GSA set to allow crossover of telecom services

GSA set to allow crossover of telecom services


After months of going back and forth with telecommunications vendors, the General Services Administration is preparing to allow local and long-distance crossover service that could bring more telecom competition to government agencies before summer's end.

GSA met with industry representatives late last month to outline its plans.

John C. Johnson, assistant commissioner for service development in GSA's Federal Technology Service, called the meeting 'an exciting step forward toward crossover' between the FTS 2001 long-haul program and the local Metropolitan Area Acquisition program.

But Johnson acknowledged that not everyone is satisfied.

'There are those who think this is a wonderful thing, and those who may be concerned,' he said.

The rules of the crossover game

' Only existing FTS 2001 or MAA contractors can cross over.

' Modifications to existing contracts would not be subject to full competition or to Federal Acquisition Regulation requirements.

' Crossover contractors can offer basic services already on contracts or new services. They must meet the original requirements for existing services, but they do not have to provide all the services of the contract to which they cross over, nor do they have to cover all geographic areas.

' GSA, based on the government's best interest, will decide which proposed modifications to accept.

The goal of FTS since 1997 has been competition in local and long-distance services. But no crossovers have been approved to date, angering some MAA vendors. For the past several months, FTS has been under congressional pressure to allow crossovers.

FTS will respond by Aug. 3 to industry comments on its crossover plans. The target date for accepting vendor proposals for contract modifications is Aug. 17. Procedures will be posted at

Minimum's down the road

Carriers that have expressed concern about the plans include FTS 2001 contractors Sprint Corp. and WorldCom Corp. After a protracted two-and-a-half-year transition with lower than expected revenues, they now face new competition. The companies have spent millions bidding for and moving customers to their contracts, which guarantee them each at least $750 million. But current estimates indicate the minimum will not be met until 2004, years later than first thought.

Those companies pleased by crossover plans are carriers that hold MAA contracts in 21 metropolitan areas. AT&T Corp. and Qwest Communications International Inc. of Denver entered the MAA program expecting to offer long-distance service, too.

James F.X. Payne, Qwest's senior vice president for government services, said he is encouraged that FTS is talking about crossover, but he questioned the way it is being done. He said agencies represented on the Interagency Management Council, which agreed in 1998 to use the nonmandatory FTS 2001 contract, will likely stay with Sprint and WorldCom until the minimum revenue guarantees are met.

Payne also questioned FTS' 8 percent surcharge for management services on FTS 2001, saying that services on Federal Supply Service schedule contracts have a 1 percent surcharge.

'I am concerned about [FTS'] ability to reconcile their FTS 2001 strategy' with the schedule strategy, Payne said.

'We are very aware' of the issue, said Dennis W. Groh, FTS deputy assistant commissioner for service delivery. 'There are a lot of things we do as value-added services,' such as program management, billing and defining requirements.

'If a customer wants to use FSS, we're not mandatory,' he said. FSS is designed primarily for small programs and is geared toward products rather than services.

No pressure

Groh said the Interagency Management Council agencies' commitment to Sprint and WorldCom for basic services for the next several years should not discourage crossover. The commitment is not binding, he said, and nonmember agencies can choose other vendors.

The greatest demand will be for new services from crossover vendors, he said.

Groh said agencies are spending an estimated $8 billion a year on telecommunications, of which about $1 billion goes to FTS 2001. 'So there is plenty of room for competition,' he said.

Although attention has focused on MAA contractors' push to offer long-distance services, Sprint and WorldCom also can offer local services under the MAA program.

'I think the interest is there,' Groh said. Because of the demands of the FTS 2001 transition, they have had little opportunity to consider crossover. 'With transition behind us, they are going to be more interested in pursuing regional services,' he said.


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