomm SVCSTelephone and Telegraph Apparatus

Internal RevenueService

BELLATLANTIC

143495C30244TransmissionCommunication Services, NEC

Geological Survey

BELLATLANTIC

6009308084

ADP SVCS / Telcomm & TransmissionCommunication Services, NEC

Social SecurityAdministration

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Agency Presence of Selected IT Solutions Providers (2)

VENDORCONTRACT

NUMBERPRODUCT or SERVICE AGENCY

BELLATLANTIC

DAAB0792CC109Other ADP & Telecommunications SVCSElectronic Computers

Army, Dept. The (Exc.Corps Of Engineers)

BELL ATLANTIC GS00K95HS0534Telephone & Telegraph EQTelephone Communications, EXC. Radio

Small BusinessAdministration

BELL ATLANTIC GS35F3030DADP Support EQElectronic Computers

Office of FTS2000

BELL ATLANTIC N0014095DJ021ADP Facility ManagementComputer Repair & Maintenance

Navy, Department Of The

BELL ATLANTIC N0014096C1026Other ADP & Telecomm. SVCSCommunication Services, NEC

Navy, Department Of The

BELL ATLANTIC N0039197MMD21ADP Facility ManagementComputer Repair & Maintenance

Navy, Department Of The

BELL ATLANTIC NRC2895206Other ADP & Telecomm. SVCSBusiness Services, NEC

Nuclear RegulatoryCommission

BELL ATLANTIC W91331Other ADP & Telco SVCSCommunication Services, NEC

National Aeronautics &Space Administration

IBM 53315750009Other ADP & Talc SVCSComputer Repair & Maintenance

Farmers HomeAdministration

IBM 6009520396Other ADP & Telecomm SVCSComputer Repair & Maintenance

Social SecurityAdministration

IBM 94BYC103245000ADP SoftwareComputer Peripheral Equipment., NEC

Tennessee Valley Authority

UUNET 43YABC740149COMM Security EQ & COMPSCommunication Services, NEC

Bureau Of The Census

UUNET DABT2396P3239Prof. SVCS / Communication ServicesComputer Related Services, NEC

Army, Dept. The (Exc.Corps of Engineers)

WORLDCOM 43ABNW700050Telephone and-or Communications ServicesRadiotelephone Communications

National Oceanic AndAtmospheric Administration

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• Very strong Y2K focus• Limited PKI infrastructure

Profile: Department of the Treasury

Total Employees: 148 K FY1999 IT Budget: $2.0 BFY1999 Internet Budget: % Empl with E-Mail: 80 % +% Empl with Int Access 80 % +

• Using the Internet to improve customer contact

• Creating virtual government - ubiquitous access to the government for taxpayers

• Investment Review Boards evaluate ROI for Internet initiatives• Running PKI pilots• Intranet used largely for informational purposes (e.g.,

transborder shipment info, maps, bonds, etc.) by a full range of bureaus within the department

• IRS is the Internet leadership agency• Some electronic commerce (selling special edition mint sets on

the web)

Agency Vision

Incumbent ISP(s)Current Situation

Buying Plans

Buying Vehicles

Key Individuals • TRW advising Treasury• TRW RFQ went out two weeks ago allowing

them to take moves, adds, and changes for WANs and backbones and put it on a sub-contractor

Obstacles to Deployment

Treasury Telecom Services (TSC) managed by TRWNTIS supports IRS in peak periods

• Large procurement• GSA and GWACs - use available buying vehicles• Pilots• Shift to performance-based measurements

• Jim Flizik, CIO• Candace Hardesty, Dir of Liason and Business Service• Steve Holden, IRS• Cosgrove, IRS Outsourcing Status

• Actively outsourcing• TRW, NTIS, etc.• Use existing buying vehicles (e.g., GWACs and GSA)

Suggestions to ISPs

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• Significant business process re-engineering / re-organizations underway

• In “infant” stage of Internet adoption• Y2K focus

Profile: US Postal Service

Total Employees: 765K FY1999 IT Budget: $1B+FY1999 Internet Budget: $10M+% Empl with E-Mail:% Empl with Int Access:

• PostOffice Online - Geared towards small and home-based businesses, will offer customers access to postal products and services via the Internet

• Secure service for movement of messages and money (Mail a check and feel comfortable that it will get there.)

• Electronic commerce (e.g., secure money transfers and selling postage) and Digital Certificates.

• USPS is also looking at their competitors for ideas (e.g., UPS and FedEx).

• Today -Informational web pages, internal e-mail, and Internet / intranet usage account for the bulk of current Internet applications. Now starting to explore and evaluate more sophisticated applications (e.g., selling postage over the Internet, knowledge management solutions [based on Lotus Domino], and extranets [pilots underway]).

• USPS faces strong competition from private sector vendors (e.g., UPS, FedEx, etc.) as well as electronic communications (e.g., e-mail) - Threat: Very concerned about losing first class postage and shipping revenue.

• Selling postage (information-based indicia [IBI]) over the Internet may be a huge business - In 1999, the USPS projects mail volume at 200 billion pieces.

• Strong interest in exploring Internet applications to stay ahead of strong competitors and electronic communications.

Agency Vision

Incumbent ISP(s)Current Situation

Buying Plans

Buying Vehicles

Key Individuals

• Select vendors for Information-Based Indica (IBI) program• Ramp up IBI / PostOffice Online

Obstacles to Deployment

• Use all buying vehicles• Can buy through MCI’s $3B Managed Network Services contract -

MCI beat out CSC, TRW, and IBM

• Norm Lorentz, CIO• Kathy Rogerson, Grp Mgr, New Business• Marvin Benan, Manager, Telecommunications Services• Roy Gordon, Program Manager, IBI

Outsourcing Status

• Expected to depend heavily on vendors for IBI program• Public Internet site (hosted in CA) is likely to continue to

be hosted by USPS. • Internet access and security demands are the greatest needs.• Ready to talk with vendors now• Looking to work with smaller partners (e.g., StampMaster).

Suggestions to ISPs

• MCI• Not locked in sole relationship with MCI - Can use other service

providers

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• Beholden to Government oversight and guidance

• PKI infrastructure• Lack of expertise within the agencies in

understanding the technology• Integration with Legacy systems• Y2K focus

Profile: Social Security Administration

Total Employees: 65,000 FY1999 IT Budget: $600MFY1999 Internet Budget: $6M% With E-Mail / Intranet: 90%% With Web Access: 20%

• Electronic Transactions (earnings history, online benefits)

• Complete online transactions (request online, delivered online)

• Public Key Infrastructure (PKI) is the gating item.

• Building integrated service delivery channel slowly over 10 years

• Building apps online and developing policies

• Today - Most SSA web services today are informational for the employer community and the Regional Field Offices, no hosting, no VPN, no e-Commerce. Internally they have an Intranet.

• Less than 1% of IT budget spent on Internet Services.• Recently spent $1.2B to modernize computers and upgrade Token Ring

LANs to TCP/IP.• The bulk of internet expenditures are for developing internet content• (4) T-1s and a sprinkling of dialup accounts

Agency Vision

Incumbent ISP(s)Current Situation

Buying Plans

Buying Vehicles

Key Individuals • Upgrade to T-3• Redundancy and Backup• Just initiated a $400K study with Price Waterhouse

Coopers to help set direction

Obstacles to Deployment

AT&T Worldnet

• Use all vehicles used, the bulk of purchases are small.• Use credit cards for <$2500.• Work through FTS2000 contract but not obligated to

use if they can find a better deal.

