FTS 2001 delays may hurt service, price

The delayed transition of federal agencies to the FTS 2001 telecommunications contract jeopardizes the government's ability to achieve best service and price and to maximize competition, according to a draft General Accounting Office report obtained by Federal Computer Week.

The draft, titled "FTS 2001: Transition Challenges Jeopardize Program Goals," cites several reasons for the FTS 2001 transition delays that involve the General Services Administration, FTS 2001 contractors WorldCom Inc. and Sprint, agencies and local exchange carriers. Those problems may prohibit the government from receiving maximum cost savings and quality service, according to the report.

The draft GAO report is subject to revisions, such as the inclusion of GSA's response.

GSA awarded FTS 2001 contracts to Sprint in December 1998 and to WorldCom in January 1999. The transition deadline was Dec. 6, 2000, but 27 agencies failed to make the cut, forcing GSA to extend its FTS 2000 contracts with AT&T until Dec. 6, 2001, and with Sprint until June 6, 2001.

Although participation in FTS 2001 is not mandatory for federal agencies, the program guarantees each contractor minimum revenue of $750 million throughout the length of the eight-year contracts.

The report is critical of GSA's management of the transition and cites the failure of WorldCom and Sprint to provide updated transition progress information to GSA.

According to the report, FTS 2001 waives numerous service performance requirements placed on the contractors during the transition period. Because the transition period has been extended due to delays, the contractors are not accountable for the service they are providing at this time, according to the report.

The contract extensions also increased the government's telecommunications costs, which diminish the savings that could be achieved if all agencies had switched to the new contract, according to the report.

For example, discounts on FTS 2000 services from Sprint and AT&T were discontinued on the FTS 2000 contract extensions, raising prices to the higher levels offered earlier in the contract. AT&T also charged $8 million to cover administrative systems. Agencies pay more for switched-voice services as usage declines.

The report also cites the transition delays, GSA's long process for adding services to FTS 2001 that were needed to complete the transition and the withdrawal of agencies such as the U.S. Postal Service from the contract as reasons that the contractors will be slow to receive their minimum revenue guarantees.

If the guarantees are not met, GSA will be constrained from adding more contractors to FTS 2001, which would limit agencies' choice of telecom service providers, according to the report.