a

GAO

United States General Accounting Office

Report to the Chairman, Committee

on Government Reform, House of 

Representatives

April 2003 TELECOMMUNICATIONS

GSA Needs to Improve 

Process for Awarding 

Task Orders for Local 

Service

GAO-03-369
GSA field offices take different approaches to awarding task orders under 

multiple-award MAA contracts, leading to variations both among cities and 

within cities. Although the FAR gives contracting officers broad latitude in 

ensuring that this process offers contractors a fair opportunity to be 

considered, GSA recognizes that consistency is important within the 

nationwide MAA program. However, GSA headquarters has not developed or 

implemented a uniform fair consideration process. As a result, GAO found 

variations in the processes used: principally, in the time frames used in 

contractor price comparisons (see table). Such inconsistencies frequently 

influenced the choice of contractor. Further, because oversight was not 

provided, in six cases agency preference was used as a criterion for selecting 

a contractor, which is a violation of the FAR. Because GSA did not 

consistently follow a common process that ensured compliance with the 

FAR, it cannot ensure the fairness of its decisions. 

Further, the documentation for about one-fifth of GSA’s fair consideration 

decisions was not adequate for determining how these decisions were 

reached. According to the FAR, sufficient documentation of all contractual 

actions must be maintained to provide (1) a basis for decisions reached and 

(2) information for subsequent reviews. Out of 483 fair consideration 

decisions from regional GSA offices in the 11 cities that GAO assessed, the 

documentation furnished for 91 (19 percent) was not adequate. Weaknesses 

observed include lack of stated rationale for decisions reached, price 

comparisons that did not support the choice of contractor selected by GSA, 

and lack of support for technical factors used in making the decisions. These 

weaknesses occurred because GSA did not establish and implement uniform 

guidelines for documenting its MAA fair consideration decisions. As a result, 

MAA stakeholders (GSA, agencies, and MAA contractors) do not have 

assurance that the fair consideration process was properly administered. 

Variations in Time Frames Used in MAA Contractor Price Comparisons 

 Time frame used in price analysis 

City 1 month 1 year 3 years 4 years Life cycle 

Insufficient data to 

determine

Atlantaa — — — — — —

Boston X X — X — —

Cleveland — — — — X —

Dallas — X — — X —

Denver X — — — X —

Indianapolis — — — — X —

Los Angeles — — — — — X

Minneapolis — — — — X —

New York — X X — — —

Philadelphia X — — X — —

St. Louis — — — — — X

Source: GAO, GSA. 

a

No price comparison was completed in calendar year 2001. 

TELECOMMUNICATIONS 

GSA Needs to Improve Process for 

Awarding Task Orders for Local Services 

www.gao.gov/cgi-bin/getrpt?GAO-03-369 

To view the full report, including the scope 

and methodology, click on the link above. 

For more information, contact Linda Koontz at 

(202) 512-6240 or koontzl@gao.gov. 

Highlights of GAO-03-369, a report to the 

Chairman, Committee on Government 

Reform, House of Representatives 

April 2003 

The Metropolitan Area Acquisition 

(MAA) program, managed by the 

General Services Administration 

(GSA), provides local telecommunications services to government 

agencies in selected metropolitan 

areas. Of the 25 cities in which 

MAA contracts were awarded as of 

January 2003, 15 were awarded to 

two or more providers. Such 

multiple-award contracts are a 

means of promoting competition. 

To ensure equity in the award of 

task orders under these contracts, 

the Federal Acquisition Regulation 

(FAR) requires that the government 

provide contractors a fair 

opportunity to be considered. GAO 

was asked to review, among other 

things, whether GSA’s 

implementation of the fair 

consideration process is consistent 

and the effect of any inconsistency, 

as well as the adequacy of GSA’s 

documentation to support the 

decisions reached. 

GAO is recommending that GSA 

follow a consistent fair 

consideration process, including 

uniform requirements for 

documentation. Deviations from 

this common process should be 

documented and communicated to 

contractors so that all MAA 

stakeholders can understand the 

process. 

In written comments on a draft of 

this report, the Administrator of 

General Services agreed with our 

recommendations and said that 

GSA was acting to implement them.
Page i GAO-03-369 Telecommunications 

Letter 1

Results in Brief 2

Background 4

GSA Has Not Established a Consistent Process or Provided 

Adequate Oversight 7

Numerous Fair Consideration Decisions Were Not Adequately 

Documented 14

Use of Requests for Quotations Produced Mixed Results, but 

Limited Data Preclude a Thorough Evaluation 16

Conclusions 18

Recommendations for Executive Action 19

Agency Comments and Our Evaluation 20

Appendix I Termination Charges and Service Initiation 

Charges 22 

Appendix II Objectives, Scope, and Methodology 24 

Appendix III Comments from the General Services 

Administration 27 

Tables 

Table 1: MAA Multiple-Award Cities in Which GSA Made Fair 

Consideration Decisions in 2001 7

Table 2: Comparison of Time Frames Used in MAA Contractor 

Price Comparisons 9

Table 3: Comparison of 1-Year and Life-Cycle Price Analyses for 

Dallas 10

Table 4: Effect of Including Reconfiguration Charges in MAA 

Contractor Price Comparisons (Dallas) 12

Contents 
Page ii GAO-03-369 Telecommunications 

Abbreviations 

ASP Aggregated Switch Procurement 

FAR Federal Acquisition Regulation 

FTS Federal Technology Service 

GSA General Services Administration 

MAA Metropolitan Area Acquisition 

RFQ Request for Quotations 

SIC service initiation charge 

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Page 1 GAO-03-369 Telecommunications 

April 4, 2003 

The Honorable Tom Davis 

Chairman 

Committee on Government Reform 

House of Representatives 

Dear Mr. Chairman: 

