[12286] in Commercialization & Privatization of the Internet
NSF Response to Conyers - FYI
daemon@ATHENA.MIT.EDU (UpdegraffW)
Sat May 14 00:27:16 1994
Date: 13 May 1994 11:33:57 U
From: "UpdegraffW" <UpdegraffW@mac.ripon.edu>
To: "com-priv" <com-priv@psi.com>
>
>Honorable John Conyers, Jr.,Chairman
>Committee on Government Operations
>House of Representatives
>Rayburn House Office Building - Room 2157
>Washington, DC 20515 6143
>
>Dear Mr. Chairman:
>
>I am writing in response to your April 12, 1994 letter, in which you
>refer to numerous allegations questioning the propriety of certain
>actions taken by the National Science Foundation (NSF). The issues in
>your letter have been raised before and are not entirely surprising in
>an arena of intense competition among telecommunications interests. Any
>major networking development may lead to a potentially lucrative
>advantage for those competing in the Nation's emerging information
>infrastructure. In this atmosphere, a number of serious allegations
>have been raised for which I welcome the opportunity to provide an
>accurate statement of the facts.
>
>Cooperative Agreement vs. Procurement Contract
>
>As you note, NSF plans to support NSFNET activities through cooperative
>agreements rather than procurement contracts. We chose this instrument
>because we believe it to be the best and most appropriate vehicle to
>stimulate these activities, not -- as some maintain -- as a way to
>circumvent Federal acquisition regulations.
>
>Section 6305 of title 31 of the United States Code (originally enacted
>and still commonly referred to as part of the Federal Grants and
>Cooperative Agreements Act of 1977) states that agencies shall use
>cooperative agreements when
>
>"(1) the principal purpose of the relationship is to transfer a thing of
>value to the State, local government, or other recipient to carry out a
>public purpose of support or stimulation authorized by a law of the
>United States instead of acquiring (by purchase, lease, or barter)
>property or services for the direct benefit or use of the United States
>Government.
>(2) substantial involvement is expected between the executive agency and
>the State, local government, or other recipient when carrying out the
>activity contemplated in the agreement."
>
>NSF used a cooperative agreement because the principal purposes behind
>NSF's solicitation No. 93-52 entitled "Network Access Point Manager,
>Routing Arbiter, Regional Network Provider and Very High Speed Backbone
>Network Services Provider for NSFNET and the NREN(SM) Program" are to
>support and stimulate the creation and growth of extensive computer-
>based networks for the benefit of the scientific and
>engineering research and education community (consisting primarily of
>academic researchers and educators). This activity will require
>substantial involvement of various research communities and of NSF staff
>in addressing anticipated but unpredictable technical and logistical
>problems. Both as a matter of law and policy, NSF firmly believes that
>a cooperative agreement is the appropriate vehicle.
>
>This very issue was directly examined by NSF's Office of Inspector
>General (OIG) in a report entitled "Review of NSFNET." OIG (pages 36-37)
>independently concluded that "the NSFNET program is a paradigm for the
>use of a cooperative agreement," and that "the use of cooperative
>agreements for NSFNET's next stage of evolution is appropriate." A copy
>of that 70 page report, dated March 23, 1993, is attached for your
>information.
>
>Allegations of Conflicts of Interest
>
>You also cite allegations that "a senior NSF official failed to recuse
>himself from involvement in this procurement despite an apparent
>conflict of interest caused by his affiliation with the winning vendor's
>partially-owned subsidiary and corporate partner in this procurement."
>
>I can assure you that no NSF official is affiliated with MCI, its
>subsidiaries, or its subcontractor. No member of the National Science
>Board is on the Board of Directors of MCI, its subsidiaries, or its
>subcontractor. Nevertheless, because of the relationship between ANS (a
>not-for-profit corporation created by MCI), and the University of
>Michigan through Merit, Inc., one of the Members of the National Science
>Board with an affiliation with the University of Michigan did recuse
>himself from the Board's consideration of the vBNS award to MCI. The
>minutes of the National Science Board meeting reflect this action.
