DEFENSE DIVISION a7 B-146864 FE5 18 1971 The Honorable The Secretary of Defense Attention: Assistant to the Secretary of Defense (Telecommunications) Dear Mr. Secretary: We are examining into savings - possible through the use of the Federal .T.e.lecommunLcati~~~~_~~~~~e;li“iF~~~j'.“i~~~~~hone e net- ,IWIw,I-*U-,., [ wor'k by -Department of Defense (DOD)installati?%. Our r-e- ?""- view is to determine whether increased use of FTS by DOD would reduce Government telecommunications costs. This let- ter presents the results of our review to date. We request your comments on our findings and your answers to certain questions concerning DOD communications policy, as we inter- pret it. COMPARISON OF AUTOVON AND FTS SERVICE The Automatic Voice Network (AUTOVON) is the principal long-distance voice communications network of DOD. It is de- signed to handle essential command operations, intelligence, logistics, and administrative traffic. It offers special technical features, such as alternate routing for increased survivability and multilevel precedence service for priority- call override of other calls. Because AUTOVON is designed to serve DOD activities, service over the system is usually con- fined to traffic between locations of these activities. Com- pletion of AUTOVON calls to nonsubscribers, off-network, is permitted; but, since AUTOVON is limited to the local-dialing areas of existing AUTOVON switchboards, many locations can- not be reached. As a result we find that commercial long- distance facilities provide the only means of reaching many locations called by DOD activities. The FTS telephone network, which is managed by the Gen- 'T‘! era1 Services Administration (GSA), serves executive agen- 17 5 ties and departments, including DOD. 50TH ANNIVERSARY 1921- 1971 B-146864 provide direct dial access to system subscribers and also off-network completion to those locations not served by the network. FTS subscribers are able to reach most telephones in the continental United States, Hawaii, and Puerto Rico through. the FTS network. CURRENTDOD POLICY Current DOD policy concerning the use of FTS service by DOD installations, as promulgated by an August 6, 1964, mem- orandum from the Deputy Secretary of Defense, states that, 1 where AUTOVONservice adequately satisfies the requirements of a DOD installation, such service will not be duplicated by the addition of FTS service. The memorandum states fur- ther that, where it is economical and feasible to do so, FTS service may be used in lieu of AUTOVON, but in no case will DOD installations become subscribers to both systems without approval from the Assistant Secretary of Defense (Installa- tions and Logistics). We understand that this approval au- thority has recently been transferred to the Assistant to the Secretary of Defense (Telecommunications). In our opinion, the above policy emphasizes the use of either FTS or AUTOVONand discourages concurrent use. In re- ality, many DOD installations have divided communities of in- terest and cannot be adequately served by one system alone. AUTOVONdoes not offer the latitude of off-network completion that is required to communicate with commercial concerns and other telephone subscribers outside the DOD community, and FTS does not offer the precedence, survivability features, and overseas capability that are required for effective com- mand and control. We have been told by an official from the Office of the Assistant to the Secretary of Defense (Telecommunications) that, although current DOD policy permits concurrent use of AUTOVONand FTS, very few requests have been received--appar- ently because of the reluctance of the military departments to forward them. We believe that this reluctance is fostered by the restrictive context of current DOD policy. This be- lief is reinforced by the fact that only one of the four 2 B-146864 installations we visited had made any sustained effort to obtain FTS service. Our review revealed that, prior to the request, the one installation that requested FTS service--the San Francisco Procurement Agency of the Army Materiel Command--was using both FTS and AUTOVONservices through a GSA-operated manual switchboard. When the switchboard was converted by GSA in January 1969 to a direct in-and-out dial Centrex system, the installation was informed orally by its major command that direct access to both FTS and AUTOVONwas prohibited by DOD policy and that use of one of the systems would have to stop. Nevertheless, the agency submitted, through channels, a for- mal request for approval to retain the use of both systems, on the grounds that the loss of FTS would result in a sub- stantial increase in telephone costs. The request was approved by the installation's major command and forwarded to the Department of the Army for sub- mission to DOD. The request was denied at this level, how- ever, and returned with the following explanation, "Your request for approval *** to have access to both the AUTOVONand FTS systems was discussed in the Office of Telecommunications Policy, ASD (IGL). During discussions it became apparent that the re- quest would not be favorably considered if submit- ted." The subsequent loss of FTS service resulted in an increase in the agency's average commercial toll costs from under $100 to about $4,900 a month. SAVINGS AVAILABLE THROUGHUSE OF FTS Our review at four DOD installations, representing each of the military services, showed that the AUTOVONsystem alone did not satisfy the voice communications requirements of many DOD activities. We found that a relatively large number of of- ficial calls were being completed over commercial long-distance facilities, because the locations called could not be reached through the AUTOVONsystem. 