Summary: Pursuant to a congressional request, GAO assessed the effectiveness of General Services Administration (GSA) efforts to obtain competitive rates for telecommunications services under the Federal Telecommunications System (FTS) 2000 contracts.
GAO found that: (1) the government will continue to pay more than commercial prices for FTS 2000 services until the next fiscal year, unless prices are reduced; (2) FTS 2000 prices will exceed commercial rates for switched-voice service by $148 million over fiscal year (FY) 1991 and FY 1992; (3) prices for data services were significantly higher than commercially available prices and will make up about 20 percent of the vendors' FTS 2000 revenue in FY 1992; (4) FTS 2000 requires the vendors to provide a number of unique services that are beyond typical commercial services, but GSA cannot presently quantify the incremental effect of these additional services on FTS 2000 prices; (5) GSA notified both vendors that they were exceeding the mandated price caps and has had some success in getting FTS 2000 switched-voice prices reduced; (6) GSA has been negotiating with both vendors to obtain agreement on a price-cap index for nonswitched-voice services and both vendors have either offered or agreed to provide discounts on certain data transmission services; and (7) GSA plans to issue a draft price redetermination and service reallocation solicitation to the two vendors for their review and comment, and expects the price redetermination process to be completed by December 1992.