>
>Basis for Awards
>
>Apparently, the allegations made against NSF have caused your Committee
>to question the fairness of NSF's selection process for the vBNS service
>provider and, specifically, whether the awardee was selected on the
>basis of familiarity and favoritism rather than merit. This was not the
>case. Our solicitation sought proposals from any organization that
>wished to submit one. It was open to competition from all
>U.S.telecommunications companies. A merit review panel of technical
>experts from academic and industrial research communities and
>representatives of affected communities was assembled in accordance with
>customary NSF practices. Panel members were asked to evaluate proposals
>on the basis of the criteria listed in the solicitation, and to reach a
>consensus recommendation for award. The panel did so, finding the MCI
>proposal technically superior by a substantial margin. Before and after
>the release of the solicitation, steps were taken to encourage broad,
>fair participation from the community. A draft solicitation was widely
>distributed to give companies and other interested parties an
>opportunity to help us shape the final solicitation. Also, once the
>final solicitation was put forward, questions regarding it were
>collected, analyzed and answered in a manner that ensured equal access
>to information and fair treatment of potential proposers. I believe
>there was nothing improper in the way the Foundation handled the
>solicitations and awards for the NSFNET and NREN programs.
>
>I hope this letter, and the attached responses to the nine points you
>raised will assure you that NSF acted responsibly and appropriately in
>helping form the nation's largest and fastest network for research,
>education and technology transfer. Should you need any additional
>information, please do not hesitate to contact me.
>
>Again, I appreciate being given this opportunity to address your
>concerns and thank you for your continued interest in the National
>Science Foundation.
>
>Sincerely,
> Neal Lane
> Director
>Enclosures
>
>--------------
>Detailed NSF Response to Questions Posed by Chairman Conyers
>
>1. Why has the NSF chosen to acquire these services through a
>cooperative agreement
>rather than a competitively awarded contract?
>
>As described in NSF solicitation 93 52, the services of the vBNS are
>intended to provide the scientific and engineering research and
>education community with access to an extremely high speed computer
>network that will operate seamlessly with the existing Internet.
>Although the vBNS will be provided by the awardee, NSF staff will
>continue to be involved in addressing anticipated but unpredictable
>technical and logistical problems as they arise, and will participate
>with the awardee in their resolution. Under these circumstances,
>cooperative agreements are clearly the appropriate award mechanism.
>
>Section 6305 of title 31 of the United States Code (originally enacted
>and still commonly referred to as part of the Federal Grants and
>Cooperative Agreements Act of 1977) states that agencies shall use
>cooperative agreements when
>
>"(1) the principal purpose of the relationship is to transfer a thing of
>value to the State, local government, or other recipient to carry out a
>public purpose of support or stimulation authorized by a law of the
>United States instead of acquiring (by purchase, lease, or barter)
>property or services for the direct benefit or use of the United States
>Government.
>(2) substantial involvement is expected between the executive agency and
>the State, local government, or other recipient when carrying out the
>activity contemplated in the agreement."
>
>Clearly, the choice of award instrument (cooperative agreement vs.
>contract) must depend on "the principal purpose" of the award, which, in
>this case, is to stimulate the development of an extremely high speed
>computer network for the benefit of the scientific and engineering
>research and education community. Certainly, Federal agencies will
>benefit from the growth of the NSFNET along with other members of the
>scientific and engineering research and education community, but this
>does not compromise the "principal purpose" of the vBNS: to support the
>nation's research and education community. Indeed, recent analysis of
>traffic on the NSFNET Backbone Service shows that less than 2% of the
>traffic has U.S. Government entities as both source and destination of
>the traffic, and less than 6% involves any U.S. Government organization
>at all; nearly 95% of the traffic is among non-U.S.Government sites.
>
>Because the principal purpose of the vBNS award is to provide networking
>services in support of a public purpose, a cooperative agreement is an
>appropriate award instrument.
>
>2. What evaluation decision structure was used to select the winning
>vendor?
>
>After receipt of proposals, a merit review panel of technical experts
>and representatives of affected communities was selected in accordance
>with customary NSF practice; the panel was chosen to avoid both the fact
>and the appearance of conflict of interest. Panel members were given
>copies of vBNS proposals from which pricing information had been
>tripped, and asked to evaluate them according solely to the criteria
>listed in the solicitation.
>
>Each panel member individually scored the proposals. After this
>technical evaluation, pricing information was revealed, and the panel
>was asked to reacha consensus recommendation to the NSF.
>
>3. Was the proposal submitted by the winning vendor in this procurement
>determined to be technically superior to the proposals ubmitted by
>competing vendors? If so, on what basis?