• John Dyer, CIO• John Sabo, Director Electronic Services (manages the web sites)• Jeana Kotowski, Branch Chief of Systems Operations (buys ISP services)

Outsourcing Status• Outsource ISP services, backup and recovery• Hard to outsource legacy databases that takes

1000s of COBOL programers to maintain. • Most likely to outsource generic services that

don’t take specialized inhouse expertise

• “ISPs are much too passive marketing to FedGov”• Partner with Verisign to provide digital certificates that will help fed agencies to

ID individuals.• Take a marketing approach to security• Do not believe that Federal Agencies will want to outsource firewall services

unless they farm out hosting

Suggestions to ISPs

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Profile: Department of Energy

Total Employees: 132K FY1999 IT Budget: $1.5 BFY1999 Internet Budget: $ Million% Empl with E-Mail: 90 %+% Empl with Int Access 75 %+

• Intranet linking field offices with headquarters• Ensures uniform distribution of DOE knowledge base (e.g.,

industry analyses or statistical databases)• Implementation began June 1997• ATM backbone

• Electronic commerce pilot• Three VANs being used today. (Not intensive usage.)• Plan to consolidate on one of them in 1999

• Linked to Dept of Defense Extranet

• Adoption of PKI Technology • Testing secure e-mail now• Testing secure access to key labs

like Lawrence Livermore

• EDS won 5-yr, $600M ID/IQ contract for telecom and computing services in June 1997.

• Energy Resource Department (DOE) provides network services (access, hosting, etc.) for other bureaus within DOE. 4 T1s and and ATM backbone.

• Internet access• Electronic commerce solution - Frustrated with

lack of GSA solution• Individual DOE offices are “not required” to use

EDS telcom / IT services under the terms of the award

Buying PlansKey Individuals

Agency Vision Incumbent ISP(s)

Buying Vehicles

Obstacles

• Competitive Bids: CBD, FedSim, FedCAC

• Y2K and seat mgmt focus• Security concerns

• Howard Lewis, Acting CIO• Robert Wilson, Office of the CIO• Richard Otis, Chief Engineer, Telecom• Mike Raizen, Contracting Office, E-Commerce

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• Strong Y2K focus• Heavy Congressional oversight of IT

budget / “wasteful” procurement policies

• Business process re-engineering required pre-deployment

Profile: Department of Agriculture

Total Employees: 102K FY1999 IT Budget: $948MFY1999 Internet Budget: $10-50M% Empl with E-Mail: 75%+% Empl with Int Access: 50%+

• Consolidate Internet access / services for approx 29 USDA organizations

• Roll out video conferencing to every desktop - key factor in lowering training costs

• Expand EC efforts• Internet access for all employees

• Today - Informational web pages, internal e-mail, and Internet / intranet usage account for the bulk of current Internet applications. Limited extranet and electronic commerce applications are taking root. Video conferencing / training just getting underway

• Between 1-5% IT budget spent on Internet-related goods and services• Major IT centers in Washington, DC; New Orleans, LA; Kansas City, KS; and

Ft Collins, CO• Major connectivity consumer - the Kansas City Center alone has 30-40 T1s.• The agency’s Washington, DC offices are linked with FDDI backbone.

Agency Vision

Incumbent ISP(s)Current Situation

Buying Plans

Buying Vehicles

Key Individuals • Consolidate multiple T1s to fractional T3s• “Open Edition” - Migrating client-server apps to

mainframe and providing web access to the data on the mainframes.

Obstacles to Deployment

• Use all buying vehicles• In-person presentations appear key• Partnering with IBM (major IT contracts) is an easy

way to sell - IBM had 49% of all FY1997 IT contracts

• Anne Thompson, CIO• Bill Conway, (Manages security at Kansas City site)• Mike Thomas, (Buys ISP services)• Ron Anderson, Office of the CIO / NITC

Outsourcing Status• Outsourcing is “unlikely” for most IT

requirements - “We’ve got the capability … we’re a little under used right now.”

• Seat management is one of the few areas where outsourcing is likely to prevail.

• “Contact Mike Thomas directly regarding access.”• Partner with IBM• “Come on down here and make your pitch”• “Unlikely” that USDA / NITC will farm out hosting or integration

Suggestions to ISPs

• AT&T• Currently work with multiple service providers and

plan to continue doing so to ensure reliability in the event of service failure

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Roadmap: Detailed Findings

Introduction

High Level Findings

Conclusions

Detailed FindingsDetailed Findings

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Contract Vehicles used by the Competition

Contract Vehicles AT&T BTG CSC Epoch IBM MCI Sprint FDC

ACES-BPA �

AFNET �C3TE&I �

CCPL �

CECOM-ACES �

CINEMA � � �

CIO-SP � �

D/SIDDOMS II �

DEIS II �

DoC /NOAA �

DFISS �

DIESCON II � �

DOJ/INS BPA �

DoN-ES �

DS/BMS �

DSSMP �

EPA �

FAATSAT �

FEDCAC VDC �

FEDSIM MAC �

FSS �

FTS2000 � �

GSA FTS TMS �

GSA Schedule � � � � �

GSA Seat Mgmt �

GWAC �

IC41 � �

INFOSEC TSC �

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Contract Vehicles used by the Competition (continued)

Contract Vehicles AT&T BTG CSC Epoch IBM MCI Sprint FDC

ITOP �

ITSS � �Legislative CommonServices

�

LINCS �

MAPP �

MNS �

MOBIS � �

NASA ODIN �NASA SEWP �

NIH �

NIH Electronic Store �

NraD BPA �

ODIN �

PC2 �

PCTN �PM-PSE �

SASS �

SASS 2 �

SBPR �

Seat Management �

SETAC �

State Dept S11 �

TDPI �

TIPSS �

US Postal DataServices

�

vBNS �

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Cinema Pricing

CINEMA(Commerce,Internet, E-mailAccess)

• A Post-FTS2000 initiative designed to provide information services to federalagencies with integrated federal telecommunication services.

• Authorized individuals may use federal government PO, funding document orIMPAC Card.

• Contractor A POC: Deidre Wyborski, CINEMA Team Leader, BTG (Epochprovides ISP services)Phone: 888-883-2662 x.8489

• Contractor B POC: Dave Bolan, CINEMA Team Leader, Advantis (IBM GlobalNetwork)Phone: 800-588-5808

Internet Access Includes both analog dial-up and dedicated connections to a national high speedfault-tolerant DS-3 Internet backbone.

E-Mail--x.400 & x.500DirectoryServices

• x.400 Message client services providing mail-management interfaces for thecreation, submission, receipt, manipulation and filing of simple test and multi-part, multimedia messages.

• x.500 Directory client provides directory searching, browsing and online phonebook services.

EC/EDI

OMB-Circular A-130 Compliant electronic commerce and electronic data interchangeservices over a value-added network (FACNET). Document types supported: 843(RFQ), 850 (PO), 855 (PO Acknowledgement), 836 (Contract Award), 997(Functional Acknowledgement) and 838 (Vendor Profile)

Cinema Pricing Overview

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Competitive Pricing for BTG/Epoch, IBM, and MCI

BTG(ISP services by EPOCH)

IBM Global Network (formerly Advantis)Internet Access Service,

E-Mail and EC/EDI IASSetup

EM &EC/EDISetup

IAS, EM &EC/EDIMonthly

IASSetup

EM &EC/EDISetup

IAS, EM &EC/EDIMonthly

Analog Dial-up $0.00 $25.25 $21.21 $0.00 122.00 $18.86ISDN BRI Dial-up $25.25 $25.25 $41.41 $505.00 $0.00 $85.58Dedicated DS0 $433.13 $0.00 $363.00 $757.00 $0.00 $388.00

Fractional T1 (256K) $757.00 $0.00 $666.00 $757.00 $0.00 $712.00Fractional T1 (512K) $757.00 $0.00 1,040.00 $757.00 $0.00 1,131.00Fractional T1 (768K) $757.00 $0.00 1,570.00 $757.00 $0.00 1,707.00

T1 (1.544M) $757.00 $0.00 2,080.00 $757.00 $0.00 2,358.00T3 (45M) $757.00 $0.00 41,410.00 $757.00 $0.00 42,243.00

*Included in all IAS: Netscape Communicator, PPP Dialer, Streamworks, View Director Pro2 andSMTP Email, x.400/x.500 client licenses, EC/EDI VAN enablement

