GSA aims to lower prices of local city phone services

The General Services Administration’s strategy for its Metropolitan Area
Acquisitions of local telephone service is simple.

“We’re going to leverage the government’s buying power to get a good
deal,” said Dennis J. Fischer, commissioner of GSA’s Federal Technology Service.

That is the same approach the agency is taking in its FTS 2001 long-distance telephone
service contracts. In fact, FTS expects to see the offerings of the two programs merge as
vendors begin providing end-to-end telecommunications services.

“Between the two efforts, there was a lot of good synergy,” Fischer said.

FTS has issued MAA requests for proposals in three metro areas—New York, Chicago
and San Francisco—since February. The New York award has been delayed by a protest
that could add to the number of contracts awarded in each city, but FTS is moving ahead
with long-term plans to award contracts in up to 30 cities.

Despite hopes for the eventual merger of local and long-distance service, the MAAs are
uncharted territory. Competition in long-distance service has worked well for consumers
since the divestiture of Ma Bell as it has for federal users under the expiring FTS 2000
contract. But competition in local service was not allowed until the Telecommunications
Reform Act of 1996 and is still in its infancy.

“I think we will have good competition for the three cities we have out
there,” Fischer said. “There is a robust group that wants to get into this

The MAA contracting process began in December with a request for qualification
statements, to let interested bidders prove their ability to provide basic services
required under the contracts. These mandatory services include switched voice, circuit
switched data and dedicated transmission. Once a vendor has prequalified, it can bid on
any subsequent MAA contract.

The qualification process is continuing, and FTS has not released details on
prequalified vendors, but Fischer said they include regional Bell operating companies,
long-distance providers and new carriers.

Prequalification increases the workload for FTS at the beginning of the contract
process, but is expected to produce long-term benefits, said FTS contracting officer
Robert Sudhoff.

“We don’t expect there to be that much savings up front,” he said.
“But as we go on through the next two dozen acquisitions, the savings will be

An initial RFP for the New York area was released in February, followed by those for
Chicago and San Francisco. Bids for all three are being evaluated, Fischer said, but
contract awards have been delayed by a protest of the New York acquisition by WinStar
Communications Inc. of New York.

WinStar objected to the geographical area specified in the RFP, which included nearby
areas in New Jersey, the city’s five boroughs and adjacent New York counties. It also
objected to GSA’s decision to award a single contract for the acquisition. The
Federal Court of Claims upheld the boundaries, but agreed with WinStar that GSA had not
adequately justified its decision to make a single award.

“We are assessing that decision,” Fischer said. Options for the government
include providing better justification for a single contract or opening the MAA to
multiple awards. The decision also could affect acquisitions in other cities.

Because the telecommunications industry is not yet ready to compete fairly on packages
of end-to-end communications, GSA is pursuing separate FTS 2001 and MAA contracts. But
within a year of awarding a contract, distinctions between the two types of service could
begin to blur.

Provisions in both the FTS 2001 and MAA contracts will let contractors, after a
one-year forbearance, begin offering crossover services. MAA contractors will be able to
offer local service outside their contract areas, as well as long-distance services.
Likewise, FTS 2001 contractors will be allowed to offer local service on their contracts.

The vendors will not have to compete to add the features to their contracts, but will
have to compete with other suppliers to get orders. The contracts, like most GSA
contracts, will be nonmandatory, which means that vendors will be in constant competition
for orders.

FTS also will be offering MAA services to federal users who are not GSA customers.
“This is part of our overreaching goal for FTS in growing the business,” Fischer

GSA provides services to most government office buildings, but many standalone
facilities, such as Veterans Affairs medical centers and local Agriculture Department
offices, are not served by GSA. These offices will be able to buy through FTS 2001 and MAA
contracts in their areas.  

About the Author

William Jackson is a Maryland-based freelance writer.

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