D.C. snubs fed help; rings up big bills

The District of Columbia government, mired in debt and unable to pay its contractors, has repeatedly rejected assistance from the federal government to reduce the cost of its telecommunications programs and has engaged in what several executives describe as a pattern of reckless spending.

Sources said the D.C. government has repeatedly refused to use the federal government's FTS 2000 long-distance network despite assertions from the General Services Administration and D.C. employees that the move would cut in half the district's $500,000 annual long-distance bill. Bob Woods, commissioner of GSA's Federal Telecommunications Service, said he wrote to D.C. officials last year explaining the benefits of using the network but has not received a reply.

The GSA Act of 1948 defines the D.C. government as the equivalent of a federal agency capable of participating in all GSA programs. GSA agreed in 1990 to a request from D.C. government employees to give them access to FTS 2000, but the agreement was cancelled when high-level managers decided to run their own competition for long-distance services among local disadvantaged businesses.

In a December 1994 letter, congressional delegate Eleanor Holmes Norton (D-D.C.) wrote to former D.C. Mayor Sharon Pratt Kelly and incoming Mayor Marion Barry to urge them to move the D.C. government onto the FTS 2000 network. Susan Brita, a member of Norton's staff, said last week that Norton did not receive a reply from either addressee.

Brita said GSA first offered the D.C. government access to FTS 2000 in February 1990 but had been rebuffed. "I always wondered why the District never took advantage of FTS 2000," she said. "It could save them an enormous amount of money."

A former D.C. employee said telecom professionals in the D.C. government have repeatedly recommended using FTS 2000. The source said high-level officials have ignored the suggestion because of the D.C. government's tradition of awarding its business to home-grown or minority-owned small businesses.

When D.C. officials were unable to find a disadvantaged contractor who could meet their long-distance needs, they attempted to purchase the service through a competitive bid, which failed after procurement personnel received two unacceptable bids, the source said.

The source said potential bidders thought the investment was too risky because they were aware that the D.C. telecom staff wanted to use FTS 2000. The D.C. government now purchases its long-distance service from AT&T on a monthly basis.

D.C.'s mismanagement of its telecom budget forced officials into a deal last fall with Bell Atlantic. In that deal, the company agreed to forgive the D.C. government's inability to pay for phone service in exchange for permission to withhold gross receipt taxes the firm collects from D.C. customers on behalf of the local government.

A spokesman from Bell Atlantic Washington said the company collected $9.3 million in gross receipt taxes from D.C. residents and businesses in the first quarter of this fiscal year. He said only $7 million of that was transferred to the D.C. government, with Bell Atlantic keeping the remainder as payment on debt accrued by the government.

"It was a one-shot deal to help the city," the spokesman said. "It is not in existence today. That is not to say that the D.C. government might not come back to us at a future date [with a similar deal] and [that] we would not consider it."

A procurement attorney not involved with the D.C. government said the arrangement may skirt laws designed to prevent government agencies from augmenting their own appropriations. But, he said, regulations guiding some government entities often grant the authority to cut such deals.

A spokesman for the D.C. government would not comment last week on technical issues involving telecommunications but emphasized that "no taxes were forgiven" in the deal with Bell Atlantic. "We could not pay for a variety of vendors, and a lot of vendors agreed to help us," he said.

A former D.C. government employee, who requested anonymity, said the D.C. government's excessive spending on telecom equipment and maintenance led to its inability to pay phone bills and to a situation in which the D.C. officials are "beholden to the phone company."

Why Use ISDN?

For example, the source said the government has been paying premium prices for Integrated Services Digital Network (ISDN) equipment it does not need from GSA's Washington Interagency Telecommunications System (WITS) contract, held by Bell Atlantic.

The source questioned the need for fully featured ISDN phone sets in an environment that involved no video applications or requirements for combined voice and data services and, in fact, includes few digital lines. "Nobody in the D.C. government needs ISDN," the source said.

Bill Graeff, director of civilian programs at Bell Atlantic, confirmed that the D.C. government buys ISDN-ready telephones from WITS for about $600 per unit and also purchases installation and maintenance services from the contract. D.C. does not purchase its dial-tone service from WITS, he said.

The Bell Atlantic spokesman indicated that the need for ISDN systems may change in the coming years because of a $30 million contract the company won about three months ago to upgrade D.C.'s analog lines to digital and to provide other improvements. The contract will also upgrade rotary dial phones still installed at some D.C. offices and integrate various networks run by different D.C. agencies, he said.

But the former employee said D.C. used to buy many of the services now bought from WITS via GSA schedule contracts. The source said employees at the time were able to document savings of up to 40 percent over the prices offered on WITS.

The former D.C. employee said the waste is likely to continue if the government renews the arrangement with Bell Atlantic to forgive its gross receipt taxes. "If everything is bought from Bell Atlantic and Bell Atlantic [is] forgiven its taxes, agencies can buy anything without the money to back it up," the source said.