The General Services Administration, under pressure from the House Government Operations Committee, agreed yesterday to suspend the assignment of the Navy to US Sprint's FTS 2000 government phone network pending further review.
At the same time, GSA agreed to appoint an assistant administrator for FTS 2000 who will have responsibility for managing the FTS 2000 program. The new assistant administrator, who has not been named, will have authority to decide the fate of the Navy assignment to Sprint's network.
"We now have the opportunity for the largest civilian contract ever let to become a model of success, rather than the chaos it has been until now," Representative John Conyers Jr., D-Mich., the committee chairman, said in a written statement to announce the agreement.
The capitulation of GSA comes on the heels of steady pressure by Mr. Conyers' committee, which has oversight authority over GSA, to re-evaluate its approach to handling the massive FTS 2000 contract. Valued at $25 billion, the FTS contract is the largest non-defense contract ever awarded by the federal government.
The contract to build the government's FTS 2000 phone network was awarded to American Telephone & Telegraph Co. and Sprint in a 60-40 split in late 1988. Under the contract, each company is responsible for building its own FTS network. Federal agencies are then assigned to one of the two networks.
Questions concerning GSA's handling of the contract began to arise within months after the contract was awarded. At issue was whether GSA was favoring AT&T over Sprint, and whether the agency was committed to adhering to the 60-40 revenue split promised the two vendors by the contract. That criticism peaked earlier this year when AT&T learned GSA had assigned the Navy to use Sprint. AT&T claimed at the time that GSA had already given Sprint too much business. Under the contract, AT&T is supposed to get a 60 percent share of FTS business, and Sprint is supposed to get the remaining 40 percent. But AT&T claimed GSA's mismanagement had actually caused those shares to flip-flop.
According to AT&T, that lapse is costing millions in overcharges because Sprint's FTS prices, in some instances, are higher than those offered by AT&T.
Hopes that yesterday's announcement would lead to a temporary cease-fire in the ongoing battle surrounding FTS 2000 were quickly --ed by Sprint, which immediately vowed to "fight to keep" the Navy assignment. A Sprint spokeswoman said Sprint is currently in the process of converting Navy traffic onto Sprint's FTS 2000 network. The suspension will bring that transition to a halt.
AT&T, meanwhile, said it "applauded" yesterday's developments. "We are encouraged by the positive steps now being taken to get the FTS 2000 contract back on course," said Jim McGann, an AT&T spokesman.
At a public hearing last month before Mr. Conyers' panel, the General Accounting Office said Sprint had already overcharged the government by more than $1.5 million.
At that hearing, Mr. Conyers strongly urged GSA to reconsider its management approach to FTS 2000.
GSA's administrator, Richard Austin, has argued that AT&T's own marketing ineptitude, and not any action by GSA, had caused it to lag behind Sprint.