Agencies select telecom providers under new pact

Federal agencies are quickly selecting long-distance telecommunications providers under the new FTS 2001 contract, as Sprint, MCI WorldCom and AT&T battle for their business.

This winter, the General Services Administration chose MCI WorldCom and Sprint for the long-awaited FTS 2001 contracts, which could bring the government's long-distance costs to under one cent per minute in the next eight years. Agencies have been quickly moving from the old FTS 2000 telecommunications contracts to start taking advantage of FTS 2001's cost savings.

On Tuesday, the Agriculture Department selected MCI WorldCom as its voice, data and Internet provider. USDA spends $40 million a year on telecommunications with AT&T under the FTS 2000 contract. MCI WorldCom estimates that the Agriculture contract is potentially worth more than $150 million over eight years. Agriculture estimates that it will save at least 25 percent a year in telecommunications costs under the new contract.

MCI WorldCom has also won the Defense and Interior departments' business, said Jerry Edgerton, MCI WorldCom senior vice president of government markets.

Sprint spokesman James Fisher said that under FTS 2001, his company has also won the awards of three agencies: Veterans Affairs, Treasury and the Agency for International Development.

AT&T and Sprint held contracts under FTS 2000, which expires this year. The FTS 2001 contracts will run for the next eight years. While the FTS 2000 contract was mandatory for all agencies, agencies are not required to do business with the companies selected under FTS 2001. That means AT&T can compete for federal business even though it didn't win an FTS 2001 contract.

An AT&T spokesperson said the company has won long-distance business from NASA, the Postal Service and the Defense Department in the last several weeks. "We will continue to pursue federal business. AT&T is very committed to the government marketplace," the spokesperson said.

In addition to the lower negotiated calling rates under FTS 2001, agencies have another incentive to quickly move out of FTS 2000. Agencies' FTS 2000 rates are determined partly by the volume of calls. As some large agencies move to the new program, rates for the remaining ones may rise noticeably.