FTS 2000: An Overview of the Federal Government's New Telecommunications System

Published by the Government Accountability Office on 1990-02-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                      United   States   General   Accounting   Office
                      Fact Sheet for the Chairman,
:‘GAO                 Committee on Governmental Affairs,
                      U.S. Senate

-!. February   1990
                      FTS 2000
                      An Overview of the
                      Federal Government’s
United States
General Accounting    Office
Washington,   D.C. 20548

Information    Management      and
Technology    Division


February 14, 1990

The Honorable John Glenn
Chairman, Committee on
   Governmental Affairs
Ilnited States Senate

 Dear Mr. Chairman:

As requested in meetings with your office in April and August 1989, this
report provides information on the Federal Telecommunications System
2000 (F-B zoo())-a new system that will provide the federal government
with long-distance telecommunications services for the next 10 years.
More specifically, this report describes (1) background on FTS2000
including services available, system design, and features of the FTS2000
contract; and (2) the process used by the General Services Administra-
tion (GSA) to grant exemptions to the use of ws 2000. In addition, the
report provides information on GSA'S review of agency requests to pro-
cure telecommunications services and equipment.

 On December 7, 1988, (~4 awarded FTS2000 contracts to two major ven-
 dors-American     Telephone and Telegraph (AT&T) and US Sprint Com-
 munications. These contracts, which have a potential cost of $25 billion
 over 10 years, represent a significant shift in GSA'S approach to meeting
 the government’s telecommunications needs. IJnder the existing Federal
 Telecommunications System (FTs)-the system FTS ZKKIwas designed to
 I-ephF.-GSA   manages a system which is composed of equipment leased
 from vendors. In contrast, under the new contracts, GSA is purchasing
 telecommunications services, rather than leasing the equipment itself,
 and will oversee the c,ontractors’ management of the system, rather than
 managing the system itself.

 E”Ezooois a sophisticated, technologically advanced system offering
 voice service and a wide range of data and video services not previously
 available under FTS. FTS ~000data services will allow users to exchange
 data at high speeds and access remote data bases. In addition, through a
 nationwide electronic, mail feature offered under one of the data ser-
 vices, employees will be able to use terminals and personal computers to
 exchange messages. Two-way video teleconferencing-one         of a number
 of video service option-will    allow users at two locations to fully inter-
 act by exchanging both voice and commercial network quality video


contained in appendix 11.Appendix III further summarizes our objec-
tives, scope, and methodology and appendix IV provides a list of agen-
cies assigned to the vendors’ networks.

Agency comments on a draft of this report were obtained and have been
incorporated where appropriate. Unless you publicly announce the con-
tents earlier, we plan no further distribution of this report until 10 days
from the date of this letter. At that time, we will send copies to inter-
ested parties and make copies available to others upon request.

This report was prepared under the direction of Jack L. Brock, Jr.,
Director, Government Information and Financial Management, who can
be reached at (202) 275-31916.Other major contributors are listed in
appendix V.

Sincerely yours,

Ralph G. Carlone
Assistant Comptroller General



AT&T       American Telephone and Telegraph Company
FTS        Federal Telecommunications System
FTS 2000   Federal Telecommunications System 2000
GAO        General Accounting Office
GSA        General Services Administration
IMTEC      Information Management and Technology Division

Page 5                              GAO/lMTEC90-17FS   An Overview   of ITS 2000
                       Appendix I
                       The FTS 2000 System

                           2000will replace FTS voice service and give agencies access to a vari-
FTS 2000 Services,     FTS
                       ety of high-speed data and video services. The vendors are responsible
Delivery Points, and   for delivering these services to service delivery points. Service delivery
Service Improvements   points are places where the agency connects its equipment (which may
                       be acquired outside the FTS2000 contract) to receive the FTS zooo services.
                       The FTS2000 contracts provide a means for both GSA and the vendors to
                       improve FTS 2000 services and keep them in step with new telecommuni-
                       cations technologies through the use of service improvement provisions
                       in the contracts.

                       The FTS 2000 vendors will provide services to the federal government
                       through two separate, nationwide networks. See appendix IV for a list
                       of agencies assigned t.o vendors’ networks. See figures I.1 and I.2 for
                       diagrams of the vendors’ networks. The cities identified on the diagrams
                       represent network switch locations.’ Some cities will have switch loca-
                       tions for both networks.

                        ‘A netwwk switch is vendor rqulpment that routes information   (wnce and data) through the nrt
                        work on its way from sendw to receiver.

                        Page 7                                            GAO/IMTEC-SO-17FS      An Overview   of F-E 2000
                                                Appendix 1
                                                The FIS 2000 System

Figure 1.2: US Sprint FTS 2000 Network

                                                                      \   Chicago

                                                Source GSA

FTS 2000 Services                               As discussed below, FTS2000will provide switched voice service and the
                                                following five additional advanced telecommunications services: circuit-
                                                switched data, packet-switched data, dedicated transmission, video
                                                transmission, and switched digital integrated service. Agencies will be
                                                able to order these advanced services, with the exception of switched
                                                digital integrated service. 30 days after receiving FTS~OOO
                                                                                                          voice service.