The Metropolitan Area Acquisition (MAA) program provides local 

telecommunications services to federal agencies in selected metropolitan 

areas. The MAA program manager, the General Services Administration 

(GSA), initiated this nationwide program in 1997 to achieve immediate, 

substantial, and sustained price reductions for agencies’ local 

telecommunications services; to expand agencies’ choices of high-quality 

services; and to encourage cross-agency sharing of resources. In 15 of 25 

metropolitan areas in which MAA contracts had been awarded as of 

January 2003, GSA had awarded contracts to two or more 

telecommunications providers. The intent of such multiple-award 

contracts is to sustain competition and obtain the best value on task 

orders awarded throughout the contract period. For these contracts, the 

Federal Acquisition Regulation requires agencies to provide the multipleaward contractors a fair opportunity to be considered for task orders; GSA 

refers to this process as its fair consideration process. Fair consideration 

decisions may be based on price alone, or they may be based on 

consideration of price plus other factors, such as technical requirements 

or the contractors’ past performance. This report responds to your request 

that we determine (1) whether GSA’s fair consideration process is 

consistent within and among metropolitan areas, and if not, whether or 

not inconsistencies affect the process results; (2) whether GSA’s 

documentation properly and appropriately supports its fair consideration 

decisions; and (3) whether the use of Requests for Quotations1

 in the fair 

 1

 Requests for Quotations are used in acquisitions to communicate government 

requirements to prospective contractors and to solicit quotations from them regarding 

price and other factors. In this report, the term “Request for Quotations” refers to a request 

from GSA to MAA contract vendors for price and other information. These Requests for 

Quotations are authorized by section G.2.1, “Service Price Quotes,” of the MAA contract, as 

follows: “The contractor shall provide price quotes for specific services and features when 

requested by the GDR or ADR prior to submitting a service order request. The price quote 

shall identify all recurring and nonrecurring charges, the service availability date, the date 

when the price quote will become nonbinding, and appropriate technical information that 

describes the service.” 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-03-369 Telecommunications 

consideration processes followed by GSA is cost-effective. In response to 

concerns raised at an oversight hearing on the MAA program, you also 

requested that we determine whether contract termination charges and 

service initiation charges had affected GSA’s fair consideration decisions; 

these results are reported in appendix I. 

This report is based on work we performed at GSA’s Federal Technology 

Service (FTS) headquarters and at our Washington, D.C., office, using 

documentation furnished by GSA’s regional FTS offices. We reviewed all 

fair consideration decisions made by GSA during calendar year 2001 as 

part of the MAA contracts’ service ordering process, including supporting 

documentation maintained by GSA, the MAA contracts, applicable federal 

acquisition guidelines, and any further GSA guidance on this process. We 

conducted our work from May 2002 through February 2003, in accordance 

with generally accepted government auditing standards. Appendix II 

contains a detailed discussion of our objectives, scope, and methodology. 

Although GSA officials have stated that the nationwide MAA program 

should be consistently administered, GSA did not establish and follow a 

consistent process when making its fair consideration decisions.2

 During 

calendar year 2001, fair consideration processes varied both within and 

across MAA cities. Variations occurred in the lengths of time over which 

contractor prices are compared and in the use of additional estimated 

costs for changing telecommunications lines or service features over time. 

Both variations influenced which contractors received task order awards 

to provide services to agencies under these contracts. Further, because 

GSA has not provided adequate oversight, regional offices in six instances 

incorrectly used agency preference as a basis for selecting a contractor—

violating the Federal Acquisition Regulation—and selected a higher priced 

incumbent service provider. 

Of the fair consideration decisions made by GSA during calendar year 

2001, 19 percent were not fully supported by documentation. According to 

the Federal Acquisition Regulation, all contractual actions must be 

documented in a manner sufficient to provide a basis for decisions 

reached in the acquisition process, and to provide information for 

 2

 Consistent with the request letter, we use the term “fair consideration” for the task order 

award process established by the Federal Acquisition Regulation, Part 16, requiring that 

each vendor be accorded “a fair opportunity to be considered for each order.” 

Results in Brief 
Page 3 GAO-03-369 Telecommunications 

subsequent reviews of those decisions. Weaknesses observed included 

lack of stated rationale for decisions reached, price comparisons that did 

not support the choice of contractor selected by GSA, and lack of support 

for technical factors used in making the decisions. These weaknesses were 

allowed to occur because GSA did not establish and implement uniform 

guidelines for documenting its MAA fair consideration decisions. As a 

result, for 91 out of 483 decisions made in 2001, MAA stakeholders (GSA, 

agencies, and MAA contractors) do not have assurance that the fair 

consideration process was properly administered. 

GSA’s use of Requests for Quotations in the fair consideration process 

may be cost-effective for some local telecommunications services, but 

limited data preclude a comprehensive evaluation. By pursuing this 

additional competition, GSA may receive cost proposals from contractors 

that could include more favorable terms than those in the published 

contract, such as lower monthly prices, or waived or reduced service 

initiation charges. Examination of this process in Denver revealed that 

although it produced substantial savings when one type of service was 

acquired, it did not result in savings when a second type of service was 

obtained. GSA did not measure the costs and benefits of this process to 

determine where the use of Requests for Quotations was most suitable for 

acquiring local telecommunications services or to identify improvements 

that could make the process more cost-effective. 

In addition, we determined that the inclusion of contract termination 

charges may have changed the choice of contractors in 5 of 16 GSA fair 

consideration decisions in the one MAA city in which these charges 

applied,3

 and service initiation charges were a deciding factor in the choice 

of contractors in 61 out of 272 decisions in seven cities (details are given in 

app. I). 

In light of the inconsistencies in the MAA fair consideration process, we 

are recommending to the Administrator of General Services that GSA 

establish and follow a uniform process for fair consideration. We are also 

recommending that GSA develop and implement uniform guidelines for 

 3

 Three of these decisions were made based on price alone, and therefore would have been 

directly affected. The two other decisions were made based on price and technical 

considerations; it is unclear from the documentation, however, how the technical 

considerations supported those decisions. Therefore, in those two cases, we are unable to 

predict whether inclusion of termination charges resulted in a different choice of 

contractor. 
Page 4 GAO-03-369 Telecommunications 

documenting its fair consideration decisions, and that it establish the 

measures needed to ensure the cost-effectiveness of its process and to 

provide a basis for improvement. 

In written comments on a draft of this report, the Administrator of General 

Services agreed with our recommendations and said that GSA was acting 

to implement them. 

The MAA program comprises contracts offering local voice and certain 

data telecommunications services to federal agencies in selected 

metropolitan areas across the country. GSA began planning this program 

just a few months after the passage of the Telecommunications Act of 

1996, which was intended to increase competition and reduce regulations 

in the telecommunications industry, particularly for local services. 

Recognizing that this competition would create an opportunity for the 

government to gain an immediate price reduction in local 

telecommunications services, GSA developed and launched the MAA 

program to take advantage of this emerging competition. Further, it 

envisioned the MAA contracts as a complement to existing local service 

contracts in metropolitan areas, as well as a solution for contracts that 

were expiring. As of January 2003, GSA had awarded MAA contracts in 25 

cities, with a total maximum value of $5.1 billion. 

