FTS 2000 Recompetition: Opportunity Exists for Better Prices

GAO discussed the FTS 2000 telecommunications contract award to two firms. GAO noted that: (1) when the contracts were awarded in December 1988, both vendors' average switched-voice prices were within range of the average commercial rate; (2) in 1989, average commercial rates for switched-voice service fell, forcing the government to pay significantly higher than average commercial rates; (3) FTS 2000 requires the vendors to provide additional services not required for commercial customers; and (4) the General Service Administration has proposed a strategy for conducting price redetermination during the contract's fourth year, which is intended to reduce prices by competing a target of each vendor's projected revenues.