FTS is on congressional hot seat

FTS is on congressional hot seat


AT&T Corp., an unsuccessful bidder on the General Services Administration's multibillion-dollar FTS 2001 program, is protesting the contracts, awarded more than two years ago, and wants the competition reopened.

The protest, filed last month with GSA's Federal Technology Service, argued that program requirements have materially changed since FTS awarded contracts to Sprint Corp. and WorldCom Inc. in late 1998 and early 1999. The changes invalidate the contracts, AT&T said.

The protest drew on a review last month by the General Accounting Office that criticized the prolonged FTS 2001 transition [GCN, April 30, Page 33].

Testimony at a congressional hearing late last month indicated that the two largest customers made it through their transitions by aggressive planning and monitoring.

The Defense and Treasury departments began planning early to move from FTS 2000 to FTS 2001 and now pay lower rates for long-distance voice and data services.

DOD handled the move like a military operation, said Brig. Gen. Gregory Premo, deputy director for operations at the Defense Information Systems Agency.

Treasury set up management teams and milestones, chief information officer James Flyzik said.
The FTS 2001 contracts awarded to Sprint and WorldCom replaced FTS 2000 contracts held by Sprint and AT&T. Delays in moving to the new contracts forced GSA to extend the old ones. Each FTS 2001 contractor is guaranteed a minimum of $750 million over the life of the nonmandatory contracts.

FTS commissioner Sandra Bates, testifying before the House Government Reform Subcommittee on Technology and Procurement Policy, said the transition is 95 percent complete and should be done by the end of next month, more than six months past the most recent Dec. 6 goal.

What the delay has cost the government depends on how it is measured. Bates put the cost at $74 million because of higher rates paid from Dec. 6, when extensions expired, through June 30.

Savings trend

But GSA has estimated that the government saved $150 million in fiscal 2000 compared with the cost of similar long-haul services the previous year. GSA said the government would save $250 million this year.

The General Services Administration estimates the delay in the shift from FTS 2000 to FTS 2001 has cost the government $74 million.
'FTS commissioner Sandra Bates
One significant impact of the delay is that fewer payments will count against the minimum revenue guarantees. GAO reported that since the beginning of the transition in June 1999, Sprint has received about $369 million from the FTS 2000 contract.

As of February, Sprint had earned $147 million under FTS 2001, about 20 percent of its guaranteed minimum, and WorldCom $302 million, about 40 percent of its minimum.

Bates said GSA expects to meet the guarantees for WorldCom in the fifth year of the contract and for Sprint in the sixth year.

The slow revenue stream has delayed GSA's admittance of new competitors into FTS 2001'one reason for AT&T's protest. Bates testified that could change soon.

'We are committed to adding competitors when transition is completed this summer,' she said.
AT&T, along with Sprint, lost its lucrative FTS 2000 business when the new contracts were awarded.

But AT&T has won a number of FTS local-service contracts and wants to cross over to FTS 2001 to compete for long-distance service. GSA has not yet allowed that to happen.

John J. Doherty, vice president of AT&T government markets, testified that GSA abandoned its policy of competition last year. He said AT&T responded by raising rates for its remaining FTS 2000 customers and by charging GSA a one-time $8 million fee for maintaining its government network.

The AT&T protest said GSA has changed or relaxed many requirements since awarding the FTS 2001 contracts.

Then, and now

The changes involve the length of the transition, timeliness of service delivery, availability and quality of services, trouble handling, an automated transition database, customer support, billing, risk assessment, personnel and program management, the protest said.

A GSA spokesman said the agency had received the protest but would not comment on the allegations until it reviewed them.


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