Cinema Pricing

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Cinema Pricing - Internet Access Only

BTG(ISP services by EPOCH)

IBM Global Network (formerly Advantis)

Internet Access Service(IAS)*

Setup Monthly Setup Monthly

Analog Dial-up $0.00 $14.14 $0.00 $14.09ISDN BRI Dial-up $25.25 $41.41 $505.00 $80.80Dedicated DS0 $433.13 $363.00 $757.00 $363.00

Fractional T1 (256K) $757.00 $666.00 $757.00 $666.00Fractional T1 (512K) $757.00 $1,040.00 $757.00 $1,040.00Fractional T1 (768K) $757.00 $1,570.00 $757.00 $1,570.00

T1 (1.544M) $757.00 $2,080.00 $757.00 $2,080.00T3 (45M) $757.00 $41,410.00 $757.00 $41,410.00

*Included in all IAS: Netscape Communicator, PPP Dialer, Streamworks, View Director Pro2 andSMTP Email

Cinema Pricing

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BTG(ISP services by EPOCH)

IBM Global Network (formerly Advantis)Internet Access Service

(IAS) and E-Mail* IASSetup

EMSetup

IAS & EMMonthly

IASSetup

EMSetup

IAS & EMMonthly

Analog Dial-up $0.00 $25.25 $21.21 $0.00 122.00 $18.86ISDN BRI Dial-up $25.25 $25.25 $41.41 $505.00 $0.00 $85.58Dedicated DS0 $433.13 $0.00 $363.00 $757.00 $0.00 $388.00

Fractional T1 (256K) $757.00 $0.00 $666.00 $757.00 $0.00 $712.00Fractional T1 (512K) $757.00 $0.00 1,040.00 $757.00 $0.00 1,131.00Fractional T1 (768K) $757.00 $0.00 1,570.00 $757.00 $0.00 1,707.00

T1 (1.544M) $757.00 $0.00 2,080.00 $757.00 $0.00 2,358.00T3 (45M) $757.00 $0.00 41,410.00 $757.00 $0.00 42,243.00

*Included in all IAS: Netscape Communicator, PPP Dialer, Streamworks, View Director Pro2 andSMTP Email, x.400/x.500 client licenses

Cinema Pricing - Internet Access with E-mail

Cinema Pricing

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Internet Security Opportunity - Critical Infrastructure Protection

• The Critical Infrastructure Assurance Office (CIAO) has designated 14 agencies that must turn in by November 18 a plan to protect critical infrastructures

• Primary agencies are: State, Treasury, Defense, CIA, Commerce, HHS, Transportation, Energy, Veterans Affairs, EPA, Justice, FBI, NSA, and Federal Emergency Management Agency

• Secondary agencies (e.g., Agriculture and Education) are required to turn in their protection plans by February 1, 1999

• FedGov agencies are slated to work closely with the private sector in the development and implementation of these plans.

• To help agencies find tools to protect services, GSA has partnered with Booz-Allen, offering infrastructure protection planning services under the $620M Telecom Support Contract 2 (TSC2)

Presidential Decision Directive 63 (May 1998) requires FedGov agencies to inventory computer systems and physical assets and develop a plan to protect from “cyberattacks” those systems deemed as critical to the agencies’ operations.

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WITS 2001 Overview - “Son of FTS2000”

Washington Interagency Telecommunications System 2001• The Washington Interagency Telecommunications System 2001 (WITS2001) procurement is intended to provide telecommunications

services to all Federal agencies and other authorized users in the Washington, D.C. area. This procurement vehicle will offer a wide range ofservices, from analog and digital switched voice services to advanced data services.

• The Government intends to use fully its investment in WITS network assets over the life of the contract while increasing its use of contractor-provided services. The WITS contract is a hybrid contract covering service & operations, administration and maintenance requirements.Additionally, Internet Access Services (IAS) has been included as a requirement.

Status of RFP: 1Q FY99 (January 20, 1999) CLOSEAward Date: 2Q FY99WITS2001 Services

• Circuit switched voice: Analog, ISDN• Dedicated Transmission: DS1, DS3, OC-3, OC-3c, OC-n• Switched data services: Frame Relay, ATM, PRI, BRI, SONET, SMDS, virtual local network• Internet access service: ISDN, T1, T3, OC-1, web hosting• Video teleconferencing service: multipoint, continous presence

WITS2001 Contract ResponsibilitiesContractor Government

• Maintenance-switching & transmission facilities• Local loop, local transport transmission provisioning• Network management• Provisioning of customer premises equipment• Provisioning of switch hardware & software generics• Ordering & billing• Trouble reporting• Marketing

• Contract administration & management• Infrastructure investment• Asset management• Service delivery to customers/agencies• Network planning & engineering analysis• Marketing

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WITS2001 - Internet Components

Annual Prices ofInternet Access Services (IAS) by CLIN(dollars)

CLIN DescriptionYear 1 Year 2 Year 3 Year 4 Option Year 1 Option Year 2 Option Year 3 Option Year 4 TOTAL

Totals by Year - - - - - - - - - IAS-00-0001 X.400 E-mail Gateway Service - - - - - - - - - IAS-00-0002 X.500 Directory Service - - - - - - - - - IAS-00-0003 Electronic Mail Service - - - - - - - - - IAS-00-0004 Server Co-Location - - - - - - - - - IAS-00-0005 Firewall Security Service - - - - - - - - - IAS-00-0006 Border Gateway Routing Protocol - - - - - - - - - IAS-00-0007 Domain Name Registration - - - - - - - - - IAS-00-0008 Domain Name Hosting - - - - - - - - - IAS-00-0009 NNTP News Feed - - - - - - - - - IAS-00-0010 Proxy Services - - - - - - - - - IAS-00-0011 Network Management System - - - - - - - - - IAS-00-0101 Web Hosting - - - - - - - - - IAS-00-0102 Web Authoring - - - - - - - - - IAS-00-0103 Periodic Reports - - - - - - - - - IAS-01-0001 56/64 kb/s - - - - - - - - - IAS-01-0002 128 kb/s - - - - - - - - - IAS-01-0003 256 kb/s - - - - - - - - - IAS-01-0004 512 kb/s - - - - - - - - - IAS-01-0005 768 kb/s - - - - - - - - - IAS-01-0006 1.536 Mb/s - - - - - - - - - IAS-01-0007 4 Mb/s - - - - - - - - - IAS-01-0008 10 Mb/s - - - - - - - - - IAS-01-0009 16 Mb/s - - - - - - - - - IAS-01-0010 34 Mb/s - - - - - - - - - IAS-01-0011 100 Mb/s - - - - - - - - - IAS-01-0012 155 Mb/s - - - - - - - - -

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FTS 2000 Cost Comparisons

Cost Comparison for Commercial & FTS200 Services

Commercial and FTS2000 FY 1997 and FY 1998 Prices ($/Month in thousands)

Item Commercial FTS2000 FY97 FTS2000 FY98

Service (Units) $/Unit $/Month $/Unit $/Month $/Unit $/Month

SVS (Minutes) 0.0512 23,379.8 0.0529 24,170.5 0.0505 23,050.1

SDS (Minutes) 0.1990 683.7 0.1986 682.2 0.1900 652.8

DTS (Circuits) 15,298.2 10,142.3 8,651.7 4.8A 1,190 778.2 523 342.0 494 323.4 9.6A 721 3,252.0 423 1,908.3 401 1,807.7 9.6D 684 1,184.0 475 821.3 447 772.5 56D 1,322 4,804.8 573 2,082.2 476 1,728.7 T1 2,735 4,625.0 2,536 4,271.8 2,083 3,522.3 T45 38,485 654.2 42,158 716.7 29,244 497.1

PSS (Ksegs) 0.765 2,860.5 0.356 1,330.4 0.345 1,290.5

Total $42,222.2 $36,325.4 $33,645.1

• Comparison between commerical prices in effect June 1997 and FTS2000 FY97 prices.• Aggregate monthly total commerical price is $42.2 Million, compared to $36.3 Million for

FTS2000.• The FTS200 FY97 aggregate total is $5.9 Million per month or 14% cheaperthan the lowest priced equivalent commercial offering.• FTS2000 prices are lower for all services & circuit speeds, with the expection of SVS and

DTS.