                                                 Switched voice. Switched voice provides both voice and analog data
                                                 transmissions (primarily low-speed data transmission up to 4,800 bits
                                                 per second; for example, facsimile service) throughout the IJnited
                                                 States, Puerto Rico, Guam, and the U.S. Virgin Islands. Phone calls may
                                                 be made on the network 7 days a week, 24 hours a day. Switched voice

                                                 Page 9                                 GAO/IMTEC9@17FS   An Overview   of FIS 2000
                            Appendix   I
                            The FTS 2000 System

                          . Dedicated TIL service will offer data transmission at very high speeds
                            for extremely high volumes.

                            Video transmission. Video transmission will allow agencies to conduct
                            color video teleconferences. FTS2000 provides two types of video trans-
                            mission: wideband and compressed. Wideband video transmission uses
                            satellite links to broadcast commercial network quality, color video
                            teleconferences to many locations simultaneously. Compressed video
                            uses digital technology to transmit near-full-motion video over fiber
                            optic lines. These services, when combined with audio capability, can be
                            used in a variety of ways. For example, agencies may conduct a one-way
                            video teleconference in which the presenter of the conference can be
                            seen and heard in remote locations. Alternatively, participants at two
                            locations can fully interact with the use of a two-way video teleconfer-
                            ence in which both locations can send and receive audio and video

                            Switched digital integrated service. Switched digital integrated service
                            will allow agencies to integrate voice and data transmission onto a single
                            line. This service will allow users, for example, to conduct a voice
                            teleconference while displaying and manipulating data or graphics on a
                            remote terminal.

Service Delivery Points      A service delivery point is a place where an agency connects its equip-
                             ment to receive FTS 2000 service. Vendors provide all equipment from the
                             network to the service delivery point, and the agencies provide all
                             equipment from the service delivery point into the users’ premises. For
                             example, at the service delivery point for video, the network provides
                             t,he high speed transmission line and the agency provides the viewing
                             screen. For switched voice service, the service delivery point could be
                             located in a private branch exchange.” In this case, the agency would
                             provide any equipment including the private branch exchange, in-house
                             wiring, and telephone, sets t,o receive phone calls.

                             Page 11                              GAO/IMTEC-90.17FS   An Overview   of F-IS 2000

                       proposals, which will consider equally (1) total estimated contract costs
                       and (2) quality of service during the preceding years of the contracts.
                       On the basis of this analysis, GSA may then award the revenues identi-
                       fied for reallocation to one of the FTS 2000 vendors. The new prices sub-
                       mitted in the proposals will be applied to each vendor’s entire network
                       as redefined. In addition, if revenues are reallocated, agencies will be
                       shifted from one network to the other.

Interoperability       The FTS 2000 contracts require GSA,AT&T, and US Sprint to work together
                       to establish a process for implementing interoperable networks. Inter-
                       operability means that users on one network will be able to transmit
                       both voice and data to users on the other m 2000 network, and other
                       commercial and government networks. Currently, GSA is developing a
                       statement of work for the vendors to prepare a technical report on inter-
                       operability. The objective is to develop a technically feasible, cost-effec-
                       tive, and quality interface between the networks.

                       According to the E‘TSzow transition manager, several options exist for
                       achieving interoperability, including:

                   l using commercial networks as an interface between the FTS 2000 net-
                     works to transmit, information from one network to the other (i.e., using
                     a third network as the interface between the two FTS 2000networks),
                   . building a hardware device or gateway between the two FTS 2000 net-
                     works, which will allow agencies on one network to transmit informa-
                     tion to agencies on the other, and
                   . using dedicated transmission lines to link one network to locations being
                     served by the other network when enough traffic exists to justify set-
                     ting up a dedicated link (i.c., avoiding transmission through the two

                       GSAplans to use a combination of these three methods to achieve inter-
                       operability among the networks and will use a simulation model to
                       develop the best mix. This model will consider economic factors as well
                       as agencies’ inter-network traffic requirements. Other factors GSA will
                       consider include the number and size of gateways, gateway locations,
                       and service quality.

                       According to the FTS%oootransition manager, GSA will have a plan for
                       voice interoperability in place by April 1990. Approaches for data and
                       video are expected to bc developed at a later date.

                       Paye                                   GAO/IMTEC-90.17FSAnOverviewofFTS2000
                       Appendix I
                       The FTS 2000 System

                       reflected in each set of network prices remained the same,” and that the
                       amount agencies pay for a group of services will be similar, but not
                       equal, for either network. According to MITRE, federal agencies have
                       accepted this approach and were provided information on levelized pric-
                       ing for fiscal years 1990 and 1991 budget planning.;

                       On November 30, 1988, GSA awarded a technical assistance and manage-
Technical Assistance   ment services contract to assist GSA service oversight center personnel in
and Management         managing the transition to FTS ~000and in monitoring the performance of
Services Contract      the new system. The contract has an estimated value of $29.4 million for
                       both the initial lo-month contract term and the four l-year options the
                       contract offers. From <January to August 1989, GSA awarded 24 task
                       orders for various technical services under this contract.

