Transition delays plague local phone contracts

Uncle Sam's new contract for local phone services may not save as much money as was projected due to repeated transition delays, Rep. Tom Davis, R-Va., said Wednesday. The General Services Administration has estimated that the contract, known as the Metropolitan Area Acquisition (MAA) program, would save the government $1.1 billion over eight years. But at a Wednesday hearing of the House Government Reform Subcommittee on Technology and Procurement Policy, Sandy Bates, commissioner of GSA's Federal Technology Service, would not stand by that figure. "I'll have to get back to you on that," she said when asked by Davis if the savings estimate was still valid. In later questioning, Bates estimated that the government currently saves $1 million a month from the program, which was designed to foster competition in the local telecommunications marketplace by giving federal agencies a choice of service providers. But delays in the transition to the MAA program will likely reduce the government's overall savings, said Davis. "This [$1.1 billion] figure does not account for transition delays or additional charges agencies may face in new equipment costs or up-front cutover fees," said Davis. While GSA has awarded 37 MAA contracts in 20 cities, the agency has missed its transition deadline in all but two cities to date. The MAA program has been delayed by a variety of problems associated with the deregulation of the local phone service market, according to Bates. For example, contractors who receive awards under the program often lack facilities in a city. GSA has had to negotiate with current phone providers to sell their facilities to the MAA vendor. Two agency MAA customers praised the program. Robert Day, a Coast Guard commander, said his agency is saving approximately $150,000 a year from the MAA contract in New York. Louis Defalaise, acting director of the Executive Office for United States Attorneys at the Justice Department, praised GSA's management of the program and said the office has achieved a 65 percent cost savings at one location in New York. Defalaise called on GSA to provide savings estimates to agencies that would illustrate the benefits of the MAA program. "It would be beneficial if GSA would prepare cost comparisons up-front to demonstrate the level of savings that the MAA program could provide a particular office for equivalent or improved services," he said. "This simple step…would reduce the amount of time needed to make a decision [to join the MAA program]." Vendors said the contract management fees GSA charges to user agencies in MAA cities are exorbitant. As a fee-for-service organization, FTS charges agencies fees ranging from 9.5 percent to 60 percent, depending on the city. "GSA must adopt a more balanced management structure for FTS, starting with the same management fee, not to exceed 8 percent," urged James Payne, senior vice president of Qwest Communications International. Linda Koontz, director of information management issues at the General Accounting Office, called on GSA to make its management fees transparent to agencies before they enter into MAA contracts. "Because GSA does not disclose fee information to its customers, they cannot make such fully informed decisions," she said. To date, MAA contracts have been awarded in New York, Chicago, San Francisco, Buffalo, Cincinnati, Cleveland, Los Angeles, Baltimore, Atlanta, Miami, Indianapolis, St. Louis, Minneapolis, Dallas, Denver, Boston, Albuquerque, Boise and New Orleans. A contract for the Washington has been awarded separately.