Nipping at FTS' heels

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The General Services Administration's Federal Technology Service, which

brokered the lowest government long-distance phone rates ever as part of

its FTS 2001 program, may have more competition in telecommunications from

within the federal family.

The National Institutes of Health has issued its recompete of the Chief

Information Officer Solutions and Partners (CIO-SP) contract, a governmentwide

contract that is intended to cover the gamut of IT efforts and includes

some telecom services. Victor Powers, acting director of NIH's Information

Technology Acquisition and Assessment Center, said telecom, including long

distance, is just part of the agency's contract.

NITAAC was established in 1996 as a way to make procurement more efficient

and less costly. In 1998, it added personal computer leasing to CIO-SP.

FTS' deals with Sprint and WorldCom Inc. to supply long-distance service

to government agencies guarantees each company a minimum of $750 million

during the eight-year contracts. The companies may earn more, but if they

fall short, GSA must pay the companies the difference.

For GSA, then, the possibility of losing FTS 2001 customers to another contract — even if it is through the government — could pose a problem.

"We embrace the idea of competition," said Charles Self, deputy commissioner

of FTS. "But that's a bigger issue than just competition between two agencies,

because the government is liable" for the minimum revenue guarantees. "My

position would be that NIH and GSA would have to get together to consider

the governmentwide implications," Self said.

NITAAC does not offer products and services a la carte, but instead packages

them to meet specific needs of customer agencies, according to Powers.

"The [CIO-SP] contract allows vendors to come in with a technical solution

that would fit the needs of the agency," he said. That could include long-distance

services, Powers said.

Telecom analyst Warren Suss said anything that draws federal business

away from Sprint and WorldCom could threaten the viability of FTS 2001.

"It could be a blow to FTS if another agency like NIH initiated a program

for reselling long distance," he said. "This kind of an action would threaten

the ability of FTS to meet the minimum revenue guarantees."

More than that, he said, it would throw into question the FTS strategy of

combining government buying power to negotiate with vendors for products

and services.

"Not only in terms of prices going down, but in getting government the

kinds of technical features and management capabilities that a government

needs," he said. "It's in the government's interest to have FTS negotiate

good prices."

Sprint and WorldCom, meanwhile, could possibly stand to earn more if they

picked up government business via NITAAC — even if it was at the expense

of their FTS contracts.

That's because they would still be guaranteed $750 million under FTS

while they earned revenues under a separate NITAAC-brokered deal.

Rick Slifer, director of FTS 2001 for WorldCom, said he believes NIH

is considering adding telecommunications to CIO-SP, but telecom "is a minor

part" of what NIH is doing.

"The point I would make here is NIH itself has committed to transitioning

all [telecommunications] services to WorldCom under FTS 2001," he said.

Mike Ligas, director of business development with Sprint's government

services division, said Sprint already holds some contracts under the earlier

version of CIO-SP and will also bid for contracts under the latest one.

Ligas said he does not know what kind of work is being done under CIO-SP

but called the contract "a vehicle to fill some gaps."

"It provides another alternative," he said. "FTS 2001 is not a complete

blanket for any telecommunications services — some things are not provided

but Sprint is actively trying to add them."