Each MAA contract is a fixed-price, indefinite-delivery, indefinite-quantity 

contract with a base term of 4 years (48 months) from date of award, with 

four successive 1-year options. In 15 of the 25 MAA cities, GSA awarded 

these contracts to two or more telecommunications providers; such 

contracts are referred to as multiple-award contracts. The Federal 

Acquisition Streamlining Act (FASA) of 1994 established a preference for 

awarding contracts for indefinite quantities to multiple firms rather than to 

a single company. This approach was intended to provide agencies a 

means to procure goods and services quickly, using streamlined 

acquisition procedures, while obtaining the advantage of competition. 

Under multiple-award contracts, the Federal Acquisition Regulation (FAR) 

requires that contractors be afforded “a fair opportunity to be considered” 

in the subsequent award of task orders issued to meet specific agency 

needs under these contracts. The process used to ensure this opportunity 

is referred to as the fair consideration process. In administering this 

process, contracting officers are given broad latitude by the FAR. 

Background 
Page 5 GAO-03-369 Telecommunications 

The MAA contracts give a broad outline of the procedure to be followed by 

the government in conducting its fair consideration process.4

 The 

government- or agency-designated representative is to consult the latest 

information about the contractors, including published contract prices, 

related analyses that aid decisionmaking, information from contractors 

such as price quotes or technical analyses, and other relevant information. 

Using available information, the representative selects a contractor by one 

of two methods: basing the decision solely on relative prices without 

further consideration of other factors, or basing the decision on a 

combination of price, technical, and past performance considerations 

appropriate to the particular decision. After completing this decision 

process, the representative then places a task order with the selected 

contractor for the required telecommunications services. 

GSA contracting officers making task order decisions can obtain price 

information from published contracts, or they can choose to issue a 

Request for Quotations (RFQ) as an additional mechanism for lowering 

prices. Using an RFQ process to support fair consideration decisionmaking can offer additional competitive benefits by allowing contractors 

to lower prices beyond their contract offers and to reduce or waive service 

initiation and other charges. However, while the RFQ process is being 

pursued, agencies must continue to pay pre-MAA prices for 

telecommunications services, rather than the lower MAA contract prices. 

When making fair consideration decisions under the MAA contracts, in 

addition to comparing monthly recurring charges for providing 

telecommunications services, GSA may consider additional costs 

associated with these services, such as the one-time termination charges 

that may be associated with a pre-MAA telecommunications service 

contract. GSA may also consider contractors’ service initiation charges5

for implementing service. When a contractor is also the incumbent, preMAA telecommunications provider in a city, it does not generally include a 

service initiation charge in its price quotes for existing lines and services 

to be transitioned to an MAA contract, because it does not incur new 

 4

 The MAA service ordering process is outlined in Section G.2 of the MAA contracts, 

including the prescribed procedure to give fair consideration to contractors for task order 

awards under the contract. 

5

 A service initiation charge is a charge to a customer by a telecommunications provider for 

the initiation of a new telecommunications service, such as the installation of a new 

telephone line. 
Page 6 GAO-03-369 Telecommunications 

expenses to provide these lines and services. Where volume or types of 

services differ from existing services, incumbents may include service 

initiation charges in their pricing. All contractors can choose to waive 

these charges. 

Including these charges in fair consideration price comparisons may give 

an advantage to an incumbent contractor (since the incumbent’s price 

would generally not include such charges), but this advantage is 

permissible. That is, acquisition case law has established that a contractor 

may have unique advantages and capabilities (because of its prior 

experience, for example), and the government is not required to equalize 

competition or compensate for these advantages, unless there is evidence 

of preferential treatment or other improper action. 

GSA’s FTS headquarters in Fairfax, Virginia, and its regional offices in the 

various metropolitan areas share responsibility for administering the MAA 

contracts. According to testimony by the FTS Commissioner in June 2001,6

FTS headquarters is responsible for developing solicitations, evaluating 

offers, awarding contracts, and supporting implementation activities, and 

the FTS regional offices are responsible for developing city-specific 

requirements and for contract implementation activities, including 

managing the process used to select among MAA contract awardees for 

placing task orders (that is, the fair consideration process). 

In calendar year 2001, fair consideration processes were conducted in 11 

of the 15 MAA cities with multiple-award contracts. Table 1 lists these 11 

cities, their MAA contractors, and the number of fair consideration 

decisions reached in 2001. 

 6

 Testimony of Sandra Bates, FTS Commissioner, General Services Administration, before 

the Subcommittee on Technology and Procurement Policy (June 13, 2001). 
Page 7 GAO-03-369 Telecommunications 

Table 1: MAA Multiple-Award Cities in Which GSA Made Fair Consideration 

Decisions in 2001 

MAA multiple-award 

cities 

Number of fair 

consideration 

decisions Contractors 

Atlanta 1 WinStar 

BellSouth 

Boston 21 AT&T 

Southwestern Bell 

Verizon 

Winstar 

Cleveland 71 Ameritech 

AT&T 

Dallas 20 AT&T 

Southwestern Bell 

WinStar 

Denver 128 AT&T 

Qwest 

WinStar 

Indianapolis 50 WinStar 

AT&T 

Ameritech 

Los Angeles 44 WinStar 

Pacific Bell 

Minneapolis 118 WinStar 

Qwest 

New York 11 AT&T 

Verizon 

Philadelphia 10 AT&T 

WinStar 

St. Louis 9 WinStar 

Southwestern Bell 

Source: GSA. 

GSA management has stated its desire to ensure consistency throughout 

the nationwide MAA program, but it has not established a common 

process for fair consideration decisions. Because GSA headquarters has 

not developed or implemented a uniform method to be followed by its 

regional offices in conducting the fair consideration process, approaches 

vary among cities and, in some cases, within cities. Variations occurred in 

the periods of time over which contractor prices were compared and in 

the inclusion of reconfiguration costs7

 in price comparisons, which 

 7

 Reconfiguration costs are associated with the need to move, add, or change telephone 

lines, services, or features after they have been installed. 

GSA Has Not 

Established a 

Consistent Process or 

Provided Adequate 

Oversight 
Page 8 GAO-03-369 Telecommunications 

affected the choice of contractors. Further, because GSA did not oversee 

the application of this process, in some instances regional offices violated 

the FAR by incorrectly using agency preference as a basis, in part or as a 

whole, for selecting a higher priced contractor for an MAA task order. 

