Industry reacts with mixed reviews to FTS 2001 RFP

Vendors attending a pre-proposal conference last week for the General Services Administration's multibillion-dollar FTS 2001 long-distance contracts privately criticized the agency's solicitation as full of government-unique requirements and skirting commercially acceptable procurement practices.

Some vendors interviewed most of whom spoke on the condition of anonymity accused GSA of issuing a request for proposals that differed substantially from the one promised during joint discussions with industry and Congress.

"GSA acted in bad faith " said a source representing a major long-distance carrier. "This is far and away nothing like what was envisioned in the points GSA laid out before the House Government Reform and Oversight Committee."

For months members of Congress pressured GSA to revise its FTS 2001 RFP originally scheduled for release last fall because they feared it would not allow the highest degree of competition. When the revised RFP was finally released last month FTS commissioner Bob Woods told the oversight committee that "the enhancements serve broad interests."

William Cunnane a former FTS official and now vice president for telecommunication technology at consulting firm Wheat International Communications Reston Va. said some concerned vendors may not bid on FTS 2001 - worth an estimated $5 billion to $8 billion - if GSA does not change the solicitation. "This is not a mandatory contract so agencies don't have to use it " he said. "There are a lot of other ways for vendors to go after that business."

In an interview last week Woods acknowledged that vendors have begun to criticize the program in ways they have not done previously and he said he will keep an open mind to industry's recommendations."When you put the real RFP out you get different kinds of comments " Woods said. "There seems to be more conversation about what constitutes commercial practice.... If there are things that need to be changed we will change them."

Long-distance vendors are particularly angry about a requirement that they provide GSA with lists of their 10 best customers using services comparable with those that will be available through FTS 2000. GSA will use the lists to contact the customers to determine how much the vendors charge them. The vendor would then be required to offer the government a 5 percent discount off the best rates charged to those customers. If a vendor refused to provide the list GSA would penalize them $40 000 a day until they comply.

Industry sources said the requirement extends far beyond anything requested in commercial solicitations and would represent an intrusion into the businesses of their nonfederal customers. It also could lead to those customers demanding the lower government rates.

"They seem to have forgotten what the laws are in this country " said an executive with a major carrier. "The government doesn't have any right to look at the books of any large commercial institution unless they are investigating some sort of wrongdoing."

Vendors also questioned GSA's decision to prohibit volume discounts in their proposals. Cunnane said the requirement will make it difficult for service providers to come up with fair pricing because carriers cannot accurately estimate how much agencies will use the nonmandatory contract.

"My concern is that it seems like the contractors will incur all of the risk " he said. "They will have to bid low enough to ensure they win and get a higher volume of traffic but also bid high enough in case higher volumes are not reached. It could produce inflated prices."

Harold Green a Treasury Department employee who headed the group that developed the FTS 2001 requirements said it will not be necessary for vendors to include volume discounts in their pricing because the network traffic will be so great that volume discounts will become meaningless. He noted that Sprint charges roughly the same as AT&T does for FTS 2000 service even though Sprint handles about one-third of the volume of AT&T's portion of the network.

Woods defended the decision to have vendors bid flat rates asserting that "the minimum-revenue guarantees are at a level that should assure very good rates without this kind of gaming on pricing."Long-distance carriers also criticized other aspects of the RFP including what they viewed as overly stringent requirements for billing network management and electronic commerce.

Woods did not dismiss these comments but said innovative services should be available to the government because of the potentially huge amount of traffic it could give vendors. "We're going to do things that are reflective of a customer of our size " he said. "We're listening to industry's comments but we're not going to say we're not going to do something because no commercial customers have ever done it."

Industry officials choosing to speak on the record were more restrained and expressed a willingness to work with GSA to correct deficiencies. "The RFP presents challenges and we will suggest to the government where those challenges will cost money " said Rick Slifer director of the FTS 2000 program at MCI. "We trust that GSA through this process will adapt the RFP to what is truly commercial service."

John Doherty vice president of FTS 2000 and civilian markets at AT&T Government Markets said he hopes to work with GSA to amend the solicitation to reflect the policy stated to industry and Congress. "[GSA officials] have said they would procure commercial services like industry does and that is not the case " he said. "A lot of work needs to be done to get to GSA's stated policy."

Barbara Connor president of Bell Atlantic Federal Systems said her company also was concerned about some of the provisions and terms of the RFP. "We hope that the government carefully reviews industry's comments and changes the requirements accordingly " she said.

A Sprint spokesman said company officials would not discuss the RFP publicly.

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