                       The contractor, Centel Federal Services Corporation, provides recom-
                       mendations, technical expertise, and support systems to the centers
                       such as:

                       recommending criteria tbr GSA to use in evaluating the contractor’s plans
                       for the transition to F1’sZoorl,
                       conducting a study to identify potential problems that could hamper the
                       transition to FIY WOO.and
                       developing a billing verification proposal.

                        “Y’IS 2000 prices inco~xate  prw mcentwes for agencies that integrate voice and data services For
                        example, agencies KWWE sigmfrant cost savings by using FE 2000 switched digital integrated ser-
                        vice, which combines voice and data. rathw than usmg FTS 2000 switched voicr and swltrhed data
                        33-wce5 separately.

                        Page 15                                           GAO/IMTEGSO-17F-S     An Overview   of @“IS 2000
                 Appemllx II
                 GSA’s Delegation   Review   Process

Review Process   GSA’S  Authorization Branch reviews agency procurement and telecom-
                 munications requests and determines if a federal agency should be
                 allowed to independently procure equipment or services to fulfill its
                 requirements. For the 18 suspended delegations, the Authorizations
                 Branch conducted a line-by-line analysis of each agency’s requirements
                 compared to the services provided under FTS2000 to determine whether
                 the agency’s requirements would exempt it from using FE 2000. See fig-
                 ure II.1 for a diagram of the decision process GSA used to review each
                 agency’s requirements.

                 Page 17                               GAO/IMTEC-SO-17FS   An Overview   of Ffs 2000
                 Appendix II
                 GSA’s Delegation   Review   Process

                 2000 could not provide. GSA reinstated the delegation, if it decided that
                 the agency’s requirements were unique and could not be satisfied under
                 FTS 2000. This reinstatement, in effect, exempted the agency from using
                 FTS 2000for the specific requirements covered by the delegation. In addi-
                 tion, GSA allowed several agencies to request authority for interim or
                 temporary exemptions to F’~S2000 until the necessary services become
                 available and the agencies’ requirements can be converted to the FE 2000

Review Results   Of the 18 suspended delegations, GSA determined that FTS NOOcould pro-
                 vide some or all of the required service for 14 of the delegations. Of the
                  14 delegations, eight we’re cancelled because all the requirements con-
                 tained in these delegations could be provided under F-R ~OOO. Six were
                 amended because FTS %OOIJ   could satisfy only a portion of the require-
                 ments contained in these delegations. In addition, GSA allowed agencies
                 in 9 of these 14 cases to request interim delegations because the agencies
                 needed the requested services before they would be available under FE
                 ZNO.In the remaining five cases, GSA made no mention of interim delega-
                 tions because these agcmcies could wait t,o obtain their requested ser-
                 vic*esunder IJW2~). For example, GSA determined that the Department,
                 of Labor’s requirements for long-distance telecommunications services
                 could be satisfied under FI’S~OOO and, accordingly, cancelled its prior del-
                 egation. At the same time, GSA allowed the Department of Labor to
                 request authority for an interim delegation until services become availa-
                 ble and the agency’s requirements can be converted to FI'S 2000. It was
                 then left up to Labor to decide whether to pursue an interim procure-
                 ment or wait for 1-1s~OOO  services to become available.

                 GSA  determined that the remaining four delegations contained unique
                 requirements that could not be satisfied by FTS2000 and therefore, rein-
                 stated these delegations. As a result, the four agencies involved (the
                 Department of Health and Human Services, the Department of the Inte-
                 rior, the Federal Communications Commission, and the Federal Aviation
                 Administration) were, in effect, granted exemptions to the use of ETS2000
                 for the specific requirements covered by these delegations and allowed
                 to proceed with independent procurements. In these cases, GSAgranted
                 the exemptions for the lift of the contracts that resulted from the dele-
                 gations. For example, GSAreinstated the Federal Communications Com-
                 mission’s delegation for multipoint dedicated transmission because EITS

                 Page 19                               GAO/IM’lXG90-17FS   An Overview   of F-IS 2000

    Appendix II
    GSA’s Delegation   Review   Process

l The Department of Energy was exempt from requesting authority to
  procure telecommunications equipment and services for its five Regional
  Power Administrations.
. The Veterans Administration was exempt from GSA authority in procur-
  ing facilities installed in hospital complexes for biomedical
l The National Aeronautics and Space Administration was exempt in pro-
  curing missile and satellite tracking facilities.
. The Tennessee Valley Authority was exempt in procuring facilities
  peculiar to operation of the Tennessee Valley Authority projects.
. The Department of .Justice/Bureau of Prisons was exempt in procuring
  facilities installed in penal or correctional institutions,

    The Bureau of Prisons agreed to use the services provided under FTS
    2000. GSA is in the process of reviewing whether the remaining seven
    agencies can use FTS zoooservices for the specific purposes previously

    Page 21                               GAO/IMTJWrW-17FS   Am Overview   of ITS 2000
Appendix III
Objectives, Scope, and Methodology

Our review was conducted at GSA headquarters in Washington, D.C., and
at the GSA service oversight center located in Vienna, Virginia, from
April 1989 through January 1990. Our work was performed in accord-
ance with generally accepted government auditing standards.

