GSA: Further post-FTS delays will hurt agencies

That was the message that Federal Telecommunications Service commissioner Robert J.
Woods offered to the House Government Reform and Oversight Committee this month during an
FTS strategy hearing.

"It's going to show up as a budget problem" for government telecommunications
users, Woods said.

Less than a month before the target April 2 release date for the RFP, telecom vendors
as well as members of Congress continued to voice concerns about GSA's post-FTS 2000
procurement strategy.

Vendors offered up their concerns last week during a second hearing of the committee.

In the wake of stern congressional criticism of its earlier plans, GSA made changes to
the strategy to foster competition among long-distance and local service providers.

But now members think the changes came too quickly. "It just does not seem like a
very good way to make a major policy decision," Rep. Bob Barr (R-Ga.) said.

Barr and other committee members said competition might not be fair because the
regional local providers probably cannot get immediate access to long-distance markets.

GSA is feeling pressure from all sides in awarding an estimated $5 billion worth of
telecommunications contracts to replace FTS 2000. The current contracts, held by AT&T
Corp. and Sprint Corp., expire at the end of next year.

In their place, GSA plans to award what it calls FTS 2001 for long-distance service and
a series
of Multiple Area Acquisitions (MAAs) for local service.

For federal users, represented by the Interagency Management Council for
Telecommunications, the overriding concern is to get the new contracts in place on time.

"We have programs to run, and as we near the end of the FTS 2000 contracts, it
becomes less practical to purchase new services and new technologies under the existing
program," IMC chairman Frank Lalley told the committee.

"We are already looking outside the program. Once an agency goes, the economies of
scale suffer," said Lalley, associate deputy assistant secretary for
telecommunications at the Veterans Affairs Department.

Sen. Ted Stevens (R-Alaska) had threatened in January to hold up the new contracts
unless some provision was made for immediate competition for integrated local and
long-distance services.

Until then, the FTS strategy had called for separate contracts with no integration for
at least four years.

Woods and his staff yielded. FTS revised its plans and proposed that FTS 2001 and MAA
contractors be able to offer optional services that cross lines between local and long

But the Telecommunications Act of 1996 has placed restrictions on the regional Bell
operating companies' entry into the long-distance markets. No such delays hamper
long-distance carriers AT&T, Sprint and MCI Communications from entering the local

"I have concerns that the long-distance providers will not have to compete head to
head with local providers," Rep. Elijah Cummings (D-Md.) said.

Richard J. Lombardi, president of AT&T Government Markets, told the committee his
company supported the most recent buying plan. He said the regional Bell operating
companies were fighting the plan as a way to maintain their monopoly on local service.

But Barbara Conner, president of Bell Atlantic Federal Systems, said the revised
version is a last-minute compromise that discards years of debate and input from federal
users and industry.

Conner said it would let long distance companies make noncompetitive entries into the
local-service market.

"The competition needs to be fair and open,'' she said. "We believe the best
response is to go back to the September strategy.''

Woods conceded his plan was not perfect but called it the best available to increase
competition in a rapidly developing market. "It's time to move on," he said.

If GSA does not release an RFP early next month, it will be a year before the agency
can award contracts and at least another year before new contractors will be serving
agencies fully, Woods said.

That means GSA will have to negotiate six-month extensions with Sprint and AT&T.
"If delays go beyond a six-month extension, agencies will find themselves really at
somebody's mercy," Woods said.

According to FTS figures, long-distance rates under FTS 2000 have decreased by about 75
percent over the life of the program.

"We have lived off these decreases," Woods said. As government use of
telecommunications climbs 30 percent to 40 percent a year, rate reductions are essential
so that agencies can conduct business within their budgets.

Some FTS 2000 long-distance rates are now as low as 2.5 cents per minute. Rep. Thomas
M. Davis (R-Va.) asked Woods how much lower it might go.

"I hope a lot lower," Woods replied. "I think one day you're going to
see long distance at a flat rate, and I don't think that day is far off."

About the Author

William Jackson is a Maryland-based freelance writer.

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