Although the FAR gives contracting officers broad latitude in 

administering the fair consideration process, GSA recognizes that the MAA 

program and its contracts should be consistently managed and 

administered. In her June 2001 testimony, the FTS Commissioner stated 

that because MAA is a national program, communications and 

coordination among GSA staff with MAA program responsibilities (FTS 

headquarters, its regional offices, and MAA program management staff) 

were essential to ensure program continuity and consistency.8

 Thus, GSA 

views consistency as an important attribute within the nationwide MAA 

program. 

The principal variation we identified in the fair consideration process 

concerned the period of time selected by regional staff over which to 

compare contractor prices. The different time periods that GSA regional 

offices used for comparing contractor prices ranged from as short as 

1 month to as long as the entire period remaining in the life of the contract 

(GSA documentation referred to the latter as a life-cycle analysis). In three 

cities—Cleveland, Indianapolis, and Minneapolis—GSA considered 

contract life as the evaluation period. GSA’s Denver staff usually used a 

1-month evaluation period,9

 but it used a life-cycle analysis to justify 17 

percent of its decisions. In four other cities, this price comparison varied 

from decision to decision: specifically, the Dallas regional office alternated 

between use of contract life and a 1-year period in its analyses; the New 

York regional office used 1-year and 3-year periods; the Philadelphia staff 

used a 1-month period and a 4-year period; and the Boston regional office 

used a 1-month period in some cases, and in others considered savings for 

both 1-year and 4-year periods. The reason for the specific comparison 

period used was not recorded in decision documentation. Table 2 

summarizes the different price comparison periods used. 

 8

 Testimony of Sandra Bates, FTS Commissioner, General Services Administration, before 

the Subcommittee on Technology and Procurement Policy (June 13, 2001). 

9

 Although Denver used a 1-month price comparison period for 83 percent of its fair 

consideration decisions, it also identified life-cycle cost savings to customer agencies. 
Page 9 GAO-03-369 Telecommunications 

Table 2: Comparison of Time Frames Used in MAA Contractor Price Comparisons 

 Time frame used in price analysis 

City 1 month 1 year 3 years 4 years 

Life 

cycle 

Insufficient data 

to determine a

Atlanta b — — — — — —

Boston X X — X — —

Cleveland — — — — X —

Dallas — X — — X —

Denver X — — — X —

Indianapolis — — — — X —

Los Angeles — — — — — X

Minneapolis — — — — X —

New York — X X — — —

Philadelphia X — — X — —

St. Louis — — — — — X

Source: GAO, GSA. 

Note: GAO analysis of GSA data. 

a Decision documentation did not identify the time frame used. 

b One fair consideration decision was reached in Atlanta during calendar year 2001. An RFQ was 

issued to the contractors to obtain a price quote for service. However, because a valid cost proposal 

was received from only one contractor, a complete price comparison was not necessary. 

Although the MAA contracts state that contract price will always be a 

factor in GSA’s fair consideration procedure, they do not specify the time 

period over which price comparisons should be made. However, a 

consistent time period is important, because analyses over different time 

periods may lead to different results. For example, one-time costs such as 

service initiation charges have a less direct influence on decisions that 

compare prices over a longer period of time, because those additional onetime costs may be offset by lower prices over the life of the contract. 

Conversely, when prices are compared over a shorter period of time, such 

additional charges form a relatively greater portion of total costs 

compared; thus, their inclusion can favor the incumbent service provider 

(whose price does not generally include these charges). 

The effect of using different time frames in price comparisons is illustrated 

in table 3. This table summarizes the decisions reached in Dallas, where 

Southwestern Bell was the incumbent telecommunications provider. If 

GSA had used a contract life-cycle time frame in its price comparisons, 

then the decisions reached might have been different in half of those 
Page 10 GAO-03-369 Telecommunications 

cases.10 Further, if it had consistently made these MAA task order awards 

to the contractors offering lower life-cycle prices, GSA could have realized 

an additional estimated $459,000 in savings for customer agencies in 

Dallas over the life of the contracts. 

Table 3: Comparison of 1-Year and Life-Cycle Price Analyses for Dallas 

Lowest cost contractor according to analysis (checks indicate analysis used) 

Customer 1st year price analysis Life-cycle price analysis Recipient of award 

Decision would have 

differed if life-cycle price 

analysis had been used 

 

1 3 Southwestern Bell AT&T Southwestern Bell Yes 

2 3 Southwestern Bell AT&T Southwestern Bell Yes 

3 3 Southwestern Bell AT&T Southwestern Bell Yes 

4 Southwestern Bell 3 Southwestern Bell Southwestern Bell No 

5 3 Southwestern Bell AT&T Southwestern Bell Yes 

6 3 Southwestern Bell AT&T Southwestern Bell Yes 

7 3 WinStar WinStar WinStar No 

8 Southwestern Bell 3 Southwestern Bell Southwestern Bell No 

9 Southwestern Bell 3 Southwestern Bell Southwestern Bell No 

10 Southwestern Bell 3 Southwestern Bell Southwestern Bell No 

11 AT&T 3 Southwestern Bell a Southwestern Bell Cannot predict a

12 Southwestern Bell 3 AT&T AT&T No 

13 WinStar 3 WinStar WinStar No 

14 3 Southwestern Bell AT&T Southwestern Bell Yes 

15 3 Southwestern Bell WinStar Southwestern Bell Yes 

16 3 Southwestern Bell WinStar Southwestern Bell Yes 

17 3 Southwestern Bell AT&T Southwestern Bell Yes 

18 3 WinStar WinStar WinStar No 

19 3 WinStar WinStar WinStar No 

20 3 Southwestern Bell AT&T Southwestern Bell Yes 

Source: GAO, GSA. 

Note: GAO analysis of GSA data. 

Southwestern Bell was the incumbent telecommunications service provider. 

Check marks indicate the actual time frame used by GSA to compare contractor pricing. 

Analyses are ordered chronologically by date of first task order award issued following each 

associated fair consideration decision. 

a Fair consideration decision made by GSA based on price and technical consideration (agency 

preference). 

