FTS 2000

The General Services Administration (GSA) followed a well-defined, appropriate process for conducting the FTS 2000 Price Redetermination/Service Reallocation. It consistently followed its source selection plan, which GAO reviewed earlier and found acceptable. GSA also used appropriate methodologies to develop data used to perform its analysis during the Price Redetermination/Service Reallocation process. As a result, GSA made a reasonable decision in maintaining the current 60-40 percentage revenue split between the two FTS 2000 vendors. This decision had a major impact on FTS 2000 prices, which will fall by about $450 million during the final six years of the contracts. Further, these new prices were generally below the lowest known commercial rates at the time of the Price Redetermination/Service Reallocation. In addition, to ensure that FTS 2000 prices remain competitive with commercial prices, GSA recently negotiated with both vendors new publicly available price caps covering all services. These agreements appear reasonable and should ensure that the government pays competitive rates during the second term of the contracts.

GAO found that: (1) the GSA approach to conducting PR/SR was appropriate and reasonable; (2) GSA developed government transitions costs from estimates submitted by the agencies comprising the majority of FTS 2000 traffic; (3) GSA determined that the vendors' prices were fair and reasonable after conducting tests to determine the characteristics of the vendors' bids; (4) proposed FTS 2000 prices were generally below the lowest known commercial prices; (5) GSA believes that the new Publicly Available Price Cap agreement will ensure that FTS 2000 prices remain competitive with commercial levels until the next PR/SR; and (6) GSA determined that awarding 100 percent of the FTS 2000 business to one vendor was not advantageous for the government.