Page 23                              GAO/IIvfI’EC90-I7FS   An Overview   of ITS 2990
                                            _     ---
                     Appendix JV
                     Government Agencies or Entities Assigned to
                     the FTS 2000 Networks as of .Jnnuary 22,199O

                     National Commission on Children
                     National Commission on Libraries and Information Science
                     National Gallery of Art,
                     National Science Foundation
                     Neighborhood Reinvestment Corporation
                     Nuclear Regulatory Commission
                     Office of Special Counsel
                     Panama Canal Commission
                     Peace Corps
                     Pennsylvania Avenue Development Corporation
                     Postal Rate Commission
                     Railroad Retirement, Board
                     Securities and Exchange Commission
                     Smithsonian Institution
                     IJnited States Government Printing Office
                     lJnited States House of’ Representatives
                     IJnited States Senate

                     Administrative Offices of Ilnited States Court
US Sprint FTS 2000   African Development Foundation
Network              Commodity Futures Trading Commission
                     Council for State Governments
                     Depart.ment of Housing and I:rban Development
                     Department of Justice
                     Department of Labor
                     Department of the Treasury
                     Depart,ment of Veterans Affairs
                     Equal Employment Opportunity Commission
                     Executive Office of the President
                     Federal Bureau of Investigation
                     Federal Maritime Commission
                     Federal Mediation and Conciliation Service
                     Federal Mine Safety and Health Review Commission
                     Federal Trade Commission
                     General Services Administration
                     Institute Of Museum Services
                     Inter-American Development Bank
                     Interstate Commerce Commission
                     National Archives and Records Administration
                     National Credit I Tnion 2\dministration
                     Katiordl Endowment for the Humanities
                     National Labor Kelations ISoard

                     Page 25                                        GAO/JMTECSO-17FS   An Overview   of FJS 2000
Appendix V

Major Contributors to This Report

                       Linda Koontz. Assistant Director
Information            Ronald Famous, Evaluator-in-Charge
Management and         Kim Moddasscr. Evaluatw
Technology Division,
Washington, D.C.

(510409)               Page 27                              GAO/IMTECSO-17FS   An Overview   of FIS 2000
Appendix IV
Government Agencies or Entities Assigned to
the FTS 2000 Networks as of January 22,199O

National Mediation Board
National Transportation Safety Board
Occupational Safety and Health Review Commission
Office of Management and Budget
Office of Personnel Management
Office of Thrift Supervision
Public Defender Service
Selective Service System
Small Business Administration
United States Commission on Civil Rights
United States Court of Appeals for the Federal Circuit
United States Information Agency
IJnited States International Trade Commission
IJnited States Supreme Court
United States Tax Court

Page 26                                       GAO/IMTECSO-1i’FS   An Overview   of FTS 2000
Government Agencies or Entities Assigned to
the FTS 2000 Networks as of January 22,199O

AT&T FTS 2000   Administrative Conference of the United States
Network         Advisory Commission on Intergovernmental Relations
                Advisory Committee on Federal Pay
                Agency for International Development
                Appalachian Regional Commission
                Architectural and Transportation Barriers Compliance Board
                Board of International Broadcasters
                Central Intelligence Agency
                Commission of Fine Arts
                Commission on International Migration
                Commission on Railroad Retirement Reform
                Committee for Purchase from Blind and Other Severely Handicapped
                Consumer Product Safet,y Commission
                Department of Agriculture
                Department of Commerw
                Department of Defense
                       Defense Communications Agency
                       Defense Contract Audit Agency
                       Defense Logistics Agency
                Department of Education
                Department of Energy
                Department of IIcalth and Human Services
                Department of the Interiot
                Department of StaW
                Department of Transportation
                District of Columbia Public Service Commission
                Environmental Protwtion Agency
                Export-Import Bank of the United States
                Federal Communications Commission
                Federal Election Commission
                 Federal Emergency Management Agency
                 Federal Energy Rt~gulatory Commission
                 Federal Labor Relations Authority
                 Food and Agriculture Organization of the United Nations
                 Institute of Museum Services
                 Inter-American Foundation
                 Japan-IJnited States f+iendship Commission
                 .John F. Kennedy (:cbntel
                 Marine Mammal Commission
                 Merit System Protection Board
                 National Aeronaut its and Space Administration
                 National Capital Planning Commission

                Page 24                            GAO/IMTECSO-17FS   An Overview   of FlX 2000
Appendix III

Objectives, Scope,and Methodology

                This review was requested by the Chairman, Senate Committee on Gov-
                ernmental Affairs. As agreed with the Chairman’s office, our objectives
                were to provide information on (1) the background of the FTS 2000 pro-
               ject, including the services that will be provided, (2) GSA'S process for
                granting exemptions t,o the use of FE 2000,(3) how GSA determines which
                agencies will use F’TSNOO,and (4) the current status of GSA'S review.

               To obtain background on the FTS2000 project, including the services pro-
               vided, we examined the FTS 2000 contract, including the request for pro-
               posals and the best and final offers. We reviewed previous GAO reports
               concerning FTS and FTS ZUOO,  a GSA report entitled Federal Telecommuni-
               cations System (FTS) Intercity Program Changes in the 8Os,l a GSA Office
               of Inspector General report for the President’s Council on Integrity and
               Efficiency concerning F’I’S use,L and other relevant reports and documen-
               tation. We also inttlrviewed GSA officials responsible for managing the
               transition to the new system.

