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GSA Selects AT&T for Local Telecommunications in 3 Metro Areas Company to Provide Local Service in New York, Chicago, San Francisco

GSA # 9582

May 20, 1999
Contact: Bill Bearden (202) 501-1231

Washington, DC -- In announcing the results of the first-ever head-to-head competitions for local services since passage of the 1996 Telecommunications Act, the U.S. General Services Administration's Federal Technology Service today surprised the world of local telecommunications providers.

AT&T is the overall and sole winner in the competition to provide local business telecommunications services to Federal agencies in three metropolitan areas - Chicago, New York, and San Francisco. The total combined value of business under these contracts is expected to exceed $680 million over 8 years - four base years plus four one-year options. All three metropolitan areas were competed simultaneously under the Metropolitan Area Acquisitions program known as MAAs. In each city, the competition included a traditional long-distance carrier, an incumbent local exchange carrier, and a competitive local exchange carrier.

These three competitions have each yielded unprecedented local telephone rates, which were achieved through the first truly comprehensive competition for local telephone and data services. These outstanding rates translate into savings of 70% over standard business rates and 66% over current government rates. This has occurred in markets that, until now, have been considered highly resistant to significant price competition for basic phone services. GSA's competitive strategy has slashed prices for the most popular telephone services by an astonishing 84% over current government rates. The new rates will save the Federal government more than $300 million over standard business rates and more than $250 million over the current government rates in these cities.

Under the MAA contracts, AT&T will provide standard business telephone services, plus data services and services for private circuits. Advanced and emerging services such as high-speed digital access connections and advanced data services will also be available.

These initial MAAs are the beginning of a series of awards planned for new competitions in nine new metropolitan areas. Responsible for designing and conducting these competitions, GSA's Federal Technology Service (FTS) has announced that the next cities to be competed are:
¿ Baltimore, Maryland
¿ Cincinnati, Ohio
¿ Cleveland, Ohio
¿ Dallas, Texas
¿ Denver, Colorado
¿ Los Angeles, California
¿ Miami, Florida
¿ New Orleans, Louisiana
¿ St. Louis, Missouri

FTS expects to quickly have metropolitan areas nationwide under competitive rates for local phone and data services based on the highly successful competitive results achieved in these first three cities.

Planning for the MAA competitions began shortly after passage of the Telecommunications Act of 1996 when little was known about how to compete local services. While long-distance voice and data services became competitive with the breakup of the Bell System in 1984, local services remained largely under the control of the Regional Bell Operating Companies (RBOCs), or "Baby Bells," until 1996.

GSA initiated the MAA program under the overall FTS strategy to foster so-called, "ruthless competition" for government telecommunications services. The MAA strategy was designed to lead the charge and take maximum advantage of the 1996 Act's vision of establishing fully competitive local markets for telecommunications services. The MAA program spearheads GSA's strategy to market and deliver competitive and innovative service packages to existing customers as well as to a broader range of potential customers who will soon be able to leverage MAA's multi-tiered, customer-focused services to meet their specific needs.

GSA made history in the long distance arena recently when it awarded the government's long-distance business to both MCI WorldCom and Sprint at unprecedented new low rates that start about 4 cents per minute and drop to less than 1 cent per minute by the end of the contract. That program is known as FTS2001

"Once again, GSA is in the forefront of competition, saving the American taxpayers millions of dollars through the successful implementation of a visionary, aggressive, market-savvy strategy," said GSA Administrator David J. Barram

"We have set the new standard for both industry and government users and we expect to remain at the forefront of competition by maintaining competitive prices and by offering excellent service solutions to our Federal customers," Barram said. "Over the past few years, we have partnered with agency users and industry to ensure, that in large part, agencies telecommunications needs can be met with commercial industry products and services. This outreach and the resulting competitions have yielded contracts featuring a robust set of local telecommunications services that will evolve at the same rapid technology pace as commercial markets and allow the Government to meet the challenges of the new millennium."

The FTS program strategy relies on continuous internal competition among contractors. In the local service arena, where competition is just beginning to take shape, GSA has been especially aggressive. The goal is to provide immediate opportunities for competitive local service providers, both Incumbent Local Exchange Carriers (ILECs) as well as Competitive LECs (CLECs), to compete and be part of the MAA program.

AT&T and the winners of the subsequent nine MAAs will continuously compete against each other and against other future MAA winners for Government business over the 8-year life of the program. To date, six firms have been qualified to compete in the future cities. These are AT&T, Ameritech, Bell Atlantic, Pacific Bell, Southwestern Bell, and WinStar.

