GSA may break local service pacts in quest for lower prices

The General Services Administration's Federal Telecommunications Service (FTS) may pull the plug on hundreds of millions of dollars worth of local-service contracts in instances where other firms can provide the service at better prices.

FTS commissioner Bob Woods said GSA now holds contracts with regional Bell operating companies and other vendors throughout the country that provide local service on a regional basis. He said all but one of these contracts, known as Aggregated Systems Procurement (ASP) programs, have fulfilled minimum revenue guarantees and can be abandoned if necessary.

Woods said he hopes GSA's existing local-service suppliers will bring their prices down even before the agency solicits competitors. "We'd like to see them come in and give us a reason not to recompete," Woods said.

Margaret Binns, Woods' assistant commissioner for field operations, is in the process of creating a list of GSA regions receiving the worst prices for local services and a schedule for meeting with alternate providers in those areas if existing providers do not lower their rates, Woods said.

"My advice [to ASP contractors] is to get your prices better so you're further down the list," he said.

GSA will initially seek competition in high-traffic areas such as major cities and will issue requests for information to seek out potential competitors within the next six to nine months, Woods said.

Bill Graeff, director of civilian programs at Bell Atlantic, said his company has already begun lowering rates on its ASP II contract and has already met Woods' $15 per-line goal on the Washington Interagency Telecommunications System local-service program. "We're going to do what we can to meet [Woods'] requirements or come as close as we can," he said.

The move is part of Woods' plan to cut local rates to an average $20 per line by the end of the fiscal year. The strategy also calls for a reduction in GSA's local-service overhead charges by reducing the number of assistant regional administrators (ARAs) operating in the agency's field offices.

But a GSA source who requested anonymity said Woods' plea for fewer ARAs has fallen on deaf ears in the regional offices. These officials are in no hurry to surrender their kingdoms, the source said.

"You can't achieve that $20 [per] line rate by Oct. 1 unless you cut overhead," the source added. "But nobody is doing a damned thing about it."

Woods acknowledged the problem and said he has encountered some resistance from field officials afraid of losing their jobs.

John Okay, deputy commissioner of FTS, said it will ultimately fall on GSA's regional administrators to determine which ARAs are expendable. "It's really a decision that the regional administrators have to make," Okay said.

"They've got to be concerned with the [full-time equivalences] and overhead dollars represented by those ARAs," he added.