Sprint seeks turnaround on FTS 2001
Sprint seeks turnaround on FTS 2001
Slow pace of agency cutovers to network threatens revenue guarantees
Sprint's Anthony G. D'Agata, who became head of the company's government systems division in November, says 'We're marching as quickly as the agencies want to march.'
By William Jackson
Sprint Corp. has gotten off to a slow start on its FTS 2001 long-haul communications contract with the General Services Administration, the company's new head of federal services acknowledged late last month.
'I don't think Sprint committed itself to spending the resources prior to winning,' said Anthony G. D'Agata, vice president and general manager of Sprint's government systems division.
The carrier is trying to make up for lost time by forming teams to move agencies to the new contract and pursuing new customers, D'Agata said. He said his division would not mark time while awaiting regulatory approval of Sprint's proposed merger with its FTS 2001 competitor, MCI WorldCom Inc.
'We want to grow the government systems division,' D'Agata said. He became head of the division in November after more than 30 years in management positions at Bell operating companies, including 10 years as vice president of sales and vice president of marketing and development at Bell Atlantic Federal Systems. He joined Sprint 11 months after the company won one of the two FTS 2001 long-haul contracts.Tighter margin
FTS 2001 is turning out to be substantially different from what was envisioned during the bidding. Its minimum revenue guarantee of $1.5 billion, split evenly between the two contract winners, was only a small percentage of the estimated total value at the time of award. But slow agency cutovers to the networks mean that GSA, Sprint and MCI WorldCom must hustle to meet the guarantees.
'I think there are a number of legitimate concerns' about minimum revenue, D'Agata said. When the guarantees were set, no one expected that incumbent AT&T Corp., which garnered about 80 percent of earlier FTS 2000 business, would not be in the new environment, or that the prices bid for FTS 2001 would drop so low.
'The pie shrank,' D'Agata said. 'I think there are some concerns, particularly when others want to participate.'
The primary 'other' in this case is AT&T, which won GSA contracts last year for local phone service in New York, Chicago and San Francisco under the Metropolitan Area Acquisitions program. That could make AT&T eligible to participate later this year in FTS 2001.
AT&T has said it wants to compete for the long-haul contract. Participation is not automatic, however, and GSA could veto it if the entry poses a threat to revenue guarantees.
For the past year, Sprint and MCI WorldCom have been competing to win agencies' FTS 2001 business. But some agencies,
Agata said, delayed a change to finish year 2000 fixes, others to re-evaluate needs or await new offerings.
Also, Sprint's decision to cut prices on its FTS 2000 bridge contract lessened the financial incentive to jump to the nonmandatory FTS 2001.
Sprint has moved about a third of the 60,000 circuits that must shift to the new contract, he said. GSA has set a June deadline for such moves.
'We're marching as quickly as the agencies want to march,' D'Agata said.
One new offering Sprint wants to bring to FTS 2001 is its Integrated On-Demand Network, a broadband end-to-end network service. D'Agata said he hopes to have several federal trials of ION under way in the second half of the year.
Outside FTS 2001, he said, Sprint will have to change its way of operating to compete in a new government environment.
'A lot of agencies are not looking for commodity services anymore,' D'Agata said. 'They are looking for partners in planning their architectures.'
Sprint probably will find itself competing for more systems integration contracts and omnibus procurements that call for services and products beyond mere transport of voice and data, he said. The company will have to determine what it needs to be a prime contractor in such deals and who it can partner with.
'You have to know your strengths,' D'Agata said.
Sprint would become even larger under the proposed merger with MCI WorldCom.
If the merger goes through, he said, 'I expect the contracts to remain on their own' within the merged company.