>
>Yes, the MCI proposal was judged by the merit review panel to be
>technically superior by a substantial margin to the other proposals
>received. As stated above, the criteria were those listed in NSF
>solicitation 93 52, namely, the seven criteria for all components of the
>solicitation listed on page 11 and the five criteria specific to the
>vBNS component listed on page 12 of NSF solicitation 93 52.
>
>4. Does the winning vendor currently offer in the commercial
>marketplace the Asynchronous Transfer Mode (ATM) services which NSF is
>purchasing in this procurement?
>
>MCI does not currently have a commercial ATM service offering. It will
>announce a beta ATM testbed and trials with customers in May 1994, and
>will be conducting ATM interoperability trials with local exchange
>carriers (LECs) starting in the third quarter of 1994.
>
>NSF solicitation 93-52 requests Internet Protocol (IP) and
>Connectionless Networking Protocol (CLNP) service at 155 megabits per
>second, a service not available over ATM -or in any other form - as a
>commercial product from any vendor or carrier.
>
>Under the cooperative agreement to be concluded with NSF, MCI will
>participate in joint studies leading to the development of IP/CLNP at
>data rates of 155 mb/s and higher.
>
>According to the solicitation (page 6), the vBNS "...will provide for:
>high speed interconnection of NSF Supercomputing Centers (SCCs); the
>development of a national high performance computing environment (the
>metacenter); applications involving distributed high performance
>computing and isochronous visualization; and connection to the NSF
>specified NAPs. The vBNSconnections to the NAPs will, for example,
>facilitate connecting the SCCs to research institutions that have
>meritorious high bandwidth network applications."
>
>Thus the solicitation focuses on the desired outcome to the research and
>education community (i.e., the "public purpose" per 31 USC 6305) of
>establishing the vBNS, not on the specific technology (e.g., ATM) to be
>used. This choice was made deliberately to allow for innovative
>proposals. At the same time, NSF staff were aware of the state of
>technology and also of the potential dangers of idiosyncratic,
>proprietary technological solutions; accordingly, one of the evaluation
>criteria in the solicitation was "...(the)relationship of proposed
>services to emerging international standards such as SONET, ATM, SMDS,
>and FDDI."
>
>All telecommunication carriers intend ultimately to use ATM in tandem
>with SONET, a transmission technology especially designed for use in
>fiber-optic high-speed networks. MCI is an industry leader in the
>deployment of SONET in its network.
>
>During the review of proposals, panelists (though unaware of MCI's ATM
>roll-out schedule) believed that the state of ATM technology is such
>that the success of an extremely small-scale deployment in the vBNS
>would not be jeopardized by MCI's lack of a large scale commercial
>offering.
>
>5. If the winning vendor is unable to meet the delivery goal, or
>exceeds the original funding amount, what recourse will the NSF have?
>
>The award for the vBNS has not been made and the award amount and other
>details have not been finalized. Based on consideration of this project
>and the winning proposal, the National Science Board (NSB) authorized UP
>TO (emphasis added) $50m over 5 years (as requested in MCI's proposal)
>for the project. The actual award amount could be lower or higher; NSB
>approval authority allows NSF award amounts to exceed the amount
>authorized by up to 10% before having to return for additionalNSB review
>and approval.
>
>The cooperative agreement is expected to be on a cost- reimbursement
>basis with a ceiling amount and will call for the awardee's "best
>efforts" in undertaking and accomplishing the project activities.
>However, NSF intends to include appropriatemilestones, performance
>standards, timelines and other appropriate developmental goals as part
>of the award requirements. Progress reports and other required
>interactions between the awardee and NSF will provide NSF with
>information to help evaluate progress on a continuing basis. Among
>other provisions, NSF willinclude appropriate audit and records,
>suspension, and termination clauses in the agreement. Using these
>mechanisms, changes or adjustments in the award can be made if it
>appears that the awardee is or will be unable to perform in a reasonable
>time, or if the quality of the performance does not meet the
>requirements in the cooperative agreement.
>
>6. Did any NSF officials involved in this procurement hold discussions
>with the winning vendor at any time during the evaluation process which
>preceded this award? If so, which other vendors were given the same
>opportunity?