               To obtain information concerning GSA'S process for delegating procure-
               ment authority, we reviewed Public Law 100-440, which mandates the
               use of FTS2000 for all federal agencies subject to the provisions of the
               Brooks Act, as well as GSA regulations implementing this law. We also
               reviewed GSA'S process for determining whether an agency should use
               FTS2000 government-furnished services to satisfy telecommunications
               requirements or whether it should be allowed to proceed with an inde-
               pendent procurement to satisfy such requirements. We reviewed the 18
               delegations that (zi.4 granted prior to the award of FTS zoooand which GSA
               later suspended in Ftlbruary 1989. For these 18, we reviewed the rele-
               vant documentation including the agency request to procure long-dis-
               tance telecommunications services, the original delegation granted by
               GSA, and the subsequent outcome of GSA’S review. In addition, we col-
               lected information on GSA'S disposition of all agency requests to procure
               long-distance telecommunications services that were submitted to GSA
               after the award of ETSNOOthrough December 1989. Finally, we obtained
               information from (~4 concerning the status of eight regulatory exemp-
               tions that were susptinded in October 1988.

               We obtained agency comments during the exit conference with the
               Assistant Commissioner for the Office of Telecommunications Services.

                ‘The FcderalTelecommun~~;rt~onh Systrm (FIX) lnterrity Program Changes m the 80's, Officeof
               lnformatmn Resources .Mm;qymrnt. GSA, Febnm-y 1984

               Page22                                            GAO/IMTEC~SO-l'IFSAnOveniewof~2000
                     Appendix D
                     GSA’s Delegation   Review   Process

                     zoooprovides only point-to-point dedicated transmission.:’ GSA also
                     exempted the Department of Health and Human Services delegation for
                     a Tl carrier for local services because FTS2000 only provides long-dis-
                     tance services.

                     Since the FTS 2000 award, GSA has not granted any agency an exemption
GSA’s Review of      to the use of FTS 2000 services. For agency requests submitted after the
Agency Requests      award, GSA’S Authorizations Branch continued to review requests
After the FTS 2000   involving long-distance telecommunications to determine whether FTS
                     2000 could satisfy the requirements. According to an Authorizations
Award                Branch official, GSA has reviewed 54 agency procurement requests
                     involving intercity telecommunications since the award. GSA determined
                     FTS 2000 satisfied the requirements contained in 16 of these requests and
                     required the agencies to use FTS 2000. GSA delegated interim procurement
                     authority for the remaining 38 requests and required the respective
                     agencies to use FTS zooowhen services become available. For example,
                     GSA provided the Department of Treasury an interim delegation to pro-
                     cure an 800 toll-free service until this service becomes available under
                     FTS 2000.

                     On October 1, 1988, GSA suspended regulatory exemptions for eight
Status of Blanket    agencies that had previously been exempt from requesting authority
Exemptions           from GSA to procure equipment and services for specific computer and
                     telecommunications systems. GSA is reviewing these blanket exemptions
                     to determine whet.her their requirements can be satisfied under FI‘S2000:

                     The Department of Defense was exempt from requesting authority to
                     procure telecommunications equipment and services from GSA for
                     requirements pertaining to Department of Defense’s command and con-
                     trol function.
                     The Nuclear Regulatory Commission was exempt from requesting pro-
                     curement authority for voice and data services for the Emergency Tele-
                     phone System and the Regional Office Incidence Response Center.
                     The Department of Transportation/Federal    Aviation Administration
                     was exempt from GSAauthority in procuring facilities used for air traffic

                     “Multipomt dedicated truhmiskn      allows the user to connect devices at two or mwe locations to a
                     smglr transmission bne WI h thee drvicrs having exclusive use of the line. Point-to-point dedicated
                     transmission allows only Iwo stations tn be connected by 8 single transmission path that is available
                     for these, stations’ cxrlusiw 115~

                     Page 20                                             GAO/IMTEGOO-17F-S       An Overview    of FIX 2000
                                                   Apptmlix  II
                                                   GSA’s Delegation            Review   F’mcess

Figure 11.1:GSA’s Decision     Process for Reviewing          the 18 Suspended            Delegations   of Procurement   Authority

      Can FTS 2000 meet
       the agency’s total                   Yes                      Provide interim
     requirements at some                                 .          authority

     Can FTS 2000 meet                      Yes                    Can the requirements                        Yes                   Amend delegation of
      any requirements?                                               be separated?                                          ’       procurement  authoritya

\~                                                             \

                   I                                                       I

                 Reinstate the delegation    of procurement        authority.