Source: GAO

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Commercial & FTS2000 Discount Comparison

Commercial and FTS2000 Price Comparison by Service for Fiscal Year 1997 (FY97) ($/Month in thousands)

Item CommercialFTS2000 FY9

FTS2000 Compared toCommercial

Service (Units) $/Unit $/Month $/Unit $/Month $/Month Discount

SVS (Minutes) 0.0512 23,379.8 0.0529 24,170.5 790.7 3.4%

SDS (Minutes) 0.1990 683.7 0.1986 682.2 -1.5 -0.2%

DTS (Circuits) 15,298.2 10,142.3 -5,155.9 -33.7% 4.8A 1,190 778.2 523 342.0 -436.2 -56.1% 9.6A 721 3,252.0 423 1,908.3 -1,343.7 -41.3% 9.6D 684 1,184.0 475 821.3 -362.7 -30.6% 56D 1,322 4,804.8 573 2,082.2 -2,722.6 -56.7% T1 2,735 4,625.0 2,536 4,271.8 -353.2 -7.6% T45 38,485 654.2 42,158 716.7 62.5 9.6%

PSS (Ksegs) 0.765 2,860.5 0.356 1,330.4 -1,530.1 -53.5%

Total $42,222.2 $36,325.4 -$5,896.8 -14.0%

Demand Set Assumptions: SVS (191K minutes); SDS (3.1M minutes), PSS(3.2Mksegs), DTS (12k circuits).

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FY97 and FY98 FTS2000 Price Comparison By Service

FTS2000 FY 1997 and FY 1998 Price Comparison by Service ($/Month in thousands)

Item FTS2000 FY97 FTS2000 FY98FY98 Compared

to FY97

Service (Units) $/Unit $/Month $/Unit $/Month $/Month % FY97

SVS (Minutes) 0.0529 24,170.5 0.0505 23,050.1 -1,120.4 -4.6%

SDS (Minutes) 0.1986 682.2 0.1900 652.8 -29.4 -4.3%

DTS (Circuits) 10,142.3 8,651.7 -1,490.6 -14.7% 4.8A 523 342.0 494 323.4 -18.6 -5.4% 9.6A 423 1,908.3 401 1,807.7 -100.6 -5.3% 9.6D 475 821.3 447 772.5 -48.8 -5.9% 56D 573 2,082.2 476 1,728.7 -353.5 -17.0% T1 2,536 4,271.8 2,083 3,522.3 -749.5 -17.5% T45 42,158 716.7 29,244 497.1 -219.6 -30.6%

PSS (Ksegs) 0.356 1,330.4 0.345 1,290.5 -39.9 -3.0%

Total $36,325.4 $33,645.1 -$2,680.3 -7.4%

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Descriptions of FTS2000 Services

DEFINITION OF FTS2000 SERVICES

Service Description

Switched Voice Service (SVS) An FTS2000 service which has the capability of transmitting voice ormodulated data.

Switched Data Service (SDS) An FTS2000 service which has the capability of transmitting data at rates of56 kilobits per second using conditioned access lines.

Dedicated TransmissionService (DTS)

An FTS2000 service for which the private line transmission of voice or dataon a dedicated circuit between two end locations is continuously availableand for which pricing is not sensitive to the number of minutes or calls.

Packet Switched Service(PSS)

An FTS2000 service in which messages are broken down into smaller unitscalled packets, which are then individually addressed and routed throughthe network.

Compressed VideoTransmission Service (CVTS)

An FTS2000 terrestrial based video service that uses digital codecs totransmit near full motion color video over FTS2000 facilities.

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FTS Acquisition Projects Pending

Acquisition RFP Release RFP Close ProjectedAward

Technical and Management Support(TMS) 01Nov96 24Jan1997 4th Qtr FY1997

Wire and Cable (WAC) Services 11Apr1997 21Jul1997 1st Qtr FY1998

FTS2001 02May1997Projected

2nd Qtr FY1998Summer 1998

Metropolitan Area Acquisitions (MAAs)

Qualifications 26Nov1997(RQS+ Release)

Aug1998(Initial Qualification)

New York 26Feb1998 06Aug1998 1st Qtr FY1999

Chicago 24Apr1998 24Jul1998 1st Qtr FY1999

San Francisco 24Apr1998 31Jul1998 1st Qtr FY1999

WITS2001 Projected2nd Qtr FY1998

Projected2nd Qtr FY1998

4th Qtr FY1998

Federal Relay Service (FRS) Projected2nd Qtr FY1998

Projected3rd Qtr FY1998

3rd Qtr FY1998

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FTS Acquisitions Recently Completed (one)

Acquisition Award Date Contractor For Information...

BDM International, Inc.www.bdm.com/bdm/tms

888-TMS1-BDM

Boeing Information Services, Inc. www.tmsteam.com888-294-4TMS

Booz-Allen & Hamilton www.bah.com/tms/index.html703-902-5353

DynCorp Information & EngineeringTechnology

www.dyncorp.com/tms888-4DYNTMS

Science Applications InternationalCorporation (SAIC)

css.saic.com/tms703-824-5955

12Oct1997

Unisys Corporation www.federal.unisys.com/contract/tms703-556-5562

SETAwww.seta.com703-821-5685

24Dec1997

Sherikon Inc.www.sherikon.com/tms/

888-TMS-8300

Technical and nagementSupport (TMS)

www.fts.gsa.gov/html/tms.html703-904-2832 (GSA)

AT&T www.att.com/gov/id3/800-253-3846

International Direct DistanceDialing (ID3)

01Jul1997

www.fts.gsa.gov/html/id3.html703-904-2927 (GSA)

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FTS Acquisitions Recently Completed (two)

Acquisition Award Date Contractor For Information...

Advantis www.ibm.net/cinema.html800-588-5808

BTG www5.btg.com/cinema888-883-2662

CINEMA (electronic Commerce,INternet and E-Mail Access)

09Apr1997

703-904-2838 (GSA)

GTE www.fedwire.com888-FED-WIREFederal Wireless

Telecommunications Services

06Nov96

703-904-2888 (GSA)

Technical Services Contract II 06Sep96 Booz-Allen & Hamilton 800-458-4TSC

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General Implications of Changes in Federal Procurement Policies

• Managing Change and Transition is Key to Success in Federal Procurements

• Timeliness and speed of delivery of service or product is more important than "fairness" or "competition" requirements

• One-Stop-Shop arrangements desired by Agencies, making long-term partnerships and alliances necessary and desirable, especially with 8(a)s

• GSA Schedule is Table Stakes because Past Performance is paramount!!

• Contracting Officers have more individual discretion: fewer protests have been lodged

• Modular Contracting is new Paradigm: Incremental acquisition and development

• New Metrics: Results-Oriented vs. Process-Oriented

Assisting Agencies Manage Change is an Ideal Means of Garnering Goodwill and Mindshare

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Industry-specific Implications of Changes in Federal Procurement Policies

• Accelerated Response Times: shorter sales cycle, increased sales velocity

• Increased Customer Service through Employee Churn Mitigation: improved compensation plans

• Increased Internal corporate coordination of customer-facing activities

• Increased Planning of Uncertainty: Personnel and Pricing

• Increased Marketing, Sales and Bidding & Proposal Budget Allocations

• Increased Market Research and Customer Education

Partnering with Federal Agencies to take advantage of IT Revolution is the Key to Making Agency Friends & Influencing Federal Decision-makers

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Roadmap: Conclusions

Introduction

High Level Findings

ConclusionsConclusions

Detailed Findings

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Conclusions & Recommendations

•Enter this market aggressively and swiftly - If GTE wants to be there in the future, it must be there now since past performance is key.

