GAO: Sprint, WorldCom to Reach Guaranteed Revenue

WorldCom Inc. and Sprint Communications Corp. are likely to reach their FTS2001 minimum revenue guarantees, worth a combined $1.5 billion, by fiscal years 2003 and 2004, respectively, according to the General Accounting Office.

The federal watchdog agency prepared its estimate at the request of Rep. Tom Davis, R-Va., chairman of the House Government Reform subcommittee on technology and procurement policy. Davis asked the GAO to look into the matter following the subcommittee's April 26 hearing on FTS2001, the General Services Administration's long distance telecommunications program.

The GAO also found that Sprint of Westwood, Kan., and AT&T Corp. of New York, the vendors on the GSA's original long distance contract, FTS2000, billed almost $160 million from December 2000 to April 2001 under the terms of contract extensions while services were being transitioned to FTS2001. Over that same period, WorldCom of Clinton, Miss., and Sprint billed more than $236 million under the terms of the new contract.

Delays in transition from FTS2000 to FTS2001 ? which was awarded to Sprint and WorldCom in the winter of 1998-99 ? cost the federal government an estimated $74 million in unrealized savings, GAO said.

The FTS2001 contract has been the subject of much congressional scrutiny and several protests by other telecommunications companies over its implementation. Davis convened the hearing because of concerns that delays in the FTS2001 transition were thwarting the program's goals of lower prices and expanded competition.