FTS 2000

Pursuant to a congressional request, GAO assessed the effectiveness of General Services Administration (GSA) efforts to obtain competitive rates for telecommunications services under the Federal Telecommunications System (FTS) 2000 contracts.

GAO found that: (1) the government will continue to pay more than commercial prices for FTS 2000 services until the next fiscal year, unless prices are reduced; (2) FTS 2000 prices will exceed commercial rates for switched-voice service by $148 million over fiscal year (FY) 1991 and FY 1992; (3) prices for data services were significantly higher than commercially available prices and will make up about 20 percent of the vendors' FTS 2000 revenue in FY 1992; (4) FTS 2000 requires the vendors to provide a number of unique services that are beyond typical commercial services, but GSA cannot presently quantify the incremental effect of these additional services on FTS 2000 prices; (5) GSA notified both vendors that they were exceeding the mandated price caps and has had some success in getting FTS 2000 switched-voice prices reduced; (6) GSA has been negotiating with both vendors to obtain agreement on a price-cap index for nonswitched-voice services and both vendors have either offered or agreed to provide discounts on certain data transmission services; and (7) GSA plans to issue a draft price redetermination and service reallocation solicitation to the two vendors for their review and comment, and expects the price redetermination process to be completed by December 1992.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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