•GTE must choose to position itself as an ISP, SI, or Prime - Positioning will be vehicle dependent.

•Quickly put up GSA schedule and sell hard against it•Educate agencies about what to buy and how to buy - Agencies don’t all understand what is possible.

•Participation in Pilots is a relatively easy and low risk way to establish past performance.

•NTIS can be a channel for Internet solutions - This DC-based part of the Dept of Commerce operates on a “fee-for-service” basis and serves as an incubator for some FedGov agencies

•Buying vehicles don’t sell themselves and must be marketed•Hidden opportunity - replacing private networks with VPN

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Appendix

• Public Key Infrastructure Pilot Projects

• Paper-Based Procurement Process

• Internet / Credit Card-Based Procurement Process

• Internet / Intranet-Based Procurement Process

• WITS 2001 Network - Supplement

• WITS 2001 Government-Owned Infrastructure

• A Guide to Federal Procurement Vehicles

• Federal Procurement Expenditures for FY97

• ADP Services and Equipment for the Dept. of Defense 1997

• ADP Services and Equipment Expenditures for Civilian Agencies for 1997

• Input Market Size Numbers

Table of Contents

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Public Key Infrastructure Pilot Projects (one)

Federal Agency Projects Using Public Key Technology

Department of Agriculture/Food and Consumer Services Electronic Benefits TransferIn an initiative to employ security technologies in the Electronic Benefit Transfer (EBT), the United States Department of Agriculture’s Food and Consumer Services (FCS) is piloting a security demonstration system. After a successful demonstration, FCS has made provisions to pilot the demonstrated technologies in a live EBT environment. This will be accomplished by selecting states in which the security technology will be integrated into operational EBT systems.

Department of Agriculture/National Finance Center Trusted Certification Authority at the National Finance CenterThis project focuses on the requirements and functions necessary to allow the National Finance Center (NFC) to support digital signature requirements from client agencies and to have the NFC’s CA participate in interoperability testing with NIST as a trusted CA site using COTS software. Selected application documents, that are electronically submitted and require an original signature, are transmitted to NFC with an attached digital signature. The digital signature is stored with pertinent document information prior to application processing. Along with this initial pilot, NFC is establishing IPSec Encryption with VPN technology using certificates with various applications at NFC. NFC has begun interoperability testing with NIST.

Department of Commerce/National Institute of Standards and Technology Purchase Order Request System The Information Technology Laboratory at the NIST has been focusing on the design, implementation and use of advanced systems for cryptographic based computer security and office automation systems. The Purchase Order Request System combines both technologies into a system which will provide NIST with basic infrastructure components necessary for migration into a paperless process. The approving authority reviews the request, verifies the user's signature and, if in agreement with the request, signs it and sends the electronic form to the administrative officer for processing. The system has been developed in a modular fashion so that both the digital signature module and the certificate management module can be used to support other applications using digital signature technology.

Department of Commerce/National Institute of Standards and Technology Root Certification Authority Reference ImplementationThe purpose of this project is to develop an initial implementation of a top level or root CA for the PKI and to conduct experiments with Federal agencies who are actively engaged in the development and use of digital signature technology. The CA will issue certificates to various pilot CA applications now being developed by Federal agencies. This test will foster a flexible hierarchy, which could support agency-level digital signature based applications.

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Public Key Infrastructure Pilot Projects (two)

Department of Commerce/National Technical Information Service Secure Web and Certification The NTIS FedWorld Secure Web and CA Project has prototyped trusted-agent services that support digital signature, encryption of files and messaging, and authorized emergency access to encrypted information through key recovery management. NTIS currently provides the security infrastructure supporting the DOT Electronic Grants System and the NIH Electronic Grants Pilot, both detailed below, and is actively exploring partnerships with other agencies that need digital signature and encryption capabilities incorporated into current or planned web-based applications.

Department of Commerce/Patent and Trademark Office International Patent Document Exchange ProjectThe USPTO International Patent Document Exchange Project will demonstrate the exchange of patent documents in secure electronic form between the Trilateral Offices (USPTO, European Patent Office, and Japanese Patent Office) and the International Bureau of the World Intellectual Property Office (WIPO) to reduce processing costs and the burden on applicants. The pilot implements encrypted e-mail with a key recovery capability.

Department of Commerce/Patent and Trademark OfficeElectronic Patent Application Filing System (EPAFS)Recent developments in the areas of high-grade encryption and DS technology coupled with emerging vendor products and software components offer promising solutions to many of the problems associated with moving to an electronic patent filing and processing environment. For example, encryption key recovery interchange standards and software modules will now support and enhance the recovery capabilities of archival data and other information assets. General business practices will be enhanced with this new key recovery capability.

Department of Defense/Defense Information Systems Agency Defense Travel Management SystemTo support digital signature, the Department of Defense (DOD) Public Key Infrastructure will provide the means for DTS users to acquire moderate assurance digital signature certificates and provide access to those certificates.

Department of Defense/Defense Logistics Agency/AQAC Standard Procurement SystemThe Standard Procurement System (SPS) will provide a single DOD procurement system with electronic commerce capability. The SPS will process only sensitive but unclassified (SBU) information, financial data, trade secrets, technical methods, and other proprietary information as well as source selection data. The business goals of the SPS include meeting procurement functional requirements, accepting and outputting standard DOD data elements, and reducing operating expenses of the DOD procurement infrastructure.

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76

Public Key Infrastructure Pilot Projects (three)

Department of Defense/National Security Agency Multi-Level Information Systems Security Initiative The Multi-level Information Systems Security Initiative (MISSI) is a network of security initiatives employing a framework for the development and evolution of network system security solutions. These solutions draw on interoperable, complementary COTS and government-sponsored security products and standards to provide flexible, modular security for networked information systems across the DII and the National Information Infrastructure (NII). The underlying Network Security Framework, developed in partnership with customers and technology suppliers, addresses security services. Each of the framework solutions, which provide these services, includes requirements for a supporting network security infrastructure. Within the Network Security Framework, NSA is analyzing the commercial PKI products and services to determine requisite characteristics and the state of the commercial technology in order to make recommendations regarding the use of these industry offerings. To support near-term DOD customers and gain technology expertise, the PKI functions have been implemented through a government-sponsored CA Workstation (CAW) that manages keys, privileges, and certificates. The current operational MISSI CAW hierarchy focuses on supporting FORTEZZA Crypto Cards. In the near term, the Defense Information Systems Agency (DISA) and NSA as part of MISSI are utilizing the CAW and FORTEZZA Crypto cards to field a high assurance PKI for the Defense Messaging System (DMS) for organizational messaging traffic. A long-term goal of MISSI is to support customer PKI needs, through a combination of (1) acting as an unbiased authority validating the security goodness of the commercial PKI products/services, and (2) driving the development of robust PKI solutions by specifying requirements and transferring technology expertise to industry.

Department of Energy Electronic Research Administration DemonstrationThis project will test emerging security technologies for EDI that are based on the Internet standards for secure e-mail. Six Federal agencies and eight academic research organizations currently involved in Electronic Research Administration (ERA) will participate in this project. This project will test the interoperability of multiple vendors' products across an open systems environment. The initial implementation will focus on processing encrypted electronic grant applications and providing key recovery services.

Department of Energy/Lawrence Livermore National Laboratory Badges and Security ClearancesThis project uses the PKI digital signature capability to sign and route, via E-mail, an electronic form used to request changes in clearance/badge status. The form originates in the Lawrence Livermore National Laboratory’s (LLNL’s) Human Resources Department and is routed to the Security Department. Human Resources signs and Security verifies the form.

Department of Energy/Lawrence Livermore National Laboratory Public Key InfrastructureIn order to utilize the network, LLNL’s infrastructure must provide strong authentication, non-repudiation, message integrity, and privacy for the information being exchanged. LLNL will exercise the key recovery capabilities of a commercial software product to ascertain its ability to meet requirements.