A secondary inconsistency within fair consideration processes concerned 

the use of reconfiguration costs (costs to move, add, or change telephone 

 10 In 16 of 20 cases, GSA cites price and technical considerations as the basis for its 

decisions. 
Page 11 GAO-03-369 Telecommunications 

lines, services, or features) in contractor price comparisons. Although 

these charges are a part of all MAA contracts, only the Dallas regional 

office included estimates of these costs in the MAA price comparisons 

supporting its fair consideration decisions. Further, Dallas did not use 

these charges consistently: they appeared in only half the price 

comparisons completed, and they were calculated in two different ways. 

(In most cases, GSA staff based estimates on the assumption that 

10 percent of the telecommunications lines ordered would move locations, 

add services, or change features during the course of a year; in two cases, 

GSA staff assumed that services or features associated with 25 percent of 

lines ordered would change annually.) The reason for the variations in the 

use of these charges and in their estimates was not recorded in decision 

documentation. 

Table 4 shows that in 5 of 10 decisions made in Dallas, a different 

contractor might have been awarded the task orders if reconfiguration 

charges had not been included in price comparisons. (Three of these five 

decisions were based on price alone. Two of these decisions were based 

on both price and technical considerations, and so we cannot predict the 

effect of excluding reconfiguration charges.) 
Page 12 GAO-03-369 Telecommunications 

Table 4: Effect of Including Reconfiguration Charges in MAA Contractor Price 

Comparisons (Dallas) 

 

Result if reconfiguration charge were not 

included 

Customer 

Actual result, including 

reconfiguration charge Result 

Change in 

outcome 

1 Southwestern Bell AT&T Yes 

2 Southwestern Bell AT&T Yes 

3 Southwestern Bell AT&T Yes 

4 Southwestern Bell AT&T Unknown a

5 AT&T AT&T No 

6 Winstar Winstar No 

7 Southwestern Bell AT&T Unknown a

8 Southwestern Bell b Southwestern Bell No 

9 Southwestern Bell b Southwestern Bell No 

10 Southwestern Bell Southwestern Bell No 

Source: GAO, GSA. 

Note: GAO analysis of GSA data. 

Southwestern Bell was the incumbent telecommunications service provider. Comparisons are 

ordered chronologically by date of first task order award issued following each associated fair 

consideration decision. 

a Task order awarded based on price and technical considerations. 

b Analysis used reconfiguration estimate based on 25 percent of lines. In all other cases, the basis 

was 10 percent of lines. 

These variations exist because GSA has not established a common process 

for making fair consideration decisions. GSA did provide guidance on the 

fair consideration process to be followed in MAA cities following each 

contract award. This guidance provided general background, including the 

basis of the requirement in the Federal Acquisition Streamlining Act of 

1994; the exceptions to this requirement; and the procedure to be followed 

for issuing an MAA task order. However, it did not outline a common 

process or identify common costs to be considered other than contract 

prices. Rather, according to a GSA official, GSA permitted its regional 

offices to define and follow their own fair consideration processes in order 

to encourage innovation and to learn which process yields the best results. 

However, GSA headquarters has taken no action that would permit it to 

learn from any such experiences in order to address inconsistencies and 

determine the most suitable process. As a result, variations occur in the 

application of the fair consideration process, contrary to GSA’s stated 

interest in ensuring the consistency of the MAA program. 
Page 13 GAO-03-369 Telecommunications 

Further, these variations led to a lack of transparency that could hinder 

GSA’s ability to obtain full value from the fair consideration process. 

Specifically, although the MAA contracts outline the fair consideration 

procedure in broad terms, they do not outline specific aspects of the 

process that vary across MAA cities, such as costs that may be considered 

by the government in addition to the price of services, or the length of time 

that may be used to compare contractor prices. Because these aspects of 

the process are not disclosed, the contractors may find it difficult to 

determine their most competitive offers. 

GSA’s lack of oversight also hampered its ability to ensure that its fair 

consideration processes always complied with appropriate federal 

acquisition guidelines. Specifically, in six instances GSA violated the FAR 

by incorrectly using agency preference as a basis, in part or as a whole, for 

selecting a contractor for an MAA task order. According to this regulation, 

designating preferred awardees is not permissible in the award of task 

orders valued at more than $2,500. For orders that exceed that threshold, 

all contractors in a multiple-award contract must be given a fair 

opportunity to be considered. However, we identified six cases in Boston, 

Dallas, Denver, and Indianapolis where decisions explicitly cited agency 

preference as a factor for choosing a contractor for task orders above the 

$2,500 threshold.11 These violations of the FAR were allowed to occur 

because GSA did not provide adequate oversight to ensure that staff were 

correctly applying regulations when conducting fair consideration 

processes. As a result, the integrity of the fair consideration process could 

not be ensured, and potential savings were lost. In all six cases the 

incumbent provider was selected, which was also the higher priced service 

provider; selecting the lowest priced contractor in these cases would have 

yielded $76,000 in additional estimated cost savings to those agencies over 

the life of the contracts. 

 11 We identified two additional cases in Boston citing agency preference as a factor; 

however, because adequate documentation was not maintained, we are unable to 

determine what services were ordered and therefore whether those decisions breached the 

$2,500 threshold. 
Page 14 GAO-03-369 Telecommunications 

About one-fifth of GSA’s fair consideration decisions were not adequately 

documented. According to the FAR, documentation of all contractual 

actions must be maintained in a manner sufficient to provide a basis for 

decisions reached in the acquisition process, and to provide information 

for subsequent reviews of those decisions.12 Out of 483 fair consideration 

decisions from regional GSA offices in the 11 cities that we assessed, the 

documentation furnished for 91 (19 percent) did not adequately support 

the task order award that was made. 

One or more of the following four weaknesses were present in 

documentation for these 91 decisions: 

• An explanation of how the fair consideration decision was made was 

absent. Although contracting offices are required by the FAR to maintain 

documentation sufficient to constitute a complete history of contracting 

actions, this documentation was not available in 66 of the 483 decisions 

assessed. Specifically, the documentation of decisions reached during 

calendar year 2001 in Boston, Denver, Indianapolis, Los Angeles, New 

York, and St. Louis did not include a stated rationale for the decisions 

reached. As a result, in these cases it is not possible to determine whether 

or not the fair consideration decisions reached by GSA were justified. A 

GSA program officer stated that a decision rationale was not prepared for 

53 decisions in Los Angeles and St. Louis that were based on price alone 

because of a lack of clarity pertaining to documentation requirements for 

those cases. She also stated that 5 decisions in New York were not 

documented because of urgency, as those decisions were made shortly 

after the September 11th terrorist attacks in that city. Further, the GSA 

program officer stated that a decision rationale was not prepared for the 

balance of decisions because of administrative oversight. 