                                                    Source GSA
                                                    “The delegation IS amended to allow the agency to independently       procure ?.ome requrements   that FTS
                                                    2000 cannot presently meet

                                                    In reviewing the delegations, GSA determined whether to cancel, amend,
                                                    or reinstate an agency’s delegation. If all of the agency’s long-distance
                                                    telecommunications requirements could be satisfied under FTS 2000, GSA
                                                    cancelled the delegation. If some of the agency’s telecommunications
                                                    requirements could be provided by FTS 2000,GSA amended the delegation
                                                    to ( 1) require the agency to use FE 2000 to satisfy those requirements
                                                    and (2) allow the agency to independently purchase the services that FTS

                                                    Page 18                                                   GAO/IMTEC-90.17FS      An Overview   of F-lS 2000
Appendix II

GSA’s Delegation Review Process

                        In September 1988, the use of FTS2000telecommunications services
                        became mandatory for most federal agencies. Under Section 627 of Pub-
                        lic Law lOO-4401, federal agencies are required to use FE 2000services
                        unless GSA grants a specific exemption. Although no executive agency is
                        totally exempt from the use of FTS2000,section 627 authorizes GSA to
                        grant an exemption for specific agency requirements if (1) an agency’s
                        requirements are unique and cannot be satisfied under FTS 2000 and (2)
                        the agency’s procurement to satisfy these unique requirements would be
                        cost-effective and not adversely affect the cost-effectiveness of the FTS
                        2000 procurement.

                        GSA is authorized by law’ to delegate authority to agencies to procure
                        automated data processing equipment and services, including telecom-
                        munications services. As a result of Public Law 100-440, GSA began
                        implementing the mandatory use requirement by (1) suspending and
                        reevaluating 18 delegations involving long-distance telecommunications
                        issued prior to the award of FTS 2000 and (2) reviewing agency procure-
                        ment requests submiRed after the FIX zoooaward to determine whether
                        FTS 2000could satisfy agency requirements. In addition, GSA suspended
                        eight blanket exemptions which had previously been granted to agencies
                        by regulation, to independently procure equipment and services for cer-
                        tain systems.

                        With the enactment of Public Law 100-440, GSA suspended 18 delega-
GSA’s Review of         tions of procurement authority for telecommunications services. These
Agency Delegations      delegations had bcc>nissut,d prior to the FTS 2000award, but no contracts
Issued Before the FTS   had been awarded. Thc~scdelegations were suspended to determine
                        whether FTS 2000could satisfy the agencies’ long-distance requirements.
2000 Award              GM reviewed the suspc,ndc,d delegat,ions to determine whether to (1)
                        amend the dclegat ion and require the agency to use FTS 2000 for the long-
                        distance telecommunications rcquiremcnts that FTS 2000could provide,
                        (2) cancel the d&gal Ion and require the agency to use FTS ZMI to satisfy
                        all the agency’s reqrurc~mt~ntsin the delegation, and (3) reinstate the del-
                        egation and allow 1hcl ;~gcmcyto proceed with an independent

                        Yagr 10                               GAO/IMTECrSO-17FS   An Overview   of F-IS 2000
                            Appendix I
                            The FIS 2000 System

Service Oversight Centers   llnder the FTTS2000 contract, each vendor is required to provide a service
                            oversight center for its network to enable the government to (1) monitor
                            the delivery of services, (2) oversee the contractors’ day-to-day opera-
                            tion and administration of FTS 2000, and (3) ensure that the vendor corn-
                            plies with the contract for that network. Each vendor has set up a
                            center that is staffed by GSA personnel. These centers provide oversight
                            and monitor the financial and contractual management of the FTS ~OOO
                            vendors. The centers will also handle agency and contractor problems
                            that cannot be solved through normal channels. Each center has five
                            functional areas to carry out the center’s responsibilities, as follows:

                            Customer Service serves as the account representative once the cus-
                            tomer agency is on the network.
                            Status Center Operation monitors service efficiency and network
                            Network Management evaluates, analyzes, and reviews network per-
                            formance reports to ensure the vendors are complying with the techni-
                            cal requirements of the contract.
                            Security approves and oversees the FTS 2000 contractor’s National Secur-
                            ity and Emergency Preparedness plan, and manages the FTS2000security
                            and emergency requirements.
                            Transition Implementation Service monitors transition activities involv-
                            ing agency n&work assignments.

                                determined that significant differences exist between the prices for
Levelized Pricing           GSA
                            services provided by AT&T and those provided by US Sprint. GSA officials
                            stated that federal agencies should not be required to pay different
                            prices for comparable services. Therefore, GSA decided to levelize prices
                            between the two networks in order to present approximately equal
                            charges to federal agtlncies for the same serviccg

                            To levelize prices, GSA developed a mathematical procedure to apply to
                            each network’s usage-based prices. This procedure will produce similar
                            but not exactly equal prices when agencies use identical services from
                            the two different, networks. GSA designed the procedure to satisfy three
                            conditions-that    (W’S costs were recovered, that the price incentives

                            Page 14                               GAO/IMTECSO-17PS   An Overview   of FB   2990
                              Appendix I
                              The FIX 2000 System

Service Improvements          To allow F’IS 2000 services to keep pace with the development of new
                              commercial services, the FIX 2000 contracts provide for service improve-
                              ments. Generally, improvements may be proposed by either the govern-
                              ment or the vendors to (1) save money, (2) improve performance, and
                              (3) accomplish any other purpose which presents a service advantage to
                              the government. GSA will determine which service improvements are
                              within the scope of the F-E 2000contracts and will add a particular ser-
                              vice or feature to the contracts if it can be justified in terms of govern-
                              mentwide cost-effectiveness.