Confidential GTE

77

Public Key Infrastructure Pilot Projects (four)

Department of the Treasury Secure Electronic Messaging SystemThe US Department of Treasury’s Office of Telecommunication Management (OTM) has implemented a pilot project aimed at exploring the use of PKI tools to facilitate the flow of procurement information. In the case of this pilot, OTM has instituted a system that enables Treasury employees to interact securely with key employees of a Treasury contractor over the Internet. Encryption, digital signatures, and key recovery functionality are being used to secure all transactions.

Department of the Treasury/US Customs Service North American Trade Automation Project To meet these requirements, the NAFTA partners have implemented a prototype electronic commerce initiative that is intended to demonstrate how the NAFTA customs and trade processes could function in a cost effective, secure manner. Designated as the North American Trade Automation Prototype (NATAP), the initiative includes live operations at US, Mexican, and Canadian frontiers. Through NATAP, government and commercial organizations have the opportunity to exercise a business-driven application of electronic commerce over the Internet and to validate the use of standardized international trade data elements. Further, since the application has been implemented using the Internet, it has been designed with a high level of security features to ensure confidentiality and authenticity of business sensitive information contained in routine customs declarations, while preserving the availability of that information through key recovery.

Department of Transportation/Federal Railroad Administration US Electronic GrantsLed by the US Department of Transportation, thirteen federal agencies (Departments of Education, Energy, Interior, Labor, Environmental Protection Agency, General Services Administration, Office of Naval Research, Small Business Administration, Federal Railroad Administration, Federal Transit Administration, Federal Aviation Administration, Federal Highway Administration, and US Coast Guard) have joined together to develop a comprehensive ‘Electronic Grants System’ (EGS). This system will streamline the federal grant process, improve efficiency and cut costs for grant customers and federal agencies. EGS uses Java and Information Broker technologies to enable any grant customer to electronically exchange grant data with any federal agency, or multiple agencies, using a single WWW user interface. These technologies also provide a truly interactive user interface by transmitting grant data to and from federal databases in near real-time. In addition, the EGS facilitates government-wide information sharing by maintaining a standard data structure based on existing EDI transaction sets. An EGS ‘proof of concept’ module was developed with funding from the National Performance Review and its Government Information Technology Services (GITS) Board Innovation Fund. After extensive agency and customer testing, the pilot has demonstrated the effectiveness of the system concept. With funding from the GITS Board's Key Recovery Demonstration Project, secure features including digital signatures, encryption and key recovery, have been added to the EGS pilot. This secure pilot is currently being tested with state government and university partners.

Confidential GTE

78

Public Key Infrastructure Pilot Projects (five)

Federal Bureau of Investigation (FBI) Internet Communications SecurityThis project is to develop a method for the Computer Investigations and Infrastructure Threat Assessment Center (CITAC) to communicate with representatives of private industry, the academic community, and other law enforcement agencies in a secure manner, while at the same time supporting key recovery. The pilot will test secure E-mail over the Internet and will involve security services such as digital signature, encryption, and CA.

Federal Bureau of Investigation Secure E-mailThis project focuses on a small number of E-mail users to demonstrate the use of encryption for confidentiality and the feasibility of providing key recovery for the e-mail messages.

Federal Networking Council/National Science Foundation Collaborations in Internet SecurityThis project is aimed at promoting multi-agency collaborations in the security arena. Eight agencies are participating directly (i.e., DOE, DOD/Army Research Lab (ARL), Advanced Research Projects Agency (ARPA), National Institutes of Health (NIH), National Communications System (NCS), NIST, National Science Foundation (NSF), and National Aeronautics and Space Administration (NASA)). Other Federal entities will be engaged indirectly through the Federal Networking Council (FNC) outreach efforts. Participation in this pilot effort will be open to the academic and private sectors (both software and hardware vendors), including members of various communities such as the Internet Society (ISOC), the Internet Engineering Task Force (IETF), and the Federal Networking Council Advisory Committee (FNCAC). The governing principles behind the Security Testbeds include employment of an open process (with the activities and results open to participation and comment by both public and private sector participants); a focus on multi-vendor technologies; an emphasis on testing and experimentally deploying security technologies emerging from research and private sectors as well as security technologies currently in use in the commercial environment; and an underlying objective to ensure interoperability among the broad Internet community (i.e., Federal, private, and academic). This effort will also include development of a laboratory accreditation program for testing and certifying Internet security software and systems. This process will be modeled on NIST's National Voluntary Laboratory Accreditation Program, which tests and accredits systems and products for Federal and private sector users.

General Services Administration Paperless Federal Transactions for the PublicBy developing partnerships with industry and concentrating on COTS products, a proof-of-concept pilot was designed and implemented using public key technology to enable digital signature and encryption. Six agencies agreed to participate and develop applications for use with the Paperless pilot. Each was provided a web server, server software, client software, and hardware tokens containing their key pairs. Potential offerors were then issued hardware tokens containing digital signature key pairs which were used to sign their electronic submissions.

Confidential GTE

79

Public Key Infrastructure Pilot Projects (six)

National Aeronautics and Space Administration Public Key Infrastructure The PKI pilot project will investigate (1) the use of standard X.509 certificates for public key infrastructure, (2) the deployment issues related to the PKI, and (3) other key infrastructure, such as Simple Public Key Infrastructure/Simple Distributed Security Infrastructure (SPKI/SDSI). The study of the PKI includes the COTS implementation of the PKI technology. The study of SPKI/SDSI covers the research cooperation between ARC and Professor Ronald Rivest of MIT. SDSI is designed by Ronald Rivest and Butler Lampson. SPKI/SDSI emphasizes unique approaches to naming and delegation of authority. A SPKI/SDSI version 2.0 prototype is being implemented at MIT.

National Institutes of Health Electronic Research Administration/ Public-Key InfrastructureAll secure systems require that trust be established between system users. This concept is embodied in the Electronic Research Administration (ERA)/Public-Key Infrastructure (PKI) pilot deployed by the National Institutes of Health (NIH). The NIH pilot enables grantee organizations to exchange data with NIH in a trusted manner. Many grantee organizations participating in the pilot with NIH have implemented grant administration systems. These systems are capable of generating grant administration data in a standard encoded format (e.g., EDI). The NIH pilot provides these organizations with a non-proprietary means to submit the encoded data securely to NIH. More specifically, the NIH pilot demonstrates how World-Wide Web (WWW), Electronic Data Interchange (EDI), and PKI technologies can be integrated to create a secure electronic grants system. For PKI services NIH has partnered with the National Technical Information Service (NTIS). NTIS received funding from the Government Information Technology Services Board (GITSB) Key Recovery Demonstration Project to prototype Certification Authority (CA) and Key Recovery Agent (KRA) functions for the NIH pilot. As part of its PKI service, NTIS has supplied a workgroup security tool to NIH pilot participants (i.e., grantee organizations). Using this GUI-based tool, grantees can digitally sign files (e.g., EDI transactions containing grant applications). The NIH pilot is part of an overall NIH effort to work with other Federal agencies and the research community to develop an electronic research administration system that promotes standardization of data and flexibility in non-proprietary technological solutions.

Small Business Administration Electronic Lending ProgramThe SBA Electronic Lending Program is an initiative to re-engineer business loan guarantee processes. The Key Recovery Project will feature acceptance of electronic applications for SBA guarantees on FA$TRAK loans from a small group of bank lenders.

Social Security Administration Annual Wage Reporting (AWR) PilotSSA is responsible for processing the data from approximately 220,000,000 W-2 and W-3 forms each year. The vast majority of these submissions are on paper and require significant manual processing by SSA before the data is usable by SSA or the Internal Revenue Service (IRS). The POC demonstrated that a trusted third party such as Pitney Bowes could work closely with SSA on an ongoing workload without compromising the privacy or security of the information that SSA is charged with processing, and that data can be moved over open networks while employing encryption and other data security technologies. The pilot was an important opportunity to learn more about our customers, third parties providing secure authentication and certification services, the PKI, key recovery services, systems issues related to the PKI and the Internet, and how such services should be marketed.

