GSA's technology unit unveils '98 revenues

• By William Jackson
• Dec 14, 1998

After a year at the helm of the General Services Administration’s Federal
Technology Service, Dennis J. Fischer still calls himself a recovering bean counter.

He fell off the wagon during a year-end briefing last week, producing preliminary
figures for the agency’s fiscal 1998 performance.

FTS revenues increased 37.5 percent, from $2.5 billion to $3.4 billion—good
numbers for an agency that supports itself through sales to government customers.

In the network services division, which has seen a steady fall in prices, sales were up
more than 10 percent. On the information technology solutions side, sales were up 53.5
percent. Business was so good that 1,300 FTS employees were given a day off or a
day’s pay.

The year had its downside, too. The venerable FTS 2000 long-distance contracts expired
Dec. 7, and the long-delayed FTS 2001 follow-on contracts have yet to be awarded. GSA was
evaluating best-and-final offers as the AT&T Corp. and Sprint Corp. contracts died.

“My expectation is that before Christmas we will make the first award,”
Fischer said.

The first award will guarantee, at minimum, $750 million in revenue. After the first
award, a call will go out for a second pricing round, and a second FTS 2001 contract will
likely be awarded early next month, he said.

To tide users over during the transition, FTS finished negotiations with AT&T and
Sprint just days before FTS 2000’s expiration to set up bridge contracts. They
provide continued services at essentially the same prices for one year, with two six-month
options.

Much of FTS’ attention next year will focus on GSA’s Seat Management Program
contracts, which will let agencies outsource their PC operations. Proposals for GSA’s
task order, the first under the contract, are under evaluation.

“We have robust competition, and we expect to make an award before
Christmas,” Fischer said.

One of the biggest challenges will be to raise agency enthusiasm for the seat
management concept, said Charles Self, FTS assistant commissioner for IT solutions.
Current response is split almost evenly between positive and negative, he said.

“If we have three or four task orders this first year, that will be a
success,” he said.

Fischer set his target for Seat Management a little higher. “I’d like four or
five [task orders] and increased positive buzz,” he said.

Some increased buzz might also be necessary to save several FTS niche contracts. The
International Direct Distance Dialing, the Wireless, the Wire and Cable, the Commerce,
Internet and E-mail Access (CINEMA), and the Technical and Management Support contracts
rang up about $25 million last year, Fischer said.

But one contract—Wire and Cable—accounted for nearly $15 million of that
figure. CINEMA did about $55,000 worth of business.

Running FTS like a business means knowing when to cut losses, Fischer said. Dropping
some of the contracts is a possibility, but no decision yet has been made to cancel any of
them, he said.  

The General Services Administration has negotiated a two-year extension of its FTS 2000
long-distance telecommunications contracts with AT&T Corp. and Sprint Corp.

The extension gives agencies some breathing room in making a transition to FTS 2001
contracts, which GSA officials said they will award by year’s end.

Dennis J. Fischer, commissioner of GSA’s Federal Technology Service, said the
bridge contracts’ prices will remain about the same, but the contractors will start
to pass along to agencies Universal Service Fund charges of 4.1 percent for AT&T and
4.9 percent for Sprint.

GSA had disputed the charges under the vendors’ fixed-price FTS 2000 contracts,
which expired Dec. 7.

The bridge contracts will be mandatory for FTS 2000 customers until Sept. 30. After
that, they have the option of continuing with the contracts through 2000, or moving to
other long-distance vehicles. FTS 2001 will be nonmandatory.

FTS expects to award competitive local telephone service contracts in New York, Chicago
and San Francisco early next year under its Metropolitan Area Acquisition program. Awards
for other metropolitan areas will follow.