                                   awarded FTS 2000 contracts-valued    at up to $25 billion over a lo-
The FTS 2000                  GSA
                              year period-to   AT&T and ITS Sprint. The FTS 2000 contracts are contracts
Contract                      for services and as such, represent a shift in GSA’S method of meeting the
                              government’s telecommunications needs. Rather than leasing and man-
                              aging the networks itself, as it did under FTS, GSA will now oversee the
                              vendors’ delivery of services. The FTS 2ooocontracts contain several spe-
                              cial management provisions. These provisions

                            . authorize GSA to redet,ermine service prices and reallocate the contracts’
                              revenues between the two vendors at the end of the fourth and seventh
                              years of the contracts.
                            . require the vendors to work with GSA to develop plans and schedules
                              that will provide interoperable networks to allow the transmission of
                              voice and data between the two networks, and
                            . require the vendors to establish service oversight centers to enable GSA
                              to oversee the operations of the two vendors.

Price Redetermination and     The FTS 2000 contracts contain a schedule of prices for services charged
Reallocation                  to GSA that generally cannot be increased during the lo-year contracts.”
                              The contracts, however, allow GSA to recompete the two vendors in the
                              fourth and seventh years of the contracts. According to the FE 2000 con-
                              tracting officer, rc,competition will ensure that service prices remain
                              competitive. At the l’ourt h and seventh years of the contracts, GSA will
                              identify a portion of’ contract revenues-up to 40 percent of each ven-
                              dor’s estimated revc’nuc over t,hc remaining life of each contract--that
                              may be reallocated bet wocn the two vendors as a result of the recompe-
                              tition. The two vendors will then submit pricing proposals covering the
                              remaining years of the contract. GSA will conduct an analysis of these

                              4The FTS 2000 contracts contdin an economic price adJustment &use that allows contract pnws to
                              be increased or dccre~rd m t lw went of econonuc conditions beyond the control of the vendors

                              Page 12                                         GAO/IMTEC-90.17FS     An Overview   of F-IS 2000
    Appendix   I
    The FIS 2000System

    will offer federal users features such as agency recorded announce-
    ments, audio teleconferencing, and network services attendants who
    will provide a variety of support services.

    Circuit-switched dat,a. Circuit-switched data service currently allows
    agencies located within the continental LJ.S.to use the FTS2000networks
    to exchange data at high speeds, up to 56,000 bits per second. This ser-
    vice uses digital transmission and flexible routing to establish communi-
    cations paths over which data are sent in a continuous stream. Circuit-
    switched data servic.cbis intended to provide a cost-effective method of
    meeting high-speed data requirements when transmitting large volumes
    of data.

    Packet-switched data. Packet-switched data service is designed to pro-
    vide digital data c,omrrulnications between geographically dispersed ter-
    minals and computers. When using this service, the data to be sent are
    subdivided int,o small packets which are then transmitted separately,
    perhaps over diffctrcnt communications pathways and reassembled at
    their destinations. Agencies can use this service to link their data net-
    works and make access t,o remote data bases more convenient. In addi-
    tion, this service supports the FTS2000electronic mail feature which will
    allow employees to use terminals and personal computers to send
    messages to others on the network. These messages may be delivered to
    and retrieved from “mailboxes” designated for specific persons or a
    variety of other devices including remote printers. Packet-switched data
    service is intended to provide a cost-effective means of exchanging low
    to medium volumes of data that are transmitted sporadically.

    Dedicated transmission. Dedicated transmission involves assigning of a
    specific transmission capacity to an agency for its exclusive use. As
    such, this transmission capacity is available to the agency for use 24
    hours a day, 7 days a week. This service is designed to provide agencies
    with a cost-effective method of sending large volumes of voice or data
    traffic between two locations on a continuous basis. Dedicated transmis-
    sion provides three options to users, as follows:

l Dedicated analog service will support voice and data transmission at
  speeds up to 9,600 bits per second;
* Dedicated digital service will provide digital transmission between loca-
  tions at faster speeds up to 64,000 bits per second; and

    Page 10                              GAO,‘IMTEC-90.17FS   An Overview   of F”B 2000
                                    Appendix I
                                    The FTS 2000 System

Figure 1.1: AT&T FTS 2000 Network

         I    \                                                Chicago

                     -EC--                       Dallas   I/
                                                                         Birmingham         I

                                    Source GSA

                                    Page 8                                      GAO/IMTEGSO-17FS   An Overview   of F”lS 2000
Annendix I

The FTS 2000 System

                        On December 7, 1988, GSAawarded lo-year contracts to AT&T and US
                        Sprint to replace the technically outdated FTS,which has provided the
                        federal government’s long distance service for over 25 years. The new
                        system, known as FTS2000, will provide federal agencies with voice ser-
                        vice and a range of high-speed data and video services not available
                        under FTS.The two vendors are responsible for providing these services
                        to federal agencies through two separate nationwide networks. As a
                        result of this Z-vendor award, the contract contains provisions to (1)
                        keep service prices competitive throughout the life of the contract and
                        (2) require the vendors to make their networks interoperable so that
                        agencies assigned to one network can communicate with agencies on the
                        other. In addition, to deal with price differences between the two ven-
                        dors, GSAhas developed a strategy called levelized pricing to ensure that
                        agencies pay similar prices for comparable services, regardless of which
                        network (~r&‘r or I JSSprint) they use. Finally, to assist in the oversight
                        of these contracts, GSAhas also contracted with Centel Federal Services
                        Corporation to provide technical assistance and support services.

