The number of agencies making use of the General Services Administration’s Networx contract has increased in recent months, driven primarily by a September deadline for them to recoup transition costs.

Comment on this article in The Forum.As of this week, 33 agencies have selected a contractor from one of the two Networx contracts, including more than half of the 21 largest federal agencies, said Karl Krumbholz, director of network services at GSA’s Information Technology Service. The two contracts include Networx Universal, which GSA awarded to Qwest Communications, Verizon and AT&T, and Networx Enterprise, which includes those three vendors as well as Sprint and Level 3 Communications.

Networx is the federal government’s largest telecommunications contract, with a ceiling of $68.2 billion divided between the $48.1 billion Networx Universal contract and the $20.1 billion Networx Enterprise contract. The Networx program replaces the FTS2001 contract, which has expired.

In February, Krumbholz said the transition to the Neworx contract was slow because agencies lacked resources and top executives, and chief information officers had yet to buy into the shift.

“There was some concern at the start of the year about how many things were coming out under Networx,” said Don Herring, senior vice president at AT&T Government Solutions. “We’ve turned the corner, from March and April everything started to happen at a fast rate.”

AT&T has won two of the larger awards from the new contract, a $272 million award from the Treasury Department and $292 million from the Homeland Security Department. AT&T will provide the departments with next-generation IP and telecom services. Herring said the biggest demand from agencies was for security services covering traditional IP, wireless and voice services. He said AT&T also has experienced a “huge demand” for business continuity and disaster recovery services.

The deadline for the completion of the transition to Networx is mid-2010. “The expectation is that it would be done by then,” said Krumbholz, who added that GSA’s workload would increase significantly after September as it helps agencies plan for the transition and monitoring of contracts.

Krumbholz attributed the increased activity on Networx to the September deadline imposed by the Interagency Management Council for agencies to submit their statements of work to GSA. If agencies meet that deadline, they can be reimbursed for all nonrecurring transition costs, specifically nonrecurring equipment charges, installation charges and costs associated with buying new services.

“If they don’t meet the deadline, they don’t get their transition costs reimbursed,” said John C. Johnson, assistant commissioner at GSA for the Information Technology Service.