PSA Discovery Patterns Weekly News Summary

Fri Mar 11 11:57:26 2016

FirstNet’s Pre-Proposal Conference

Thursday, March 10, 2106, FirstNet sponsored a Pre-Proposal Conference in Reston, VA to discuss the RFP, clarify some of its points, and further respond to questions at the end of the session. The event was well attended both in person and via the webcast, and was upbeat in nature. I have to admit that I learned a few things from the webcast that I was not 100% aware of from reading the RFP and discussing it with others.

I was aware that FirstNet has $6.5 billion available for the vendor to help defray the cost of the network, but that $6.5 billion can turn into a lot less because there will be holdbacks for each state that opts out. Funds that are held back will make up grants for the opt-out states to build out the RAN portion of the network in those states. I was also aware that a a payment schedule had been set up for the vendor to pay FirstNet $5.6 billion over the course of the 25-year contract, but I did not know until the webcast that the $5.6 billion is the minimum requirement for funding but FirstNet expects the vendor community to offer more than the minimum amount over the term of the contract. FirstNet stated that the funds collected over and above its operating costs incurred each year would be used first to reinvest in the network, which will include but not be limited to funding network upgrades with the successful bidder. Beyond that, some of the monies would be set aside to build up a fund to be used to pay for the next round of RFPs when the 25-year contract is up.

The FirstNet CEO also talked about the true value of the spectrum that would be available to the RFP winner starting the day of contract signing, which would be much sooner than access to any of the 600-MHz spectrum that will be auctioned this year. However, there is still no clear way to determine exactly how much of the 20 MHz of spectrum will be available on a secondary basis to the RFP winner since the number of first responders who will be using the network is unknown and the number of Public Safety applications is unknown. Then of course there is an issue with how much spectrum might be available in Times Square on a Friday or Saturday night. If secondary users need to be moved off due to a major incident, where will they go?

This last point speaks to the fact that serious bidders will have to have other spectrum already in use so secondary users can be reassigned to the vendor’s existing spectrum. If a successful vendor does not have any spectrum already serving customers and does not have an agreement with at least one other provider to share existing spectrum assets, secondary users could be booted off the network altogether. We are told this is an unlikely scenario but I know it is one that weighed heavily on several companies that have decided to walk away from the RFP. My impression is that FirstNet’s idea of what this spectrum is worth may not be the same as potential bidders believe it is, in which case a financial model may be difficult to assess.

The number of companies that submitted questions (26) and the number of people who attended this meeting both in person and via the web indicates there is still a strong interest from the vendor community, and I hope it is maintained. Another thing I learned during this event is that since the RFP process is being governed by the FAR (Federal Acquisition Regulation), my assumption that qualified bidders would have an opportunity to sit down at the bargaining table with FirstNet prior to the award may not be correct. What we were told during the webcast was that under the FAR section that covers this, such meetings may or may not occur depending on what FirstNet decides at some future point in time. So if a vendor is inclined to provide a responsive bid but holds back some additional incentives intended to be placed on the table during discussions, it may not have an opportunity to sweeten its bid. Thus everything a vendor is willing to provide will have to be detailed in one of the three volumes of the RFP response.

During the Question and Answer Period there were several questions about how smaller companies, including rural carriers, can work with prime bidders. The answer given was that they can be added to the list of small companies that want to partner, and according to the FirstNet President, FirstNet expects some of the partnerships to be set up and agreed upon prior to the final RFP response. However, it is also logical to assume that some additional partnerships may be agreed upon after the RFP responses are in. Here again, because of the FAR rule cited above, it is not clear whether vendors will have that opportunity. Another question was about a prime vendor reaching out to some or all of the 900 rural carriers or being able to work with a rural carrier organization such as the Competitive Carriers Association (CCA) instead. The answer to that was basically that FirstNet would not comment one way or another, choose your own approach and include it in your RFP response.

All in all it appeared to be a good day for FirstNet and it does appear as though there are still a number of prime vendors interested in the RFP as it stands after some tweaks were made as a result of some questions asked prior to the deadline on February 12. We were also informed that that deadline was not really a deadline and FirstNet will entertain and perhaps answer more questions until the day the RFP responses are due, which I think makes sense, especially since some of the questions won’t be uncovered until the responses are being shaped.

As usual, there were also a few things that got me going during this event. The first was the reiteration that there is a very tight schedule to award the RFP but no one has ever explained who is setting the dates or the reasoning behind them. I agree this project needs to get off the ground, but FirstNet makes it sound like if it misses the award deadline there will be hell to pay. I don’t buy that, especially when so much is at stake.

The other two things that set me off were two comments made by the Contracting Officer toward the end of the Question and Answer Period. The first was in response to a question about the status of FirstNet and whether it is a private organization or Federal. The question was barely finished when the answer came out loud and clear: FEDERAL! This means any semblance of FirstNet being an “Independent Authority” did not warrant an explanation. Honestly, my first thought was that this answer might be the final straw to a prime contractor sitting on the fence. The last comment I will make here is that in her final analysis of the RFP, the Contracting Officer referred to “Her Project” and that the RFP was, after all about an acquisition. And here I had thought it was about a private-public partnership.

To everyone’s credit, the most important point came through loud and clear: FirstNet’s stakeholders are the Public Safety community, first and foremost. Which is exactly as it should be.

Andrew M. Seybold

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