                        Since 1963, FTS has provided the federal government’s long-distance
Replacing the Federal   telephone service. GSA originally developed the system to provide cost
Telecommunications      savings over commercial phone rates and satisfy the federal govern-
System                  ment’s national security and safety needs during emergency situations,
                        Under this system, osi\ leased equipment from numerous vendors, using
                        analog technology to provide voice, low-speed data transmission, and
                        facsimile services to its 1.3 million users.

                        However, after providing over two decades of service to the federal gov-
                        ernment, GSAdetermined that ETSrates and services were no longer com-
                        petitive with those of commercial services. Further, FM out-dated
                        analog equipment couldn’t meet agencies’ increasing need for high-speed
                        data transmission. At the same time, newer digital technology-capable
                        of providing reliable, high-speed data transmission at a lower overall
                        cost than analog technology-became      available. These concerns
                        prompted Gs.4to define requirements for a comprehensive telecommuni-
                        cations procurement and issue a request for proposals in December

                        Page 6                                GAO/IMTEGgO-17FS   An Overview   of ITS 2000

Letter                                                                                                1

Appendix I                                                                                            6
The FTS 2000 System     Replacing the Federal Telecommunications System
                        FTS 2000 Services, Delivery Points, and Service
                        The FTS 2000 Contract                                                        12
                        Levelized Pricing                                                            14
                        Technical Assistance and Management Services Contract                        15

Appendix II                                                                                          16
GSA’s Delegation        GSA’s Review of Agency Delegations Issued Before the
                             FTS 2000 Award
Review Process          GSA’s Review of Agency Requests After the FTS 2000                           20
                        Status of Blanket Exemptions                                                 20

Appendix III                                                                                         22
Objectives, Scope,and
Appendix IV                                                                                          24
Government Agencies $~r~~~~~~~;;;;~ork
or Entities Assigned to
the FTS 2000
Networks as of
January 22,199O
Appendix V                                                                                           27
Major Contributors to
This Report
Figures                 Figure I. 1: AT&T PI’S 2000 Network                                           8
                        Figure 1.2: US Sprint FTS 2000 Network                                        9
                        Figure II. 1: GSA’s Decision Process for Reviewing the 18                    18
                             Suspended Delegations of Procurement Authority

                        Page 4                               GAO/IMTEGsO-1WS   An Overview   of FTS 2000

                        AT&Tand Sprint will provide these telecommunications services through
                        two separate, nationwide networks. Each federal agency is assigned to
                        one of these two networks. GSA and the vendors began to move federal
                        agencies from ETSto ITS 200o voice service on October 9, 1989, and plan
                        to complete the effort by the end of July 1990. According to a GSA offi-
                        cial, this cutover will be implemented in 18 phases occurring every two
                        weeks. As of January 22, 1990, GSA had completed phase 6 of the cut-
                        over which brought the total number of users with FTS2000 voice service
                        to 600,000. Agencies will be able to order most other data and video
                        services 30 days after receiving FTS2000 voice service.

                        In September 1988, with the passage of Public Law 100-440, using ETS
GSA’s Delegation        soootelecommunications services became mandatory for most executive
Review                  agencies unless GSA grants a specific exemption. Although no executive
                        agency is totally exempt from using ETs2000, GSA will grant an exemption
                        for specific requirements if it determines that (1) an agency’s require-
                        ments are unique and cannot be satisfied under FTS2000 and (2) the
                        agency’s procurement to satisfy these unique requirements would be
                        cost-effective and not adversely affect the cost-effectiveness of the FTS
                        ZNMprocurement. As a result of this law, GSA suspended 18 delegations
                        of procurement authority issued prior to the FTS2000 contract award;
                        these delegations would have allowed agencies to procure telecommuni-
                        cations services and systems outside FTS zooo.For the 18 suspended dele-
                        gations, GSA'S review process involved analyzing each agency’s
                        requirements compared to the services provided under FTS2000 to deter-
                        mine whether FTS~‘OIIO  could provide the agency’s requirements. GSA
                        determined that the requirements cited in 14 of the agency delegations
                        could be satisfied under FTS 2000and directed these agencies to use FKS
                        200o. GSA determined the requirements cited in the remaining four delega-
                        tions could not, be met by E”TS2000 and allowed these agencies to procure
                        these services and systems independently. Since the FTS 2000 award, GSA
                        has received and reviewed 54 requests for procurement authority, but
                        has not granted any additional exemptions to using FTS 2000 services.

                        We performed our analysis by reviewing FIS 2000 contract documentation
                        and agencies’ requests for procurement authority for telecommunica-
                        tions systems and services. We interviewed GSA officials responsible for
                        overseeing the ITS xoo contracts and federal agencies’ telecommunica-
                        tions procurements. Appendix I provides information on the FTS 2000 ser-
                        vices and contract. Information on GSA'S delegation of procurement
                        authority to agemics for telecommunications systems and services is