The General Services Administration on Friday awarded Sprint the first of two contracts under the $5 billion FTS 2001 program, a move likely to reduce prices and shift many agencies to new providers. Dennis Fischer, commissioner of GSA's Federal Technology Service (FTS), said he expects the new Spr
The General Services Administration on Friday awarded Sprint the first of two contracts under the $5 billion FTS 2001 program, a move likely to reduce prices and shift many agencies to new providers.
Dennis Fischer, commissioner of GSA's Federal Technology Service (FTS), said he expects the new Sprint prices to save about 60 percent beyond what federal users are paying now under FTS 2000. "We get great prices already, and when you see an aggregate 60 percent discount, this is a great deal for the American taxpayer," he said.
Fischer said the low pricing should ensure that GSA maintains its customer base, despite the fact that FTS 2001, unlike its predecessor, will not be a mandatory contract for federal agencies. Additionally, FTS 2001 users will have much faster access to new services and features than was possible under FTS 2000, the agency said.
GSA will award a second contract by mid-January, Fischer said. Both contracts carry a minimum revenue guarantee of $750 million. Sprint, along with AT&T, was an incumbent on FTS 2000. Sources said Sprint beat out AT&T and MCI for the first FTS 2001 contract.
Fischer said FTS 2001 also calls for a much broader range of services than its predecessor. When new services and features are rolled out into the marketplace, FTS 2001 users will have access to those services as well. Previously, there was a somewhat drawn-out process in getting new services added.
Jim Payne, Sprint's assistant vice president for FTS 2001, said the new contract represents a radical change for federal agencies that use FTS 2000. "This is an advanced [Asynchronous Transfer Mode] service, while the original contract was for voice with data added," Payne said. "FTS 2001 recognizes that data and voice are each part of a series of bit streams.''
FTS 2001 also offers a dramatically different approach from a contracting perspective, Payne said. The old pact artificially divided agencies between Sprint and AT&T, which in Payne's view limited Sprint's ability to compete on a service and cost basis for agencies' business. "FTS 2001 is an ideal situation because it brings the best elements of capitalism to the government market, with no artificial barriers to competition,'' he said.
Payne said Sprint will submit a proposal in the second round of bids in an attempt to put a lock on its share of the market.
Industry analysts and sources called GSA's selection of Sprint as the Round One winner a real setback for AT&T, which handles 76 percent of the traffic on FTS 2000. An industry executive intimately familiar with AT&T Government Markets called the Sprint award "absolutely devastating to AT&T.''
Former FTS Commissioner Bob Woods, now president of Federal Sources Inc., said, "AT&T is obviously going to lose business" as a result of the award to Sprint.
"[AT&T] currently holds between 75 and 80 percent of the market, and the Sprint award amounts to roughly 50 percent of the business,'' Woods said. But he quickly noted that AT&T still has a chance to win Round Two.
John Doherty, AT&T's vice president of FTS 2000 and civilian markets, refused to comment on the award to Sprint or whether AT&T would bid in the second round. "We're right in the middle of a competition, and I will not discuss AT&T's intentions in the press," Doherty said.
An MCI WorldCom spokes-man said in a statement that his company plans to "aggressively pursue the second half" of the FTS 2001 awards.
Sandy Bates, deputy commissioner at FTS, said FTS expects to begin the transition to the new contract this spring. She added that Environmental Protection Agency officials and representatives from other agencies already have expressed interest in switching to FTS 2001 as soon as possible.
GSA earlier this month awarded to AT&T and Sprint bridge contracts extending FTS 2000 for up to two years to ensure that agencies have access to FTS 2000 service until they move to the new contracts.
Fischer said the award was a best-value selection based on price and on Sprint's superior technical approach, the strength of its team, its billing system and other considerations.
Al Olson, assistant commissioner for acquisition at FTS, said his office will give the second-round bidders a "bottom-line figure" on Sprint's pricing to help ensure that prices are bid at a lower rate than in the first round.
GSA has not yet determined the overhead fee for FTS 2001. Fischer said he hopes the fee will be lower than the 8 percent charge on FTS 2000.
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