Have you looked at the definition for the "do shell script" command? You don't use sudo with that command. You would use "with administrator privileges" and you can supply a "user name" and "password" if you wish.
Do this... open AppleScript Editor. Under the File menu choose "open dictionary". Select StandardAdditions.osax from the dialog window. In the search field of the dictionary search for "do shell script" to see everything that you can do with that command.
For example, here's how you could use it. Good luck.
do shell script "networksetup -setproxybypassdomains Ethernet *.local, 169.254/16" with administrator privileges