First FTS 2001 award goes to Sprint | Breaking News

The General Services Administration on Dec. 18 awarded the first-round FTS 2001
contract for long-distance telecommunications services to Sprint Corp.

The eight-year contract guarantees Sprint at least $750 million in revenue. A second
round of bidding for a second FTS 2001 contract was set to begin immediately, and that
award could come by mid-January, said Dennis J. Fischer, commissioner of GSA's Federal
Technology Service, which will manage the contracts.

The second round also would guarantee $750 million revenue. The combined contracts are
expected to have an actual value of $5 billion over their four base years and four
optional years.

Sprint spokesman James W. Fisher said the company intends to bid in the second round.

Although the contract terms and bidders were not revealed because bidding is
continuing, Fischer said overall prices are 30 percent lower than current FTS 2000 prices.
The greatest savings are in private lines and data communications, for which agencies will
pay 70 percent less, he said.

Over the life of the Sprint contract alone, FTS expects savings of 60 percent, or $3.8
billion, over what the government would have spent under terms of existing contracts.
Fischer said he hoped the second round of bidding would produce even greater savings.

"We had a very robust and strong competition,'' Fischer said.

FTS 2001 is a follow-on to the FTS 2000 long-distance contracts held by Sprint and
AT&T Corp. Those contracts expired Dec. 7, but FTS negotiated a two-year extension
shortly before that date to get agencies through the transition [GCN, Dec. 14, Page 3].

The first agency customers could move over to the new contracts by late spring, said
FTS Deputy Commissioner Sandra Bates.

"Several agencies have indicated a willingness to move'' to FTS 2001, Bates said.
The Environmental Protection Agency is expected to be one of the first, she said. Others
likely will remain with the current contracts for as long as two years while they
concentrate on year 2000 issues.

FTS 2000 was a mandatory contract, splitting business between the two vendors. Sprint
currently has 24 percent of the business, and AT&T 76 percent. FTS 2001 will be
nonmandatory, which means Sprint and any second-round winner will have to compete with one
other and with other providers.

Fischer said some agencies have given assurances of business through the Interagency
Management Council. He said he was confident that FTS 2001 prices would be good enough to
attract the $1.5 billion in guaranteed revenues.

FTS officials said the agency might have to become more competitive to attract business
to its contracts. It now imposes an 8 percent FTS 2000 surcharge. "We have not
established what it would be under 2001, but I hope it would be less,'' Fischer said.

FTS 2001, in the works for several years, was shaped by the Telecommunications Reform
Act of 1996 and by input from industry and Congress. Repeated modifications to the plans
and to the request for proposals, some made at the insistence of Congress, delayed award
by a year.

The new contract has a broader array of services than its predecessor, including
Internet and intranet services, low- to high-speed data communications, international
services and high availability, in addition to long-distance, toll-free and 900 voice

Potential bidders had to pass technical qualification tests before being invited to
submit price bids. The award was made on the basis of best value, in which price was a
major component, Fischer said. The second round of bids, called additional price
offerings, will involve price only.

FTS had the option of making two awards in the first round, closing the contract on the
first round with one award, or moving to a second round of bidding.

"We have decided to go into the second round,'' Fischer said.

All bidders in the first round can submit new proposals. A second-round win by Sprint
would give it all business at the prices bid in the second round.

If another carrier gets the second contract, the two will compete. It is possible that
no contract would result from the second round. Fischer said.

Although pricing details of Sprint's contract will not be released to other bidders,
they will receive some bottom-line information to prepare new proposals, officials said.

About the Author

William Jackson is a Maryland-based freelance writer.

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