3 B-146864 To determine whether these commercial toll calls could have been placed over the FTS at a lower cost to the Govern- ment, we examined into 100 percent of the toll calls for a 3-month period at each installation visited. Nonofficial calls and those calls not eligible for FTS (calls with a toll of 204 or less, collect calls, credit-card calls, third-party calls, calls outside of the continental United States, and message-unit calls) were eliminated. The remaining calls were considered to be FTS eligible and were used in our eco- nomic analysis. To determine the cost to the Government of providing DOD installations with sufficient trunk capacities to handle cur- rent commercial-call volume over the FTS, we used a GSA anal- ysis procedure prescribed by the Assistant Commissioner, Transportation and Communications Service. This procedure is based on the following assumptions. 1. The average FTS call requires two access facilities and one interswitch (or backbone) facility. 2. The average total cost per FTS call is $0.905 (based on GSA FY 1971 estimated costs). 3. The average overall interswitch facility costs are equal for each location studied. 4. The FTS interswitch facility cost factor is $0.30 a . call (based on GSA estimated costs). The estimated monthly recurring cost of providing FTS service at the locations reviewed was determined as follows: 1. The cost of FTS access facilities, such as the cir- cuits and termination equipment required to carry each installation's potential call volume, was computed us- ing current Public Utility Commission-approved tariff rates. 4 B-146864 2. The potential call volume was increased by 20 percent as a minimum stimulation factor to account for in- creased system usage when the commercial tolls were eliminated. 3. The estimated call volume was multiplied by the inter- switch facility cost factor to determine the inter- switch cost. 4. The .sum of the access facility and interswitch costs was used to represent the total monthly recurring first-year cost of providing FTS service. Any other rental or purchase costs incidental to the installa- tion of FTS would be paid by GSA and would be re- flected in the interswitch cost factor. (See apps. I through IV for FTS analysis work sheets.) Our review at the four DOD installations showed that, on the basis of these determinations, the projected annual call volume indicated in table I could have been placed over the FTS system at an estimated cost to the Government of only $147,000. Since present commercial services cost about $366,000, this difference represents a potential saving of about $219,000 a year, or about 60 percent. We recognize that the estimated saving of $219,000 comprises total governmental savings . GSA bills its customers at its average cost for a call whether or not the cost to service a particular customer is more or less than average. In this case, we estimated that DOD would pay about $185,680 (on the basis of 170,976 calls, times the $0.905 a call GSA billing rate, times the stimula- tion factor--1.20)) or a saving of about $180,128 annually from our projection of annual costs of about $366,000. B-146864 Table I Estimate of commercial calls which would be Estimated Savings placed over cost through FTS--per month using use of Commercial FTS- -per FTS- -per Number cost month month Presidio of San Francisco 2,255 $ 4,917 $ 1,251 $ 3,666 Mare Island Naval Shipyard 3,607 10 ,556a 3,316 7,240 San Francisco Procurement Agency 2,435 5,275 1,994 3,281 McClellan Air Force Base 5,951 9,736b 5,664 4,072 Monthly total -14.241 $30.484 $J2.22~ $ 18.2% Projected annual total 170.976 $265.808 $146.70? $_219.1,9& aIncludes charges of $4,494 for 1,730 calls via Interstate WATS (Wide Area Telephone Service), a service offered by A.T. & T. (American Telephone and Telegraph Company) which provides a special line allowing the subscriber to make unlimited calls to any location in a specific geographical zone for a flat monthly charge. bIncludes charges of $9,500 for 5,820 Interstate WATScalls. ACCESSTO FTS Discussions with GSA officials at both the Washington and the local administrative levels revealed that GSA was willing and able to handle DOD telephone traffic over FTS. GSA offi- cials said that FTS currently had facilities to handle traffic for a large number of DOD installations and anticipated that this traffic would affect, only slightly, the present total average cost a call. GSA told us that methods for providing DOD installations with access to FTS were simple and readily available. The switchboards of DOD installations would interface with FTS at the nearest FTS switching center. The interface would be provided by.means of leased feeder circuits connecting the two points; the cost would be paid by GSA. Installations currently receiving local-only telephone service from GSA switchboards would be provided with access to FTS through simple rewiring of the switchboards. 