Mixed Reception for GSA Crossover Guidelines

The General Services Administration's plan for opening both federal long-distance and local services contracts to more competitors is receiving mixed reviews from the telecommunications industry.The "crossover" guidelines describe the conditions under which the GSA will allow holders of Metropolitan Area Acquisition contracts ? which provide local telecommunications services in specific cities ? to compete for services included on the FTS2001 long-distance contract. The MAA vendors can offer existing services as long as they meet the same management and technical requirements specified in the FTS2001 contract. They also can offer enhanced or new services, and negotiate new technical and management terms for them.In addition, the guidelines allow FTS2001 contractors Sprint Communications Corp., Westwood, Kan., and WorldCom Inc., Clinton, Miss., to compete for local services against the MAA holders, and for MAA holders to compete to add other cities to their rosters.To date, the GSA has awarded MAA contracts for 20 cities to six competitors: AT&T Corp., Winstar Communications Inc. and Verizon Communications Inc., all based in New York, Qwest Communications International Inc. of Denver, SBC Communications Inc. of San Antonio and BellSouth Corp. of Atlanta.The GSA presented the draft guidelines for increased competition to telecommunications executives at an Industry Advisory Council meeting June 28.Some industry observers said the draft guidelines appear to be set up to encourage the addition of new services under the terms of FTS2001, rather than competition for existing services. That's because the requirement that MAA companies must meet the management and technical terms included in the FTS2001 contract will require enormous investments to upgrade software and systems, but without any guarantee that the companies will be awarded agency business, said Warren Suss, president of Suss Consulting Inc. in Jenkintown, Pa.Suss, a longtime federal markets consultant, said the MAA contractors would not be able to recover these costs by using the new systems in their commercial businesses, because government requirements are non-standard.Nevertheless, Suss said the crossover proposal is a good-faith effort by the government to move to greater competition in the different sectors of the federal marketplace.Another area of concern, according to some executives, is that the GSA did not establish specific standards for evaluating crossover proposals from contractors. Instead, the agency said any contract modification would be awarded "based on the government's best interest.""The 'best interests' thing is totally subjective, subject to the discretion of GSA," said Jim Payne, senior vice president of Qwest's government services division, which holds MAA contracts in four cities. John Johnson, assistant commissioner for service development at GSA's Federal Technology Service, defended the concept of "best interests." The idea is not to simply offer more vendors with the same services at the same prices, but to add something to the mix of services and prices that will justify making another contract award, he said."In general, GSA is looking to improve the choices it can offer its customer agencies," Johnson said, "and sometimes the simple availability of a choice of vendors may itself constitute value, such as in several MAA cities where we currently have only one awardee."Tony D'Agata, vice president and general manager of Sprint's government systems division, also said the GSA did a good job of balancing the interests of government agencies and providers. The guidelines are likely to encourage agencies to consider new vendors if they are interested in new telecommunications services not included in FTS2001, rather than making wholesale changes in their providers, he said."I don't see many agencies choosing to [change] existing services," D'Agata said. "They've just gone through transition."If MAA vendors are steered toward providing new services rather than competing for existing services, this may help to ensure that the FTS2001 contractors receive the minimum revenue guarantees spelled out in the long-distance contract, Suss said. Sprint and WorldCom were promised $750 million each over the life of the eight-year contract.The General Accounting Office on July 2 released a letter to Rep. Tom Davis, R-Va., that estimated that WorldCom and Sprint will achieve their minimum revenue guarantees in fiscal years 2003 and 2004, respectively, assuming "no significant change in the demand for services from either contractor."Dave Page, vice president of the federal division at BellSouth said his company, which holds three MAA contracts, is more concerned with performing well on the contracts it holds than with winning new crossover business.The MAA program is "almost like the dog that catches the car," Page said. "We've caught the car, but who knows how to drive?"The MAA contracts have gotten bogged down in paperwork and administrative nitpicking, he said. While the crossover proposal seems sound, the risk is that it, too, will become "onerous and time consuming," Page said.One company is excited about the opportunities presented by the crossover proposal, even though it hasn't won an MAA contract yet.XO Communications Inc. of Reston, Va., is bidding on an MAA contract in Seattle that may be awarded in the next several months. Craig Johnson, the company's executive director of government and institution national sales, said the timing of the crossover proposal is ideal for XO.GSA has streamlined the qualifying process for companies bidding on MAA contracts, and the agency is preparing to end the forbearance periods barring competition in cities with existing contracts, he said."We have not had to apply for every city," Johnson said. "[We're] really getting the benefit of both the MAAs and FTS2001 because we will get the benefit of our host contract" if chosen in Seattle.Comments to GSA on the crossover proposal are due July 16. A second meeting between the agency and the industry is set for Aug. 3, with the final crossover procedure to be unveiled two weeks later.