Confidential GTE

80

Paper-Based Procurement Process

P a p e r F i l e s

In p u t b e s to f f e r i n t os t a n d a r d

r e q u e s t f o r m

S o l i c i t b i d sf r o m 3

v e n d o r s

S t a n d a r dR e q u e s t F o r m S u p e r v i s o r y

A p p r o v a l

B u d g e tO f f i c e

t r a n s c r i p t i on a n d f i l i n g

S t a n d a r dR e q u i s i t i o n

F o r m

P r o c u r e m e n tO f f i c e

P r o c e s s i n g

S o l i c i t b i d sf r o m 3

v e n d o r s

S t a n d a r d O r d e rF o r m V e n f o r s h i p s

g o o d s a n d i n v o i c e

F i n a n c ep r o c e s s e s

i n v o i c e

F i n a n c i a lM a n a g e m e n t

S y s t e m

R e c i e v i n gO f f i c e r o u t s

t o o r d e r i n go f f i c e

G o o d sr e c e i v e d a n d

a p p r o v e d

B u d g e tO f f i c e

a p p r o v e sp a y m e n t

P a y m e n tA p p r o v a l

I n v o i c e

P a y m e n t

Shipment

1

2

3

4

6

7

8

91 0

1 1

1 2

1 3

1 4

1 5

1 6

1 7

1 8

1 9 2 0 2 1

2 2P a p e r - B a s e dP r o c u r e m e n t

P r o c e s s

O r d e r i n g O f f i c e

A d m i n i s t r a t i v e O v e r h e a d

NPR and FASA are prime drivers in moving away from paper-based acquisition processes

Disadvantages:

• Costly

• Slow

• Inefficient

Confidential GTE

81

Internet / Credit Card-Based Procurement Process

I n p u t b e s to f f e r i n t os t a n d a r d

r e q u e s t f o r m

S o l i c i t b i d sf r o m 3

v e n d o r s

S t a n d a r d R e q u e s tF o r m S u p e r v i s o r y

A p p r o v a l

B u d g e tO f f i c e

t r a n s c r i p t i o na n d f i l i n g

P a p e r F i l e s

V e n f o r s h i p sg o o d s a n d i n v o i c e

F i n a n c ep r o c e s s e s

i n v o i c e

F i n a n c i a lM a n a g e m e n t

S y s t e m

R e c i e v i n gO f f i c e r o u t s

t o o r d e r i n go f f i c e

1 3

4

5

8

9

O r d e r i n g O f f i c e

A d m i n i s t r a t i v e O v e r h e a d

I n p u t b e s to f f e r i n t os t a n d a r d

r e q u e s t f o r m

S o l i c i t b i d sf r o m 3

v e n d o r s

S t a n d a r d R e q u e s tF o r m S u p e r v i s o r y

A p p r o v a l

B u d g e tO f f i c e

t r a n s c r i p t i o na n d f i l i n g

P a p e r F i l e s

V e n f o r s h i p sg o o d s a n d i n v o i c e

F i n a n c ep r o c e s s e s

i n v o i c e

F i n a n c i a lM a n a g e m e n t

S y s t e m

R e c i e v i n gO f f i c e r o u t s

t o o r d e r i n go f f i c e

1 3

4

5

8

9

O r d e r i n g O f f i c e

A d m i n i s t r a t i v e O v e r h e a d

I n p u t b e s to f f e r i n t os t a n d a r d

r e q u e s tf o r m

S e a r c h f o rP r o d u c t f r o m

3 v e n d o r s

S t a n d a r dR e q u e s t F o r m S u p e r v i s o r y

A p p r o v a l

B u d g e tO f f i c e

t r a n s c r i p t i on a n d f i l i n g

P a p e r F i l e s

I s s u i n g B a n kF i n a n c e

p r o c e s s e sa c c o u n t

F i n a n c i a lM a n a g e m e n t

S y s t e m

R e c i e v i n gO f f i c e r o u t s

t o o r d e r i n go f f i c e

G o o d sr e c e i v e d

a n da p p r o v e d

B u d g e tO f f i c e

a p p r o v e sm o n t h l yp a y m e n t

Shipment

1

2

3

4

5

67 8

9

O r d e r i n g O f f i c e

A d m i n i s t r a t i v e O v e r h e a d

P a y m e n tA p p r o v a l

A c q u i r i n g B a n kV e n d o r s h i p s

g o o d s a n dp r o c e s e s c h a r g e

C o n s o l i d a t e dP a y m e n t

1 0

1 1 1 2 1 3

I n t e r n e t / C r e d i tC a r d

P r o c u r e m e n tP r o c e s s

• IMPAC Card activity and actions are increasing exponentially for under $25K purchases.

• However, IT purchases via IMPAC are still not high because access to GSA schedule information online is lagging and limited to commercial content providers.

• DoD and OFPP have announced competing online one-stop, shop websites and storefronts for IT products and services.

Confidential GTE

82

Internet / Intranet-Based Procurement Process

O r d e r i n g O f f i c e

A d m i n i s t r a t i v e O v e r h e a d

O r d e r i n g O f f i c e

A d m i n i s t r a t i v e O v e r h e a d

O r d e r i n g O f f i c e

A d m i n i s t r a t i v e O v e r h e a d

S e a r c hE l e c t r o n i cC a t a l o g s

I n p u t b e s to f f e r i n t o

e l e c t r o n i cf o r m

F i n a n c em o n i t o r s

s y s t e m

A c q u i r i n g B a n k

V e n d o r s h i p sg o o d s a n d

p r o c e s s e s d e b i t /c h a r g e

I s s u i n g B a n k

O r d e r /O b l i g a t i o n

F i n a n c i a lM a n a g e m e n t

S y s t e m

I n t r a n e t

I n t r a n e t

I n t r a n e t

Intra

ne

t

S t a t e m e n t s a n dP a y m e n t s

S h i p m e n t

A c c o u n tS t a t e m e n t a n d

A p p r o v a l

1

2

3

4

6

5

P l a c eO r d e r

7 & 8

I n t e r n e t / I n t r a n e tP r o c u r e m e n t

P r o c e s s

Paper-less Procurement is a high imperative for all federal agencies.

EPS will replace GSA Advantage and other procurement sites after pilot project phase in late 2Q FY99

Confidential GTE

83

WITS 2001 Network -- Supplement

USDAWest/East

Silver Spring

Barcroft

Metro

Southwest

Bethesda

Montrose

Arlington

Crystal CityCrystal ParkCrystal Station

Midtown

SuitlandRiver Road

Archives

Sunnyside

• 167,000+ user lines• 200+ locations• 23 agencies with > 1,000 users• Assets technically current• Planned Y2K compliance• Government-owned assets

(switches, ADMs, ORMs, Right-to-Use fiber/copper)

SONET Ring

Optical Remote Module(ORM)

5ESS Switch and SONETAdd/Drop MultiplexerLocation

Fiber Links

Legend

Confidential GTE

84

WITS 2001 Government-Owned Infrastructure

5ESSSwitches (4)

Optical Remote

Modules (13)

SONETAdd/Drop

Multiplexers (4)

SS7 SignalingEquipment

Local Loop &

Local Transportto

Government Facilities

Confidential GTE

85

A Guide to Federal Procurement Vehicles (Part 1)

Procurement Vehicle FTS 2000 Commerce, Internet,Electronic Mail

Access (CINEMA)

Defense MessageSystem

Federal WirelessTelecommunications

ServicesAgency General Services

AdministrationGeneral ServicesAdministration

Defense Message System GSA

Availability Governmentwide Governmentwide Governmentwide Governmentwide and stateand local governmentagencies.

Vendors AT&T and Sprint BTG Inc. and Advantis Lockheed Martin Corp. GTE Government Services

Award Value $4 billion $600 million $499 million IDIQ $300 million

Duration Awarded in December1988. The contract willexpire in December 1998,but a delayed recompetemay extend the contractone year or longer.