6 B-146864 CONTROLOVER UNAUTHORIZEDACCESSTO FTS We have been informed that several means of controlling unauthorized use of FTS are available. For example, admin- istrative instructions and educational programs may provide adequate control in many instances. If more control is re- quired, both mechanical and manual controls are available to restrict the unauthorized use of FTS. Mechanically, tele- phone switchboards can be wired to limit the number of tele- phone instruments that are able to dial FTS circuits. In this manner only parties with official need and prior ap- proval would be able to use FTS. For manual control, tele- phone switchboards can be wired in such a manner that the only way to obtain an FTS circuit would be through the switchboard operators. This method provides tight control over the use of FTS circuits, but it is costly in terms of operator time and switchboard efficiency. We believe that these methods are adequate for control- ling the unauthorized use of the FTS system by DOD users. AUTOVONcan continue to serve as the primary means of commu- nication between DOD activities, and FTS can provide a less expensive means, in lieu of commercial telephone service, for DOD activities to communicate with commercial organizations, civilian agencies, and other telephone subscribers. We believe that dual access to AUTOVONand FTS could re- sult in substantial reductions in commercial long-distance telephone costs at selected DOD installations. We recognize that savings would be available only at in- stallations where the community of interest extends beyond the military establishment; for example, at installations with supply- and procurement-type missions. However, with hundreds of DOD installations in the United States as poten- tial users of FTS, savings could be substantial. We recog- nize that the question of consolidating FTS and AUTOVONnet- works into a common communications system is currently under consideration by DOD as well as by other Government activi- ties. It appears to us, however, that economy through 7 B-146864 expanded use of FTS in lieu of commercial service should be effected until such time as the larger question of consoli- dating these networks has been resolved. Although current DOD policy provides approval procedures for the use of both AUTOVON and FTS at the same facility, we believe that the retention of approval authority at the DOD level, the impression conveyed by the Deputy Secretary's mem- orandum of August 6, 1964, and the informal discouragement of dual access as displayed in the San Francisco Procurement Agency!s request, deter potential users from initiating ac- tion to obtain dual access. For us to properly evaluate current DOD policy regarding the use of FTS facilities, we would appreciate your answers to each of the following questions. 1. Is the current policy intended to discourage concur- rent use by DOD activities of both AUTOVON and FTS facilities? 2. Has DOD issued any policy statement or guidelines in- structing DOD installations on the procedures to be followed in obtaining dual access to FTS and AUTOVON? 3. In view of the potential savings that exist through dual access to AUTOVON and FTS, are there disadvan- tages foreseen that would deter issuance of policy statement or guidelines encouraging such use of FTS? 4. Are the disadvantages, if any, of sufficient import and extent to invalidate the potential economies? We would appreciate receiving, within 30 days, your an- swers to the above questions and any comments or suggestions you may wish to make. Information you provide will be eval- uated along with the information we are obtaining during this review. Copies of this letter are being sent to the Director, 8 B-146864 Office of Management and Budget; the Director, Office of Telecommunications Policy, Executive Office of the President; the Administrator of General Services; and the Director, De- fense Coknunications Agency. Sincerely yours, Dire n APPENDIX I FTS ECONOMIC ANALYSIS AGENCY--Presidio of San Francisco LOCATION--San Francisco, California B Total toil less--message-unit calls m> Person-to-person calls; tolls of 20C calls--only 60% of or less; collect, this charge is FTS A credit-card, third- C eligible Toll: for party calls; and CommeI;cial 40% of month calls outside CONUS Interstate WATS Total total 1970 Calls Charges Calls Charges charge charge March and April 1,677 $ 4,869.10 $217.20 $ 86.88 April and &Y 2,352 5,093,15 - . - 333.85 133.54 May and June 2,737 5,160.25 - - 375.00 150.00 Total 6,766 $15,122.50 - - $926.02 $370.42 MONTHLY AVERAGE CALLS--&C = 6,766 f 3 - 2,255 MONTHLY AVERAGE CHARGES--B+C - (40% of D) = $14,752 f 3 = $4,917 TRTJNKREQUIREMENTS--2,255 calls at 6 minutes average holding time require 12 circuits (including provision for 20-percent stimulation factor) at grade P.02 (grade P.02 means two of every 100 calls will not be com- pleted). FTS COSTS: 1. The average number of calls a month (2,255) multiplied by a stimulation factor of 1.20 equals 2,706 projected calls. 