>
>There were no substantive discussions germane to the solicitation
>between NSF officials and any proposer during the vBNS evaluation
>process. MCI is a joint study partner with ANS, a sub awardee to Merit
>under its current award for NSFNET Backbone Services, and other vBNS
>proposers currently have awards from the NSFNET program. Routine
>contacts between NSF program officers and the proposers has at no time
>been proscribed, but contact has been limited to that necessary for the
>management and prudent oversight of existing awards and was unrelated to
>the vBNS or any other element of NSF solicitation 93-52.
>
>7. Was the proposal submitted by the winning vendor priced lower than
>the proposals submitted by competing vendors?
>
>When prices were revealed to the review panelists after they had ranked
>the MCI proposal highest on technical merit alone, one proposal which
>had been judged "Technically Unacceptable" by the panel was seen to be
>substantially lower in price. In the written instructions given to the
>merit review panelists when proposals were first distributed,
>"Technically Unacceptable" was defined as "a proposal which is so
>seriously flawed or of such low overall quality that even if it were the
>only proposal received it would not be acceptable for award."
>
>Even if the NSF had used a procurement process for the vBNS, we believe
>this lower priced proposal would have been determined to be technically
>unacceptable or non-responsive and thus excluded from any competitive
>range; further negotiations with the proposer would not have occurred.
>
>8. Are any members of the National Science Board also on the Board of
>Directors for the winning vendor, its subsidiaries, or its
>subcontractors? Are any National Science Foundation officials involved
>in this procurement affiliated with the wining vendor, its subsidiaries,
>or subcontractors?
>
>No NSF official is affiliated with MCI, its subsidiaries, or its
>subcontractors. No member of the National Science Board is on the Board
>of Directors of MCI, its subsidiaries, or its subcontractors; had that
>not been the case, the National Science Board conflicts of interest
>procedures and process (copy attached), which have been reviewed and
>approved by the Office of Government Ethics, would have precluded that
>member's participation in any discussion, deliberation, or decision
>regarding MCI.
>
>Perhaps the "senior NSF official" mentioned in your letter is a
>reference to James J. Duderstadt, the President of the University of
>Michigan and Chairman of the National Science Board.
>
>Merit, Inc., a consortium of Michigan universities including the
>University of Michigan, is entitled to membership and is represented on
>the Board of Directors of Advanced Network and Services (ANS), a not-
>for-profit corporation created by MCI Telecommunications, IBM, and
>MERIT, a consortium of Michigan universities. Dr.
>Douglas E. vanHouweling, a vice-president of the University of Michigan,
>occupies Merit's seat on the Board of Directors of ANS. MCI is a joint
>study partner with ANS in its subaward from Merit for the NSFNET
>Backbone Services.
>
>Dr. Duderstadt is not now, and has never been, a member of the ANS Board
>of
>Directors. Even so, because of the relationship between ANS and the
>University of Michigan, Dr. Duderstadt did recuse himself from the
>portion of the National Science Board meeting at which the motion to
>make the vBNS award to MCI was discussed and voted upon. National
>Science Board minutes from that meeting (attached to this response)
>document the recusal, and confirm that Dr. Duderstadt literally removed
>himself from the meeting in an abundance of caution and concern over
>even the appearance of any conflict.
>
>These allegations of conflicts of interest lack any factual or legal
>basis. Further, by failing to identify specific names or relationships,
>they have the potential to unjustly impugn the character of any who were
>involved in this important evaluation and selection process.
>
>9. What legal arrangement (i.e., grant, cooperative agreement, or
>contract) was used, or is expected to be used, to acquire the related
>services of a Network Access Point Manager and a Routing Arbiter
>organization?
>
>Substantial NSF involvement in the operation of the NAPs resulting from
>solicitation 93-52 will be needed to ensure that the facilities are
>adequate, that commercial traffic does not impede that of the research
>and education community, and that fairness is exercised in all
>activities. NSF staff will also be involved in the operations of the RA
>awardees, primarily to coordinate the routing policy research required
>in the solicitation to be carried out among the RA, NAP, and vBNS
>awardees. Thus, as described in the response to question no. 1 above,
>NSF believes that the use of the cooperative agreement award instrument
>is clearly appropriate and proper. Consistent with the wording of NSF
>solicitation 93 52 and the Federal Grant and Cooperative Agreement Act
>of 1977, NSF intends to negotiate cooperative agreements for all of
>these awards.
>
>
