Telecommunications

Pursuant to a congressional request, GAO reviewed the General Services Administration's (GSA) management of the Federal Telecommunications System (FTS) 2000 contracts, focusing on: (1) whether GSA justified its reassignment of Navy traffic to another vendor; (2) the impact of the reassignment on the revenue allocation between the vendors; and (3) the adequacy of GSA enforcement of the statute requiring federal agencies to use FTS 2000 services unless they have unique requirements that cannot be met under the two contracts.

GAO found that: (1) although reassigning Navy traffic to another vendor resulted in price reductions worth nearly $43 million, GSA concessions to the awardee, including relief from refunding the government for possible overcharging during the initial contract period, were costly and disruptive; (2) the reassignment will not result in the specified 60/40 revenue split for fiscal year (FY) 1992 and GSA cannot justify the reassignment, since it did not use reliable data in its FY 1992 revenue estimates; (3) the large, unanticipated price difference between the two vendors made it difficult for GSA to achieve the intended revenue split and created the need for price levelling; (4) GSA complied with the laws and regulations in granting and denying exceptions to the FTS 2000 requirement and rescinded blanket exceptions it granted after determining that FTS 2000 might meet agency requirements; and (5) a number of federal agencies expressed concern that complying with the mandatory-use requirement may cost them more than if they acquired services from another source.