AT&T Wins 'Disappointing' Victory in GSA Claim

AT&T Corp. has been awarded a $5 million judgment by General Services Administration's Board of Contract Appeals, far less than the $140 million the company was seeking in its claim against the federal agency.

The decision, handed down May 18, gave New York-based AT&T the money as compensation for lost revenue the company claimed should have been generated under FTS2000, the GSA's mandatory long-distance contract put in place in 1988. AT&T filed its claim in August 1998.

Saying that AT&T was "disappointed and surprised" by the $5 million award, company spokesman Wayne Jackson said AT&T intends to file an appeal with the U.S. Court of Appeals for the federal circuit.

"We believe that, if left to stand, the decision essentially eliminates the federal government's obligation to act in good faith in performing its end of a contract," he said.

Jackson contended the decision not only harms AT&T, but could have a "deleterious effect" on government contracting in general.

"Without assurances that the government will live up to its promises, vendors may think twice about whether or how they participate in the competitive process," he said.

GSA officials did not return telephone calls asking for comment by press time.

The dispute arose over the Treasury Department's voice and data business under the FTS2000 contract, which was held by AT&T and Sprint Communications Corp. A government official close to the matter said under the provisions of the contract, AT&T and Sprint were to receive fixed percentages of federal business, with the percentages to be renegotiated in years four and seven of the 10-year contract.

After the last renegotiation, to keep the volume of AT&T's business in line with negotiated percentages, the Treasury Department's business was transferred to AT&T from Sprint, the official said.

But the transfer proved very difficult, and the department ultimately decided to pull its accounts from AT&T, leaving the company short of its guaranteed share of the federal contract, the official said.

The FTS2000 contract was superseded by FTS2001, the long-distance contract awarded at the end of 1998 and early 1999 to Sprint of Westwood, Kan., and WorldCom Inc. of Clinton, Miss. Many federal agencies are still transitioning from the old to the new contract.