"We are excited that these MAA contracts will meet our agency users' telecommunications needs well into the future," said Dennis Fischer, Commissioner of GSA's Federal Technology Service. "In addition to the superior price reductions we have locked in today, we look forward to even more price competition over the life of these MAA contracts."

"I am pleased that the best of American industry has chosen to compete in the MAA process," Fischer said. "They have done a magnificent job and I'm looking forward to more aggressive competition in the next nine MAA cities followed by still more competitions after that. I am also very proud of the excellent work of our staff and the many agency customers who have contributed to this remarkable achievement. We believe in competition; it never fails to bring us to new heights of accomplishment."

The MAAs and FTS2001 efforts are the result of extensive collaborations between the Congress, oversight groups, industry, agency customers, and GSA. The two programs mark the first real steps toward realizing the ultimate goal of establishing end-to-end competitive telecommunications services delivery to the Federal user agencies. The MAA program represents the first significant realization of a key goal of the Telecommunications Act of 1996 under which Congress provided for the development of true competitive markets for local telecommunications services.

GSA is an executive branch agency that provides policy leadership and expertly managed space, products, services and solutions at the best value to enable Federal employees to accomplish their mission. Its information technology and telecommunications services are provided by the Federal Technology Service, which delivers reimbursable local and long-distance telecommunications, information technology, and information security services to Federal agencies.

GSA's Federal Technology Service includes multi-disciplinary teams dedicated to providing leadership within the Federal government in procuring information technology and telecommunications services at the lowest cost to the taxpayer and the greatest value to Federal agencies. To better provide its customers around the world with best value, innovation, integration, and interoperability, FTS services cover procurements under two business lines: network services and information technology solutions. The current emphasis is on positioning the government to take advantage of potential cost savings of the rapid advances in information technology.

For more contract specific information on these and upcoming MAAs, contact Pete Fridman at (703) 610-2855 or Margaret Binns (202) 606-9000.


Metropolitan Area Acquisition (MAA) Program Features

Program Level

¿ Achieves lowest known prices for local business telephone and data services.
¿ First nationwide qualification and competition for commercial local telephone and data services.
¿ Continuous competition throughout the life of the contracts.
¿ Price management mechanisms keep prices at or below the best market prices.
¿ One-stop shopping contract with provisions for offering end-to-end services by adding long distance services.
¿ Technology refreshment and emphasis on commercial services gives government users access to new services at same pace as commercial marketplace.
¿ Four base years plus four one-year options.
¿ Fixed price contract guarantees lowest rates for 8 years.
¿ Competition spreads to nine more cities with more to follow.

Service Level

¿ Comprehensive range of local service offerings
¿ Standard commercial telephone service
¿ Integrated Services Digital Network (ISDN) capabilities
¿ Circuit-Switched Data Services
¿ Dedicated Transmission Services
¿ Advanced and emerging services in scope
¿ Packet Switched, Internet Protocol (IP)
¿ Frame Relay (FR)
¿ Asynchronous Transfer Mode (ATM)
¿ Switched Multi-megabit Data Service (SMDS)
¿ Synchronous Optical Network (SONET)
¿ Video Teleconferencing
¿ Digital Subscriber Line (DSL) Services
¿ Feature-rich voice services with many features included at no additional charge.
¿ Free local number portability allows current customers to retain existing telephone numbers regardless of vendor used to provide services.
¿ Eliminates all per-minute usage charge for government-to-government calls on a contractor's network.
¿ Consistent pricing of services regardless of geographical locations
. Provision for National Security/Emergency Preparedness (NS/EP) capabilities.
¿ Local service coverage
¿ Chicago
¿ All sites within the Chicago city limits
¿ New York City
¿ All five city boroughs, lower Westchester County, Nassau County, Western Suffolk County
¿ New Jersey - Southern Bergen County, Hudson County, Eastern Essex County, Eastern Union County, and Eastern Passaic County
¿ San Francisco
¿ All sites within the city and county of San Francisco
¿ All contracts may evolve and expand to include additional locations in close proximity.
¿ New services are compatible with existing equipment so agencies minimize up front costs to transition.
¿ Six flexible service delivery point options allow agencies a wide range of service choices from agency-managed (e.g., agencies with PBXs) to contractor-managed turnkey services.
¿ Flexible solutions for ensuring high quality inside wiring and building-wide connectivity.
¿ Comprehensive support services including ordering, billing, network troubleshooting, repair capabilities, infrastructure inventory, and more.