2. Projected call volume 2,706 multiplied by backbone cost : factor of $0.30 a call equals total FTS backbone costs $ 812 3. Telephone company charges for 12 circuits, including mile- age and termination equipment costs 439 Total FTS costs $;1,,251 ESTIMATED MONTHLY SAVINGS USING FTS: Current average commercial cost $4,917 Estimated FTS cost 1,251 Estimated savings $3,666- APPENDIX II FTS ECONOMICANALYSIS AGENCY--Mare Island Naval Shipyard LOCATION--Vallejo, California B Total toil calls D less--message-unit Person-to-person calls; tolls of 2OC calls--only 60% of ,A or less; collect, this charge is FTS Tolls credit-card, third- C eligible for party calls; and Commercial 40% of month calls outside CONUS Interstate WATS Total total 1979 Calls Charges Calls Charges charge charge April 2,274 $ 6,003.05 1,817 $ 4,204.04 $182.20 $ 72.88 &Y 2,412 6,166.OO 1,522 4,916.76 146.90 58.76 June 945 6,217.25 1,851 4,359.80 167.25 66.90 Total 5,631 $18,:86.30 5,190 $13,480.60 $469.35 $198.54 K)NTHLY AVERAGECALLS--B-t-C 10,821 f 3 = 3,607 MONTHLYAVERAGECHARGES--B-K - (40% of D> = $31,668 + 3 = $10,556 TRUNK REQUIREMENTS--3,607 calls at 6 minutes average holding time require 16 circuits (including provision for 20-percent stimulation factor) at grade P.02 (grade P.02 means two of every 100 calls will not be com- pleted). FTS COSTS: 1. The average number of calls a month (3,607) multiplied by a stimula- tion factor of 1,20equals4,328 projected calls, 2. Projected call volume 4,328 multiplied by backbone cost factor of $0.30 a call equals total FTS backbone costs $ 1,298 3. Telephone company charges for 16 circuits, including mile- age and termination equipment costs 2,018 Total FTS costs $ 3,316 ESTIMATEDMONTHLYSAVINGS USING FTS: Current average commercial cost $10,556 Estimated FTS cost 3,316 Estimated savings $ 7,240 APPENDIX III FTS ECONOMICANALYSIS AGENCY--San Francisco Procurement Agency LOCATION--Oakland, California i! Total toll calls z! less--message-unit Person-to-person calls: tolls of 20C calls--only 60% of or less; collect, this charge is FTS credit-card, third- C eligible A party calls; and Commercial 40% of Toll: for calls outside CONUS Interstate WATS Total total month Calls Charges Calls Charges charge charge Nov. 1969 2,340 $ 5,508.75 - - June 1970 3,069 . 6,283.30 - July " 1,895 4,032.95 -- - - - Total 7,304 $15,825.00 ; - s - - - MONTHLYAVERAGECALLS--Bi-C 7,304 f 3 = 2,435 MONTHLYAVERAGECHARGES--BiC - (40% of D) = $15,825 + 3 = $5,275 TRUNR REQUIREMENTS--2,435 calls at 6 minutes average holding time re- quire 12 circuits (including provision for 20-percent stimulation factor) at grade P.02 (grade P'.O2 means two of every 100 calls will not be completed). FTS COSTS: 1. The average number of calls a month (2,435) multiplied by a stimulation factor of 1.20 equals 2,922 projected calls. 2. Projected call volume 2,922 multiplied by backbone cost factor of $0.30 a call equals total FTS backbone costs $ 877 3. Telephone company charges for 12 circuits, including mileage and termination equipment costs 1,117 Total FTS costs $$,994 ESTIMATEDMONTHLYSAVINGS USING FTS: Current average commercial cost $5,275 Estimated FTS cost 1,994 Estimated savings APPENDIX IV FTS ECONOMIC ANALYSIS *AGENCY--McClellan Air Force Base LOCATION--Sacramento, California B Total toil calls 2 less--message-unit Person-to-person calls; tolls of 20C calls--only 60% of A or less; collect, this charge is FTS Toils credit-card, party calls;: third- and c Commercial eligible 40% of . for month . calls outside CONUS Interstate WATS Total total 1970 Calls Charges Calls Charges charge charge &Y 109 $274.70 5,905 $ 9,500 $17.40 $ 6.96 June 99 199.40 6,093 9,500 30.60 12.24 July 97 265:50 5,551 9; 500 30.90 12.36 Total 305 $739.60 17,459 $28,500 $78.90 $31.56 MONTHLY AVERAGE CALLS--B-i-C 17,854 f 3 5 5,951 MONTHLY AVEWGE CHARGES--B-t-C - (40% of D) = $29,208 + 3 = $9,736 TRUNK REQUIREMENTS--5,951 calls at 6 minutes average holding time re- quire 23 circuits (including provision for 20-percent stimulation factor) at grade P.02 (grade P.02 means two of every 100 calls will not be completed). FTS COSTS: 1. The average number of calls a month (5,951) multiplied by a stimulation factor of 1.20 equals 7,141 projected calls. 2; Projected call volume 7,141 multiplied by backbone cost factor of $0.30 a call equals total FTS backbone costs $2,142 3. Telephone company charges for 23 circuits, including mileage and termination equipment costs 3,522 Total FTS costs $5,664 ESTIMATED MONTHLY SAVINGS USING FTS: Current average commercial cost $9,736 Estimated FTS cost 5,664 Estimated savings
Examination into Possible Savings Through the Use of the Federal Telecommunications System (FTS) Telephone Network by the Department of Defense Installations
Published by the Government Accountability Office on 1971-02-18.
Below is a raw (and likely hideous) rendition of the original report. (PDF)