• The price analysis did not support the decision reached. As part of fair 

consideration decisionmaking, GSA usually included in each task order 

file an analysis that compared the service prices offered by each 

contractor over some defined period of time. In Dallas, Denver, and 

Indianapolis, eight task order awards were justified by price comparisons 

that did not support the decisions reached. Although price was the sole 

factor considered in these cases, the lowest priced contractors, as 

revealed by the price comparisons, were not awarded task orders. GSA’s 

 12 Contract documentation requirements are outlined in section 4.801 of the FAR. The FAR 

and Office of Federal Procurement Policy guidance require that task order awards be 

documented adequately in the contract file to provide a history of the transaction and a 

complete background for informed decisions at each step in the acquisition process. 

Numerous Fair 

Consideration 

Decisions Were Not 

Adequately 

Documented 
Page 15 GAO-03-369 Telecommunications 

decision documentation does not explain why these awards were made to 

higher priced contractors. 

• Technical factors were cited but not supported. According to the 

procedure defined in the MAA contracts, fair consideration decisions may 

be based on price or on a combination of price, technical factors, and past 

performance. How these technical factors are weighted depends on the 

particular circumstances of each decision. Technical factors were cited as 

the reason for fair consideration decisions, either as a whole or in part, in 

four MAA cities: Boston, Dallas, Indianapolis, and New York. For three of 

these cities, Boston, Dallas, and Indianapolis, we were not able to 

determine how these technical factors were applied to support a total of 

20 decisions. Contract documentation for these 20 decisions included a 

statement that both price and technical factors were considered. However, 

in one case, the specific factor considered was not identified. In the other 

19 cases, the specific technical factor was identified, but the 

documentation did not specify how it supported the decision reached. 

• Other documentation weaknesses were identified in Boston. 

Documentation prepared to support fair consideration decisions in Boston 

contained two additional weaknesses. In three cases, the decision 

documentation suggests that not all MAA contractors were included in 

those fair consideration evaluations, but it does not indicate why not all 

contractors were considered. Further, the documentation in three other 

decisions indicates that price was not considered in these cases, although 

price must be considered in all fair consideration decisions. 

In three regional offices, GSA has taken some action to improve its fair 

consideration documentation. Specifically, in response to concerns that 

we initially raised during our prior review of early MAA contract 

implementation efforts,13 GSA improved its decision documentation in 

Cleveland and Indianapolis by including additional analyses and clarifying 

memorandums in those contract files. In addition, Denver staff have also 

taken action to correct their files. 

Nevertheless, GSA has yet to take nationwide action to improve its fair 

consideration documentation. Currently, weak documentation of fair 

consideration decisions makes it difficult to determine the basis upon 

 13 The results of that review were reported earlier: U.S. General Accounting Office, 

Telecommunications: GSA Action Needed to Realize Benefits of Metropolitan Area 

Acquisition Program, GAO-02-325 (Washington, D.C.: Apr. 4, 2002). 
Page 16 GAO-03-369 Telecommunications 

which a contractor was selected for a task order. These problems were 

permitted to occur because GSA did not establish uniform guidelines to 

ensure that all regional offices were documenting fair consideration 

decisions in a manner consistent with the FAR. As a result, in 19 percent of 

the cases we reviewed, GSA, customer agencies, MAA contractors, and the 

Congress do not have assurance that the procedure followed by GSA to 

award MAA task orders was properly applied. 

In MAA multiple-award cities, GSA attempted to reduce the cost of 

telecommunications services by asking contractors to submit price 

quotations to compete for task orders. However, the process had mixed 

results in the only MAA city in which we could do a partial evaluation. (We 

could not do a comprehensive evaluation because of limitations in 

documentation.) For acquiring some types of services, substantial savings 

were realized by the use of Requests for Quotations (RFQ), but for others, 

the savings were not sufficient to offset the cost of paying pre-MAA prices 

during the time taken to complete the process. 

GSA’s most common approach to selecting contractors for task orders was 

to issue an RFQ, rather than basing decisions on published contract prices 

alone: specifically, GSA followed this process in 347 out of the 394 

decisions reached in the 11 MAA cities in which fair consideration 

processes were conducted.14 Of the 11 cities, GSA issued RFQs to support 

fair consideration in 8. (In the 3 other cities—Boston, Los Angeles, and St. 

Louis—the documentation was not sufficient to determine whether GSA 

issued RFQs.) Denver was the only city, of the 11 reviewed, where GSA 

staff documented their actions while reaching most fair consideration 

decisions. As a result, Denver was the only city where we could make an 

 14 Documentation in 89 cases was not sufficient to determine whether or not an RFQ 

process was used. 

Use of Requests for 

Quotations Produced 

Mixed Results, but 

Limited Data Preclude 

a Thorough 

Evaluation 
Page 17 GAO-03-369 Telecommunications 

assessment (although still partial15) of the cost-effectiveness of the RFQ 

process. We were not able to comprehensively evaluate the costeffectiveness of the RFQ process across all 11 MAA cities, or to partly 

assess processes in any other city, because the documentation maintained 

was not sufficient for that purpose. 

Despite their limitations, data available on the RFQ process in Denver 

indicate substantial differences in savings realized, depending on the types 

of local telecommunications services acquired; therefore, this process may 

not be cost-effective for acquiring all types of local telecommunications 

services. GSA used its MAA contracts in Denver to acquire two types of 

services: one type is a large telephone line, known as a trunk, which is 

used to interconnect a customer-owned switch, called a private branch 

exchange (PBX),16 to the contractor’s network; the second type is a voice 

telephone line served by a switch that is owned and operated by the 

contractor. According to our evaluation of Denver’s records for 119 fair 

consideration decisions17 that preceded award of task orders for these two 

types of services, the benefit of the RFQ process (over the life of the 

contracts) varied between the two. Specifically, in five of the eight cases 

where GSA sought to buy PBX trunks, the MAA contractor waived or 

reduced service initiation charges, reduced its monthly recurring cost, or 

both (no additional benefits were derived by this process in the three 

 15 In general, the complete RFQ process has four segments. In the first segment, GSA 

prepares and issues the RFQ to the MAA contractors. In the second, the contractors 

prepare and submit their RFQ responses. In the third, GSA reviews and accepts the RFQ 

responses. Finally, GSA compares contractor prices and awards task orders. The 

documentation in 40 of 121 cases in Denver was not sufficient to allow a complete 

assessment, because it did not permit us to determine the time it took to complete all 

discrete segments of the process, such as the time to compare contractor prices, which 

would be essential to a complete assessment. Because of this limitation, we could not 

comprehensively evaluate this process, nor can we present results in precise terms. In 2 of 

the 121 decisions, sufficient data were not available to permit any analysis. The available 

data for the other 119 decisions do suffice, however, to permit general observations. 

