Tuesday January 12, 1999
GSA Awards MCI WorldCom Final Round of FTS2001 Long-Distance Telecommunications Service Contracts
GSA Negotiates Lowest Ever Market Prices; Projects Price Reduction of
More than 65 Percent and Total Savings to Exceed $4 Billion Over Today's Prices



GSA #9551
Contact: Bill Bearden (202) 501-1231
bill.bearden@gsa.gov

Washington, DC -- The U.S. General Services Administration today selected MCI WorldCom to provide long-distance telephone, data and video telecommunications services to Federal government agencies worldwide in the second and final round of its multi-billion dollar FTS2001 competition.

Sprint was selected in the first round in late December. Both Sprint and MCI WorldCom will share equally a total minimum revenue guarantee of $1.5 billion -- $750 million each -- in federal telecommunications business, and both companies will compete head-to-head for business over the life of the contract. The estimated value of government business under FTS2001 is more than $5 billion over the eight-year contract.

Through GSA negotiations over the past 10 years, telecommunications services have gone from a national average of 27 cents per minute in 1988 to 5.5 cents per minute under FTS2000. Under FTS2001, prices start at about 4 cents per minute and drop to less than 1-cent per minute by the end of the contract.

These contracts follow the two successful FTS2000 contracts currently held by AT&T and Sprint, which began in 1988, and retain some of its key features, especially the aggressive price competition. During the past ten years FTS2000 has continually reduced prices saving taxpayers billions of dollars.

"This has been an extremely hard fought competition," said GSA Administrator David J. Barram. "In this final round GSA has gained even further remarkable savings over those achieved in the first round. We are very pleased with the overall results of the FTS2001 competition. This is a good example of how we are using real market competition to help forge a path to inexpensive electronic government in the next millennium."

Barram said that this acquisition completes a key component of the new full-service GSA. "During the last several years we've restructured GSA to provide better products and services to our customers at lower and lower costs," he said. "We will continue to invest in high technology to provide the federal workforce with the most economical, state-of-the-art tools they need to accomplish their mission. We look forward to even stronger partnerships with American industry as they lead the way with products and services for our customers -- products that we will buy using aggressive competition."

"In December, I reported that we had achieved the lowest prices anyone has ever seen for telecommunications services," said Dennis Fischer, Commissioner of the Federal Technology Service, the organization responsible for conducting the competition. "We just beat those prices with this final round of competition and we can now project a price reduction of more than 65 percent and total savings in excess of $4 billion over today's current prices. This is indeed a banner day for the taxpayer, because their government continues to find ways to be more accessible to them, to work better for them, and best of all, to cost less."

FTS2001 Program Features

Following are highlights of what FTS2001 customers can expect to receive under the new long-distance contracts:

* Comprehensive range of service offerings
* Long distance, toll-free, and 900 voice services
* Internet and intranet based services
* Data communications services from low-speed to very high-speed interconnections using latest technologies
like Asynchronous Transfer Mode (ATM) and Frame Relay
* Dedicated services from low-speed to high-speed circuits
* Special arrangements for mission-critical users (e.g., high-availability circuits, national security and
emergency users)
* International services
* Wide range of support services, including state-of-the art ordering, billing, network troubleshooting, and
repair capabilities
* Continuous competition between Sprint and MCI WorldCom designed to allow agencies to act as
"smart shoppers" in a commercial-like marketplace
* Price management mechanism to ensure continued competitive pricing and prevent a disparity if industry
prices drop below governments
* Government customers on par with commercial customers - government gets access to new services at
same pace as commercial marketplace
* No up-front payments
* No government investment

In expressing his enthusiasm for the FTS2001 award, Ron Hack said, "We knew we did well after the first round, but this second round further strengthens the telecommunications prospects for Federal telecommunications users." Hack, who is Telecommunications Director at the Department of Commerce and chair of the agency advisory group for FTS2000 known as the Interagency Management Council added, "We have two very robust competitors vying for our business in a competitive Federal market. The agencies are well served by this outcome. We could not have hoped for a better result. This is a great success for the agency customers of FTS2001 and for the American taxpayers."

The FTS2001 acquisition ends a five-year process involving many organizations - Congress, oversight organizations, industry, Federal customers, and GSA - that have collaborated in various ways. Many discussions were held with congressional and industry leaders, which prompted adjustments to the approach to reflect the Telecommunications Act of 1996 by encouraging end-to-end competition, not just long-distance; enhanced the competition strategy; raised the revenue guarantees from $1.0 billion to $1.5 billion; and limited the number of available awards to two.

As part of the strategy and as a way of establishing competition for local services, GSA is also conducting telecommunications acquisitions in major metropolitan areas across the country. These acquisitions, known as the Metropolitan Area Acquisitions (MAAs), are scheduled to begin rolling out in early 1999 and will help GSA realize the ultimate goal of establishing end-to-end competitive telecommunications services delivery to its customer agencies.

Administrator Barram praised the leadership of Bruce Brignull, Al Olson and the entire FTS2001 acquisition team for actively pursuing all competitive possibilities leading to a full competitive services acquisition that resulted in the lowest rates available in the market.

"Through these procurements, GSA has positioned itself to become the provider of choice for full-service, low-cost, long-distance telecommunications services to our customers," Barram said. "GSA's efforts will save these agencies and ultimately the American taxpayer billion of dollars over what they are spending today and this is in addition to the savings they have realized over the past decade."

Additional information may be found on the Internet at http://www.gsa.gov and http://post.fts2k.gsa.gov.

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