Telecom fee rankles cash-strapped agencies

ATLANTA— The General Services Administration and the Defense Department are at odds with AT&T and Sprint over a new 4.9 percent "universal service fee" that the companies have tacked onto FTS 2000 long-distance bills that will require agencies to pay millions of dollars more each month for telecommunications services.~At an FTS 2000 users conference last week, representatives from agencies that use the network complained that their budgets could not accommodate the large and unexpected increase in the price of long-distance services resulting from the additional charge. Others questioned the legality of vendors increasing prices on a fixed-price contract such as FTS 2000.~Officials from GSA's Federal Technology Service said last week they have collected the fees from agencies but will not pass them along to FTS 2000 contractors AT&T and Sprint until it is determined whether the charges are appropriate.~"We're going to collect the amount AT&T and Sprint have put on our bills and hold it until this dispute runs its course," said Mark Langsam, a regional economist in the FTS Office of Regional Services. "The question is whether they can pass that amount through to us as part of a firm, fixed-price contract arrangement or [whether] that [cost was] already included in the [previous] contract negotiations."~The Telecommunications Reform Act of 1996 allows vendors to charge universal service fees to help them meet requirements to provide advanced networking services to schools, libraries and rural areas.~The provision also has been controversial outside of the federal contracting arena as the carriers began applying the charge to their business customers.~Because the requirement for universal service was strongly endorsed by Vice President Al Gore, executive branch agencies are reluctant to criticize it. "It really puts the government in a bind," said Ron Hack, director of the Commerce Department's Office of Systems and Telecommunications Management. "On one hand, it's a dollars-and-cents issue that will cost an organization like the Defense Department millions— and it's not budgeted. On the other hand, this is a program that Vice President Gore is really behind. So it's a problem for the government to say, 'We don't like this.' "~A DOD spokeswoman said officials there have not yet taken a firm stance on the issue. ~Sources said it appears unlikely that the government will be able to force AT&T and Sprint to pay the charges themselves because a provision of the Federal Acquisition Regulation (FAR) allows vendors to charge users expenses they incur as a result of taxes imposed after a contract is awarded.~But Ida Ustad, GSA's deputy associate administrator for acquisition policy, said she and her counterparts at DOD have yet to rule on whether the fee can legally be considered a tax and be charged back to the government. If GSA and DOD rule against AT&T and Sprint, the vendors have the option of taking the case to the agencies' boards of contract appeals or to court, Ustad said.~She added that even if the agencies agree that the charges are legal, they may still need to resolve the issue of whether they are excessive.~Bob Petersen, a senior attorney at AT&T, said past decisions by the General Accounting Office, the Armed Services Board of Contract Appeals and the Court of Federal Claims support AT&T's position that the charge is appropriate. "There's a definition within the FAR of what an after-imposed tax is, and we think this [universal service charge] meets every criteria of that definition," Petersen said.~A Sprint spokesman said the company's attempt to pass the charge along to its federal customers is legitimate.