Additional information on our methodology is disclosed in appendix II. 

16 A private branch exchange (PBX) is a communications switching system serving an 

organization and normally located on the organization’s premises. 

17 Denver made 128 fair consideration decisions, but they issued RFQs to contractors in 

only 121 of those decisions. In 2 of those 121 decisions, sufficient data were not available to 

permit any analysis. 
Page 18 GAO-03-369 Telecommunications 

other cases). For PBX services, the net savings were substantial—an 

estimated $790,000.18

In contrast, for switched voice services, the benefits of using the RFQ 

process were less substantial, and the available data suggest that they 

were not sufficient to offset the savings deferred while the process was 

completed. In 23 of 111 cases, additional cost or price reductions were 

obtained in the form of waived or reduced service initiation charges that 

did offset the value of savings deferred. However, in 88 cases, the benefit 

realized did not offset the deferred savings. Thus, using the RFQ process 

to acquire all switched voice services instead of taking immediate 

advantage of low MAA contract prices was not cost-effective. 

GSA was not able to maximize the value of the RFQ process for the benefit 

of its customers, however, because it did not institute performance 

measures that would allow it to gauge cost-effectiveness and determine 

where the RFQ process would be most suitable for acquiring local 

telecommunications services, or that would aid in identifying where its 

processes could be improved. Furthermore, because adequate 

documentation of fair consideration decisions was not maintained 

throughout this program, GSA does not have the data it would need to 

evaluate its processes throughout its MAA cities and to make 

improvements. As a result, GSA is unable to direct the most suitable and 

cost-effective use of the RFQ process in the administration of its MAA 

contracts. 

Inconsistencies in GSA’s process and practices for determining how it 

awards MAA task orders to its contractors are hampering its ability to 

 18 To estimate net savings, we identified those fair consideration decisions where the 

government benefited either through waived or reduced service initiation charges or 

through further reductions in contract pricing, and we estimated the total value of these 

benefits. In all cases, we then estimated the value of monthly savings deferred until the 

RFQ process was completed. We evaluated the difference between these two figures to 

determine the net cost or net savings associated with the RFQ process. In 40 of the 119 

decisions evaluated, complete data were not available regarding the final segment of this 

process (3 cases pertaining to PBX service and 37 cases pertaining to switched voice 

services). In those cases, we assumed that the process was completed at the same time that 

GSA received the final contractor RFQ response. Because this assumption may reflect a 

shorter time period than use of an actual process completion date for these cases, the 

effect of this assumption is to minimize the value of savings deferred, and as a result, our 

estimates may overstate the potential net savings and may understate any potential net 

loss. The value of net savings is expressed in constant year 2001 dollars. 

Conclusions 
Page 19 GAO-03-369 Telecommunications 

appropriately administer these contracts; because these inconsistent 

processes are not transparent, contractors may not be able to compete 

most effectively. In addition, weaknesses in documenting fair 

consideration decisions and inadequate oversight of the process 

undermine GSA’s ability to assure customer agencies, MAA contractors, 

and the Congress that the procedures it followed to award MAA task 

orders were always appropriately and fairly applied. Further, because it 

did not establish measures that would enable it to learn from the fair 

consideration experiences in its regional offices, GSA was unable to gauge 

the cost-effectiveness of RFQ processes so that it could make the most 

suitable and effective use of RFQs to acquire local telecommunications 

services. As a result, GSA cannot provide assurance that its MAA fair 

consideration processes are sound, and that they provide the government 

the maximum benefit from the MAA contracts. 

We recommend that the Administrator of General Services establish a 

common process for GSA to consistently follow in reaching its fair 

consideration decisions under the MAA contracts, and that he direct the 

FTS Commissioner to oversee the proper application of this process. This 

common process should include a uniform time frame for comparing MAA 

contractor prices, and it should specify the cost elements (such as 

reconfiguration costs) to be considered in those comparisons. Should 

local conditions warrant deviation from this common process, we 

recommend that GSA document these deviations and communicate them 

to GSA’s MAA contractors, so that all MAA stakeholders have a clear and 

consistent understanding of the process being followed. This process 

should include the management oversight necessary to ensure adherence 

to the FAR prohibition against the use of agency preference in decisions 

on task orders valued at more than $2,500. 

We also recommend that the Administrator of General Services direct the 

FTS Commissioner to establish and apply uniform guidelines for 

documenting fair consideration decisions that are sufficient to ensure that 

GSA appropriately reaches its decisions to award task orders. For each 

fair consideration decision, this documentation should include 

• the rationale for the decision; 

• the supporting contractor price comparison; and 

• support for other factors considered in reaching the decision, such as 

technical and past performance considerations, as appropriate. 

Recommendations for 

Executive Action 
Page 20 GAO-03-369 Telecommunications 

We further recommend that the Administrator of General Services direct 

the FTS Commissioner to develop performance measures to determine 

when the RFQ process best achieves program goals. Once GSA has 

outcomes for these measures, it should evaluate the results of its RFQ 

process to identify potential improvements and to determine its most 

suitable and cost-effective use. 

In written comments on a draft of this report, the Administrator of General 

Services agreed with our recommendations and indicated that GSA was 

acting to implement them. Specifically, GSA has created draft guidance on 

its fair consideration process under MAA procurements, and it plans to 

disseminate this guidance to all its FTS regional offices by April 11, 2003. 

According to the Administrator, this guidance addresses all our 

recommendations and will ensure consistency in the fair consideration 

process and supporting documentation. GSA also provided technical 

comments that we have incorporated into this report as appropriate. 

GSA’s written comments are presented in appendix III. 

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we will not distribute it until 30 days from its issue date. 

At that time, we will send copies of this report to the Ranking Minority 

Member, Committee on Government Reform, and interested congressional 

committees. We will also send copies to the Director of the Office of 

Management and Budget and the Administrator of the General Services 

Administration. Copies will be made available to others on request. In 

addition, this report will be available at no charge on our Web site, at 

http://www.gao.gov. 

