Treasury shares lessons learned in FTS 2000 change

The first hint of trouble came in the spring of 1996.

With April 15 looming, the number of taxpayers dialing the IRS’ toll-free number
was growing exponentially each day. But the advice they were receiving was of an
unrelated—even otherworldly—nature.

Because of a switching error, frantic callers hoping for advice on completing their tax
returns were instead connecting with Dial-a-Prayer.

It was a rumble of distant thunder presaging a downpour; IRS’ FTS 2000 transition
from Sprint Corp. to AT&T Corp., which had started in January that year, was going to
be tricky.

“Yes, it was worthwhile,” Candace Hardesty, the liaison for the Treasury
Department’s chief information officer, said of the switch. “Yes, lots of money
can be saved because the process of vendor competition really does make the vendor work to
try to offer you new creative solutions. But you should never think the transition will be

When Treasury began its transition from one local and long-distance service provider to
another, few guessed how wild the journey would be. Treasury officials struggled with the
transition for more than a year, they said, but the lessons they learned could help
managers in the upcoming FTS 2001 transition.

Of about 2,500 data communication circuits that were to have been changed from Sprint
to AT&T, work was completed on only about 126. The remainder stayed with Sprint, and
the Treasury Department ended the issue by working out an extension of service with

“My big wish is that we had been brought into the process early on,” Hardesty
said. “We never actually examined the FTS 2000 contract before it was signed by the
General Services Administration and AT&T, and I think that was our first and greatest

In November 1995 the decision had been made that Treasury would be the first agency to
make the transition. By December, the agency was expected to have fully briefed AT&T
on its telecommunications needs and requirements. The transition was to begin January 1996
with a scheduled end date of June 1996.

“Immediately we knew this was wrong,” said Nelson Hughes, FTS 2000
coordinator for Treasury. “We knew that six months was not enough time for the
transition, and we knew that AT&T did not fully understand our requirements. Not
enough details of the transition had been discussed.”

The plan called for close coordination of effort between AT&T and Treasury. New
calling cards had to be issued, and equipment inventories had to be conducted in remote
areas of the country.

The IRS accounted for about 75 percent of the switchover. More than 28,000 circuits
were to change from Sprint Corp. to AT&T—and the word from above called for a
transition transparent to users. But transparency was to prove only a dream. Hundreds of
wrong connections were made, and thousands of customers called the IRS and Treasury to

“The whole idea of transparency, the idea of a massive change without affecting
the customers, was absurd,” said Winford B. Carter, transition manager for the IRS
during the transition. “How could a transparent change be made during the middle of
the tax-filing season? That call for transparency was like adding insult to injury.”

A vice president from the catalog sales division of JCPenney called Treasury to
complain. His operators were getting rerouted calls from people seeking tax advice, Carter

“It was terribly embarrassing, but who could we blame except for ourselves?”
Hardesty said. “What we learned is that you can’t rely on the vendor to identify
your needs—scheduling or otherwise—and you should never ask them to identify
your mission.”

The transition got to be exasperating.

“It seemed that AT&T just saw the dollar signs associated with a big fat
government contract with Treasury and IRS, knowing full well that they would make hundreds
of millions of dollars,” Carter said. “But it they didn’t seem so willing
to give the needs of the project any kind of thoughtful consideration.”

AT&T officials concede that they underestimated the difficulty of the transition.
Having been through an earlier service transition, they thought FTS 2000 would be similar,
they said.

“We thought we knew most of what we needed to know about government transitions,
since we did one in 1995,” said John Doherty, AT&T vice president for FTS 2000.
“But this transition—with voice and data and other elements—was more
complicated. Probably we should have worked closer with Treasury.”

The difficulty in coordinating on-site equipment inventories was just one illustration
of how badly a more detailed transition plan was needed.

“The inventory was to help us know which Sprint components could stay and which
ones were to be replaced,” Hughes said. “It’s important, therefore, for the
losing, or outgoing, vendor to provide an accurate inventory to the winning vendor. But
the inventory given to AT&T from Sprint was a joke. It was barely usable.”

Much of the inventory was supposed to have been completed by AT&T, but with tens of
thousands of sites—including radio transmission and relay towers in the
wilderness—verification often required helicopter trips.

Not only was taking inventory difficult, it wasn’t always done, agency officials

“Often when AT&T, or their subcontractors, arrived to do the survey they were
not admitted into the building because they had not called in advance,” Hughes said.
“These are restricted areas; you cannot just arrive and say ‘I’m here to
examine your equipment.’ ”

When personnel arrived, they sometimes found that room numbers where equipment should
have been were incorrect or that equipment had been moved without notice, Treasury said.

“You just can’t imagine our shock when these complaints began pouring
in,” Hardesty said. “All that was needed was for the people to do an inventory
to check and see what kind of telephone set there was, what kind of data system it used
and how it was hooked up. But it all became very complicated very quickly.”

Treasury lost an immense amount of money and time. Inventorying was to have been done
piecemeal during the six months of the transition. Instead, the job lasted for more than a
year because, Treasury officials said, the winning vendor and the losing vendor did not
work together closely enough.

AT&T learned early on that it did not have the right supplies to replace Sprint
equipment for the data transition. After more than a year of trying, they dropped that
part of the project.

“It was just a terrible mess,” Randy Clifton, GSA telecom specialist, said.
“AT&T would say the service was up, but we could find no evidence of that. People
were called for maintenance, and no one would show up.”

The problem with the data transition was that neither AT&T nor Treasury fully
understood what was required for such a transition, Clifton said. “If they had, then
I’m certain that both would have been more prepared.”

“When you look back on that transition, you say, ‘If we knew then what we
know now.’ One thing for sure is that past experience is a real learning experience,
and neither party, I don’t suppose, would repeat such problems again,” Doherty


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