QUESTIONS LINGER ON HOW GSA WILL OPEN COMPETITION ON MAA, FTS
Less than 2 weeks before General Services Administration (GSA) is set to open cross-competition between Metropolitan Area Acquisition (MAA) and FTS 2001 long distance programs, carriers want GSA to put in place safeguards for competition. Several IXCs and Bell companies asked GSA Fri. how past performance of vendors would be factored into agency decisions to let MAA contractors compete for federal long distance business, and vice versa. WorldCom Dir.-FTS 2001 Programs Rick Slifer urged GSA not to allow holders of MAA local service contracts to vie for long distance business unless they could provide “ubiquitous” national service. Move effectively would shut RBOCs holding MAA contracts out of FTS 2001 long distance market until they received Sec. 271 approval in each state in-region. Taking different tack, Qwest Contracts Dir. Audrey Hallett told GSA that minimum revenue guarantees for Sprint and WorldCom on $1.5 billion FTS 2001 contracts continued to stymie competition.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
GSA Federal Technology Service Comr. Sandra Bates reiterated agency’s plan to open FTS 2001 program to crossover competition from MAA vendors Aug. 17. Guidance for opening of FTS to competition and similar opening of competition in more MAA markets will be posted on GSA Web site at that time. “We want to make this the most streamlined program that we can,” Bates said. Federal telecom contracts are structured so that existing MAA or FTS 2001 contractor that has received contract modification can provide local telecom services in another area or market FTS 2001 long distance offerings. “There are no predetermined minds,” Bates said. “Some of the questions that have been asked are hard. Be assured that we are listening to you.” GSA has awarded more than $4 billion in 37 MAA contracts to AT&T, BellSouth, Qwest, SBC, Verizon, Winstar, others.
GSA has received 26 questions from IXCs and LECs since meeting of Industry Advisory Council late last month on crossover issues. Companies asked GSA how past performance on existing contracts would be considered and how GSA would ensure each contractor complied with regulatory requirements. Vendors also have cited GSA plan to evaluate contract modifications by taking into account whether crossover proposal was in “the best interests of the government.” In recent document outlining GSA answers to pending questions, agency said that “best interests” included factors such as competitive prices, choices provided to federal agencies of alternative carriers and services, “innovative and emerging technologies.” GSA said other value-added services that would be considered included “wireless service in southern border states, service for MAA single award cities and additional international service to countries not presently served by FTS 2001.”
WorldCom’s Slifer urged GSA to consider “stringent evaluation criteria” for crossover program. He said GSA hadn’t defined what it considered to be “best interest of the government.” Criteria applied to crossover applicants should be similar to factors used to assess FTS 2001 contractor performance, he said. “Do not reward mediocre performance on MAA with a long distance contract,” he said. (Delays in MAA implementation in cities where contracts already have been awarded came up at House Govt. Affairs subcommittee hearing in June). Slifer urged that MAA contractors that offered long distance services to FTS customers be held to “geographic ubiquity.” He said FTS 2001 providers must offer all services throughout continental U.S. “Any deviation from this position will undermine the program through geographic cream- skimming or cherry-picking,” Slifer said. He contended that if MAA contractors could be selective about which long distance markets they entered, vendors would target only most lucrative areas.
Slifer said Telecom Act barred Bell companies from entering long distance in given states until they had proved that market was open to competitors. To extent GSA didn’t require geographic ubiquity of MAA contractors, it should draw line between territory of MAA contractor and FTS 2001 services it was allowed to offer, he said. In other words, MAA contractor interested in offering long distance should be required to offer FTS service to existing customers “that originates and terminates in the MAA territory,” he said.
“We remain skeptical that the strategy on its present course will achieve its goal of maximizing competition,” said Qwest’s Hallett. While lauding GSA efforts to open telecom contracts to cross-vendor competition, she said agency “must revisit certain elements.” FTS 2001 vendors have incentive of minimum revenue guarantees (MRGs) of $1.5 billion, which they are expected to reach in 2004, she said. Hallett questioned how parity would be achieved among all competitors for FTS work if MRGs remained in place for incumbents. She said existing MRGs could stymie competition among new competitors for long distance business. “If GSA’s goal is to spark competition between holders of MAA and FTS 2001 contracts, what additional incentives are being offered now with no MRGs [for new participants], constricting revenue potential and shrinking addressable markets?” she asked. Qwest in particular asked how GSA would: (1) Adopt structure that would reduce management fees. (2) Deliver meaningful schedule to award long distance modifications under MAAs. (3) Establish appeals process for dismissed proposals.