All parties reach consensus on FTS 2001 RFP

The 30-day delay gave GSA time for what GSA administrator David J. Barram described as
a "consensus-forging process."

The final version includes refinements in the procurement strategy for both
long-distance and local telephone service, worked out in April meetings between GSA
officials, congressional committee staff members and vendors.

Everyone got something in the compromise. Vendors received a streamlined bidding
process and a one-year forbearance on competition from optional services. Congress got
assurances that prices would continue to fall. GSA got to release the RFP.

"There are times in life when we need to get on with it," Barram said at a
hearing last month before the House Government Reform and Oversight Subcommittee on
Government Management, Information and Technology. "This is one of those times."

With all parties declaring satisfaction with the RFP, the Government Reform and
Oversight Committee on April 30 recommended its release. GSA's Federal Telecommunications
System uploaded the RFP to its World Wide Web site at on May 2. A draft RFP for the first Metropolitan Area Acquisition for local telephone
service in New York City was uploaded the same day at

Both the long-distance services contract, known as FTS 2001, and the MAA contracts will
have four-year base periods with four one-year options. GSA officials estimate that the
FTS 2001 contract will be worth $5 billion.

Proposals are due July 31. FTS commissioner Robert J. Woods said he expected GSA to
make awards early in 1998, then begin planning the transition from the present FTS 2000
contracts held by AT&T Corp. and Sprint Corp.

"We anticipate it will take anywhere from three to four months to do that
transition plan," Woods said. "And that's ambitious." The transition itself
will take roughly 12 months.

Woods also assured members of the House subcommittee that any optional services offered
by vendors will be evaluated as contract modifications and will have to meet the same
technical requirements as the original bids.

Woods said prequalification for MAA bidding was added at the request of the vendors,
who wanted to reduce the cost of bidding in as many as 20 metropolitan areas.

Prequalification probably will begin in November for the first set of MAAs, which will
include New York, Chicago and San Francisco. Requirements will consist of general
technical requirements that are not specific to any one metropolitan area. Vendors can
prequalify at any point and, once on the list, bid on any of the MAAs.

One area of disagreement between vendors and GSA is the potential for continued price
reductions for telephone service over the life of the new set of contracts. Woods has said
repeatedly that the federal government must maintain low rates and continue to reduce
them. Local service, which has not had the same competition as long-distance service,
offers the greatest potential for reduction. But Woods said he expects long-distance
prices to continue to drop as well.

"My personal belief is that the industry is sitting on a tremendous capacity that
is not being sold," Woods said.

Jim Payne, assistant vice president for FTS 2000 at Sprint, said that was a false

"We can definitely improve," Payne said. But future improvements are more
likely to come in the quality of service than in continued dramatic rate reductions, he

Meanwhile, at a GSA press conference announcing release of the RFP, deputy assistant
commissioner for information technology John Ortego also announced the timetable for GSA's
Seat Management Contract, a computer services contract that Woods has said could cut more
than $1 billion a year from the government's cost of operating desktop computers [GCN,
March 17, Page 1].

Under Seat Management, the government would contract for computer services as a utility
rather than buy PCs. GSA plans to release an RFP Oct. 1 and award a contract by February

The government operates between 1 million and 2 million desktop computers, with an
estimated annual operation cost of $12,000 each.

"Our belief is that we could buy that service at a lot less than $12,000 a
seat," Woods said.

If GSA is successful in driving that price down through competitive services, a 10
percent reduction in costs could produce savings in the billions of dollars.

"I think it will be a lot more successful than 10 percent," Woods said.

About the Author

William Jackson is a Maryland-based freelance writer.

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