Federal pact questioned as Sprint outpaces AT&T

February 06, 1991|By Leslie Cauley

A trio of congressmen say they are concerned that US Sprint, not American Telephone & Telegraph Co., is emerging as the financial winner in the government's FTS 2000 telecommunications project.

The lawmakers indicated that they might push for public hearings later this year if concerns about the General Services Administration's handling of the $25 billion telecommunications contract aren't resolved soon.

The FTS 2000 contract, aimed at overhauling the federal phone network, was awarded to AT&T and US Sprint in a 60-40 split in 1988, with AT&T having the majority.

In a letter to GSA Administrator Richard Austin last week, the congressmen -- House Government Operations Committee Chairman John Conyers Jr., D-Mich.; the committee's ranking minority member, Representative Frank Horton, R-N.Y.; and Judiciary Committee Chairman Jack Brooks, D-Texas -- said they are concerned that GSA might not be handling the contract fairly.

"Committee staff will follow FTS 2000 closely to keep us advised on whether hearings should be held to review GSA's management of the program," the congressmen wrote.

"We will continue to be in contact with you to discuss management of this important program," the letter added.

The contract gives the companies a near-monopoly on the federal phone market until 1998. Until then, AT&T and Sprint have carte blanche to sell voice, data and video services to agencies assigned to their networks.

Under the 60-40 split, AT&T's take from the contract was estimated to be worth about $15 billion over the life of the contract, while Sprint's was estimated to be in the $10 billion range.

But two years into the contract, things apparently aren't working out that way.

According to the letter, Sprint has thus far received about 53 percent of FTS revenues, while AT&T's share has been about 47 percent.

The cause of that differential is the subject of heated debate among the vendors.

AT&T claims GSA is unfairly favoring Sprint, while Sprint claims AT&T hasn't marketed its services to the government aggressively enough.

"Although we recognize that aggressive marketing could be a factor, it is difficult to understand how it could explain entirely such a large differential," the three congressmen wrote.

The congressmen said they were also concerned about a GSA pricing scheme aimed at equalizing the prices of the two vendors so that agencies receive consistent prices. AT&T claims the formula favors Sprint.

In November, Mr. Conyers asked the General Accounting Office to review a variety of issues related to GSA's implementation of the FTS 2000 contract. At the time, Mr. Conyers said he was concerned that GSA might not be enforcing rules that require agencies to use FTS 2000 services.

He also asked GAO to check to see if the 60-40 split was being observed by GSA, and if GSA's 10 percent overhead fee for FTS 2000 was "equitable."

GAO's review is expected to be concluded this spring.

The FTS 2000 contract, which won't expire until 1998, will be examined next year to determine if the 60-40 assignments for AT&T and Sprint should be changed.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.