Sprint seeks $2M in FTS 2000 charges

Sprint last week filed a complaint with the General Services Administration's Board of Contract Appeals (GSBCA) charging that GSA's Federal Technology Service owes the company about $2 million in withheld fees that had been billed to users of the FTS 2000 long-distance network.

In addition, sources said it appears that AT&T, which holds a substantially larger piece of the FTS 2000 network, plans to pursue a similar action, possibly in the U.S. Court of Federal Claims. The company has billed agencies that use the network about $14 million -- money that GSA has collected from agencies but not paid to AT&T.

FTS 2000 vendors Sprint and AT&T have been charging agencies a 4.9 percent universal service charge since January -- a move that has annoyed some users who did not expect the charges. The Telecommunications Reform Act of 1996 allows vendors to charge the fees to meet a requirement to raise funds for providing advanced networking services to schools, libraries and rural areas.

Dennis Fischer, FTS' commissioner, said his organization has held the disputed funds in escrow since the beginning of the year and will continue to do so until the issue is resolved. He said GSA's stance that the vendors are not entitled to the money will remain unchanged when it argues the case before the GSBCA.

"Our position will be that [users of] our contracts are not subject to having to pay for this," Fischer said.

George Affe, general attorney at Sprint's Government Systems Division, said previous cases have contradicted GSA's stance that vendors cannot pass universal service charges on to users of fixed-priced contracts. He said the charges are tantamount to a tax charged to telecom carriers, and taxes can legitimately be added to fixed-price contracts.

Affe added that other agencies, including the Defense Department, have agreed to pay the charges. "GSA is the only agency in the federal government that we have a contract with that has not paid the invoice," he said.

Fischer said GSA does not consider the charges a tax, so the agency has no obligation to pay. He contended that GSA's position on the issue does not differ markedly from that of DOD. "We did some pretty extensive work in coming to our position, including a lot of work with the Defense Department," Fischer said. "My understanding is that they have paid in anticipation of doing some sort of recovery later [when the issue is resolved]."

Air Force Lt. Col. Milo Fogle, deputy director of plans and procedures at the Defense Information Systems Agency's Defense Information Technology Contracting Organization (DITCO), wrote to Sprint in May that his organization still had not determined whether the charges were appropriate but would pay them "under protest."

"DITCO reserves the right to recoup all or any such charges paid," Fogle wrote.

An AT&T spokeswoman said company officials are evaluating their options and have not yet determined how they will seek to recover the charges.

But Sprint's Affe said he expects AT&T to file a similar complaint, mostly likely in court. "I have talked to them, and they say they will file," Affe said.

Likewise, Fischer said he expects AT&T to take some type of legal action. "Whichever venue they pick, we will be there with the same position that we have with Sprint," he said.


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