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 New Telecommunications System -____ United States General Accounting Office Washington, D.C. 20548 Information Management and Technology Division H-130441 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 pictures. Page1 B-130441 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 page3 contents Abbreviations 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 I Cheyenne Omaha \ 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 signals. 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 Appendix1 TheFTS20OOSystem 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 networks). 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 network. 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 communications. 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 listed. 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 ACTION 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 control. “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 procurement. 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 performance. 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 1986. Page 6 GAO/IMTEGgO-17FS An Overview of ITS 2000 Contents Letter 1 Appendix I 6 The FTS 2000 System Replacing the Federal Telecommunications System FTS 2000 Services, Delivery Points, and Service 6 7 Improvements 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 16 Review Process GSA’s Review of Agency Requests After the FTS 2000 20 Award Status of Blanket Exemptions 20 Appendix III 22 Objectives, Scope,and Methodology Appendix IV 24 Government Agencies $~r~~~~~~~;;;;~ork L 24 25 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 El30441 -- 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 page:!
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)