Awarded in April 1997 witha two-year base and threeone-year options.

Awarded in May 1995; fouroption years remain.

Awarded in November1996; it will expire in 2005.

Info Source Webwww.fts.gsa.gov

Webwww.fts.gsa.gov

GSA: (703) 904-2838;BTG: 888-883-2662;Advantis: (800) 588-5808

Webwww.lmdms.com

Program Office: (800) 551-7964

Webwww.fedwireless.com

Offerings Switched voice, switcheddata service, packet-switched service and videotransmission service.

Internet services, includingSMTP e-mail; Webbrowsing; electronic

commerce products usingX.12, EDIFACT.

E-mail software, end-to-end integration, PCs,workstations and servers.

Integrated nationwidecellular voice and dataservice; covers wirelessservice to all 50.

Confidential GTE

86

A Guide to Federal Procurement Vehicles (Part 2)

Procurement Vehicle Washington TelecomProject (Tempo)

Digital SwitchedSystems

ModernizationProgram

Voice, Video andData Contract (Vivid)TelecommunicationsIntegrator Services

(Telis)

Unified Local-AreaNetwork

Architecture II

Agency DefenseTelecommunicationsService

Army Energy Department Air Force

Availability All DOD agencies in theNational Capital Region.

Governmentwide Governmentwide Governmentwide

Vendors Bell Atlantic FederalSystems

Bell Atlantic FederalSystems, Engineering andProfessional Services Inc.,GTE GovernmentSystems, Halifax Corp.,Harris Corp., Litton/PRCInc., Lucent TechnologiesInc., Siemens Corp.,Southwestern Bell,Telecom Italia and WilTelCommunications

Electronic Data SystemsCorp.

Electronic Data SystemsCorp. and TRW Inc.

Award Value $610 million $1 billion $600 million EDS: $579 million; TRW:$634 million

Duration Awarded a 10-yearcontract in November1991.

Awarded a 10-year IDIQcontract in July 1997.

Awarded a five-yearcontract in April 1997.

Awarded December 1994;EDS' portion will expire in1999; TRW's portionwill expire in 2001.

Info Source Webwww.bell-atl.com(703) 816-4205

Web,www.monmouth.army.mil/isma/dcass/dssmp

Webwww.gsa.gov/fedcac/

Webw3.af.mil/ulana

Offerings Data networking, includingLAN, WAN, SwitchedMultimegabit Data Service (SMDS), FDDI Network

Full range of infrastructureproducts and services,including LAN services,wireless products and ATM

15,000 products; servicesinclude networkengineering, installationand operations; includes

Hardware, software andservices for LANs andenterprise networks.

Confidential GTE

87

A Guide to Federal Procurement Vehicles (Part 3)

Procurement Vehicle PC LAN + International DirectDistance Dialing

VA BPA

Agency Navy GSA and DISA Department of VeteransAffairs

Availability Governmentwide Governmentwide. DODusers access the servicethrough DISA; civilianagencies access it throughGSA.

Governmentwide

Vendors Electronic Data SystemsCorp.

AT&T Datatrac InformationServices Inc.

Award Value $575 million $50 million $1 billion

Duration Awarded October 1995;will expire February 1999.

Awarded a two-yearcontract with three one-year options in July 1997.

Awarded August 1997;expires March 31, 1999.

Info Source Webwww.chips.navy.mil/idiq/pclan2/pclan2.htm(800) 241-2143, Ext. 3041,or (800) 762-3371

Webw w w .fts .g sa .g o v (See "New Products.")

Webw w w .d a ta trac -d c .co m

Offerings Hardware, software andservices for LANs andenterprise networks;includes support.

Internationaltelecommunicationsservices; data andwideband informationtransfer services will beadded.

PCs, LAN/WAN software,telemedicine and videoteleconferencing services.

Confidential GTE

88

9.3

7.9

34.7

34.8

28.8

0 10 20 30 40B ILLIO N

OTHER DOD

DLA

NAVY

AIR FORCE

ARMY

DEPARTMENT OF DEFENSE TOTAL DOLLARS $115.4 BILLION

Source: Federal Procurement Report 4th Quarter 1997

15.111.2

6.13.6

3.12.92.72.5

2.21.8

6

0 5 10 15 20

B ILLIO N

DEPT OF ENERGY

NASA

GENERAL SERVICES ADM

DEPT OF TRANSPORTATION

TENNESSEE VALLEY AUT

DEPT OF VETERANS AFF

DEPT OF HHS

DEPT OF JUSTICE

DEPT OF AGRICULTURE

DEPT OF THE TREASURY

OTHER CIVILIAN

CIVILIAN AGENCIES TOTAL DOLLARS $57.3 BILLION

Source: Federal Procurement Report 4th Quarter 1997

Federal Procurement Expenditures for FY97

Confidential GTE

89

ADP Services and Equiptment Number of Actions - Dept. of Defense

Lockheed M artin Government Technology SVCS

Unisys

Boeing

Computer Sciences

Planning Research

AT&T

General M otors

Sysorex Internat ional

GTESource: Federal Procurement

Report 4t h Quart er 1997

ADP Services and Equipment Dollars (000) - Dept. of Defense

General M otors

Lockheed M art in

Boeing

GTE

Sysorex Internat ional

Government Technology SVCS

AT&T

Planning Research

Computer Sciences

Unisys

Source: Federal Procurement

Report 4t h Quart er 1997

ADP Services and EquipmentDepartment of Defense

Number ofActions

Dollars(000)

GENERAL MOTORS CORP. 2,679 480,383LOCKHEED MARTIN CORP. 768 398,500COMPUTER SCIENCES CORP. 558 260,430BOEING COMPANY 197 224,068GTE CORP. 384 214,822SYSOREX INTERNATIONAL INC. 602 163,603GOVERNMENT TECHNOLOGY SVCS 1,139 160,702AT&T CORP. 1,294 152,490UNISYS CORP. 447 130,465PLANNING RESEARCH CORP. 587 125,725

ADP Services and Equipment for the Dept. of Defense 1997

Confidential GTE

90

Civilian Agencies D o llars (000)

Lockheed M artin

Computer Sciences

General M otors

TRW

BTG

Dyncorp

Raytheon

Northrop Grumman

Computer Data Systems

International bus

Source: Federal Procurement Report

4t h Quart er 1997

Civilian Agencies Number ofActions

Dollars(000)

LOCKHEED MARTIN CORP. 97 273,926COMPUTER SCIENCES CORP. 346 255,618GENERAL MOTORS CORP. 347 243,290COMPUTER DATA SYSTEMS INC 640 173,868INTERNATIONAL BUS MCHS INC 894 152,592TRW INC 230 106,568BTG INC 1,058 104,047DYNACORP. 263 80,192RAYTHEON COMPANY 50 73,768NORTHROP GRUMMAN CORP. 68 69,008

CIVILIAN AGENCIES NUMBER OF ACTIONS

Computer Sciences

General M otors

TRW

Northrop Grumman

Raytheon Dyncorp

Lockheed M artin

BTG

Computer Data Systems

International bus

Source:Federal Procurement Report 4th Quarter 1997

ADP Services and Equipment Expenditures for Civilian Agencies for 1997

Confidential GTE

91

Input Market Size Numbers

6.27.9 8.7

11.1 10.3

14.7

0

5

10

15

Telecommunicat ions Comput er Syst ems Commercial Services

MARKET SIZE

1998

2003

Source: Input Research Bullet in, July 1998

5.6

8.2

0

5

10

FY-1998 FY-2003

Federal Professional Services Market

Source: Input Research Bullet in, July 1998

2.3

3.2

0

2

4

FY-1998 FY-2003

Federal Outsourcing Market ($B)

Source: Input Research Bullet in, July 1998

0%

10%

20%

30%

40%

50%

60%

70%

80%

Source: Input Research Bullet in, July 1998

F e de ra l G o v e rnm e nt Us a ge O f

D iffe re nt P ro c ure m e nt C ha nne ls