Qwest Protests Extension of FTS2000 Contract

Qwest Communications International Inc. of Denver has filed a protest with the General Services Administration, asking it to cancel the contract extensions it recently granted to AT&T Corp. and Sprint Communications Corp. for the FTS2000 contract.

The contract extensions raise prices and squelch competition, said James Payne, senior vice president for government services for Qwest.

The contract for long-distance services was to expire at the end of 1999 and had already been extended once. This second extension gives agencies using AT&T until Dec. 6, 2001, to transition to the FTS2001 contract. Agencies using Sprint have until June 6, 2001, to switch to the newer contract.

Sprint and WorldCom Inc hold the FTS2001 contract. The contract, however, is not mandatory, and agencies can chose other vendors for their telecommunications services.

In its protest filed Dec. 15, Qwest is claiming that GSA did not follow proper procedures in granting the contract extension. GSA did not announce that it was considering the extension nor the rationale behind it, according to the protest. The agency also did not demonstrate that the pricing in the extension is "fair and reasonable."

The pricing is what first drew Qwest's attention to the contract, Payne said.

Pricing under the extension raises telecommunications costs by 20 percent, Payne said, which are prices the agencies were paying in 1995.

In announcing the extension, GSA officials said they were allowing the higher prices as a way to pressure agencies to speed up their transition plans.

In addition to the higher rates, AT&T also is receiving $8 million to cover other costs.

"Someone has lost all the leverage with the vendors," Payne said.

Agencies have plenty of alternatives to obtaining telecommunications services without having to use the high-priced contract extension, Payne said.

As a holder of a Metropolitan Area Acquisition contract for local telecommunications services, Qwest is one of those alternatives, but so are several other companies that also hold MAA contracts, he said.

GSA officials declined to comment on the protest, saying it was still under review.

The alleged lack of competition for telecommunications services is gaining attention on Capitol Hill. In late October, Rep. Tom Davis, R-Va., complained on the floor of the House that the transition to FTS2001, which is supposed to open the government to competitive pricing, was too slow.

"As a result, this marketplace has experienced little in the way of introduction of new products and services to the government market," Davis said.

A spokesman for Davis said Dec. 18 that the congressman was unaware of Qwest's protest but remains "very concerned" about what he sees as a lack of competition.

In his Oct. 30 statement, Davis said he wanted to exercise congressional oversight "to restore competition within the government sector."