Agency Comments 

and Our Evaluation 
Page 21 GAO-03-369 Telecommunications 

Should you or your staff have any questions on matters discussed in this 

report, please contact me at (202) 512-6240. I can also be reached by Email at koontzl@gao.gov. Other key contributors to this report are Scott 

Binder, Harold Brumm, Barbara Collier, Kevin E. Conway, Frank Maguire, 

Mary Marshall, Charles Roney, and Michael Stiltner. 

Sincerely yours, 

Linda D. Koontz 

Director, Information Management Issues 
Appendix I: Termination Charges and Service 

Initiation Charges 

Page 22 GAO-03-369 Telecommunications 

At your request, we evaluated the effect of contract termination charges 

and contract service initiation charges (SIC)19 on the results of fair 

consideration decisions for awarding task orders in cities with multipleaward Metropolitan Area Acquisition (MAA) contracts. Under acquisition 

contract law, agencies are permitted to consider termination charges and 

SICs in contract award decisions. 

Our analysis of termination charges showed that they had minimal impact 

on fair consideration decisions. The General Services Administration 

(GSA) included these charges in 16 contract price comparisons in Dallas, 

the only city in which they were relevant.20 Termination charges had a 

direct effect on 5 of 16 fair consideration decisions; in other words, those 5 

decisions might have resulted in an award to another contractor if Dallas 

had not included the termination charges as part of its contract price 

comparisons.21

Our analysis of SICs showed that they were included as a cost factor in 

GSA’s fair consideration price comparisons in 7 of 11 MAA cities: Boston, 

Cleveland, Dallas, Indianapolis, Minneapolis, New York, and Philadelphia. 

In these 7 cities there were 272 fair consideration decisions that included 

SICs in price comparisons, and SICs were a deciding factor in 61 of these 

decisions. That is, if SICs had not been part of GSA’s analyses, the award 

decision would have been issued to another contractor in 22 percent of 

those decisions. SICs did not affect more decisions primarily because of 

the period of time used in comparing contractor prices. In 90 percent of 

fair consideration decisions where SICs were identified as a cost factor, 

GSA used the contract life-cycle period as the evaluation time frame. When 

SICs were amortized over the life of the contract, these charges were 

usually not large enough to influence fair consideration decisions. 

 19 Service initiation charges are charges to a customer by a contractor for the initiation of a 

new telecommunications service, such as the acquisition of a new line or a new feature. 

20 Contract termination charges were a factor in Dallas because termination charges were 

part of a Southwestern Bell Aggregated Switch Procurement (ASP) contract that was 

awarded before the MAA contracts. That contract imposes a $25.90 charge to disconnect 

each line from the ASP service when the customer transitions to a contractor other than 

Southwestern Bell. (Specifically, the contract identifies a charge of $19.92 per line. After 

applying its surcharge to that amount, GSA charges the agency a disconnect charge of 

$25.90.) 

21 Three of these decisions were based on price alone, and two were based on price and 

technical considerations. It is unclear from the decision documentation, however, how 

technical considerations supported these decisions. 

Appendix I: Termination Charges and Service 

Initiation Charges 
Appendix I: Termination Charges and Service 

Initiation Charges 

Page 23 GAO-03-369 Telecommunications 

For the balance of the decisions, SICs were not included in price 

comparisons, the treatment of SICs could not be determined, or cost 

comparisons were not completed: 

• In all 44 decisions in Los Angeles and in 9 decisions in Boston, no SICs 

were included in fair consideration price comparisons. 

• Contract price comparisons were not completed to support four fair 

consideration decisions in Boston, one in Philadelphia, and one in Atlanta, 

because only one MAA contractor was responsive to their RFQs. A 

contractor price comparison was also not completed to support one fair 

consideration decision in New York City, where the award was based on 

the urgency of the requirement. 

• In all nine decisions in St. Louis, seven decisions in Boston, five decisions 

in New York City, and two decisions in Indianapolis, we could not 

determine whether SICs were used in making fair consideration decisions 

because the documentation was not sufficient to permit us to make that 

determination. 

In the remaining MAA city, Denver, SICs were not included in comparisons 

of contractor prices; only monthly recurring charges were included for 

comparison purposes. However, in 22 of its 128 price comparisons in 

Denver, GSA did cite the value of SICs in recommending that task order 

awards be made to contractors with a higher monthly recurring cost for 

services, because the agency could save more money over the contract 

life; we verified the accuracy of those analyses. To show the total cost of 

the MAA service in those cases where the recommended contractor 

charged SICs, GSA staff in Denver disclosed these charges as a separate 

item in the decision results presented to customer agencies. This 

disclosure was an amortization analysis indicating the time that it would 

take for monthly MAA contract savings to amortize that one-time cost. 
Appendix II: Objectives, Scope, and 

Methodology 

Page 24 GAO-03-369 Telecommunications 

In our review of the Metropolitan Area Acquisition (MAA) contracts 

managed by the General Services Administration (GSA), our objectives 

were to determine (1) whether GSA’s fair consideration process varies 

within or among cities, and if so, whether or not variations affect the 

process results; (2) whether GSA’s documentation properly and 

appropriately supports its fair consideration decisions; and (3) whether 

the use of Requests for Quotations in the fair consideration processes 

followed by GSA is cost-effective. We also determined whether contract 

termination charges and service initiation charges affected GSA’s fair 

consideration decisions. 

We reviewed all fair consideration decisions made by GSA during calendar 

year 2001 as part of the MAA contracts’ service ordering process. To 

determine whether there were variations in the fair consideration process, 

we reviewed the fair consideration procedure outlined in the MAA 

contracts, applicable acquisition guidelines, and GSA Federal Technology 

Service guidance and direction on the fair consideration procedure. Using 

the decision documentation maintained by the GSA regional offices, we 

then reviewed the steps taken by those offices in conducting their fair 

consideration processes. We gathered and assessed documentary and 

testimonial explanations for variations within or among MAA regional 

offices in their fair consideration processes. 

To determine whether GSA’s documentation properly and appropriately 

supports its fair consideration decisions, we reviewed appropriate federal 

contract administration guidelines including the Federal Acquisition 

Regulation (sections 4.801 and 16.505) and Office of Federal Procurement 

Policy guidance (May 4, 1999, Memorandum for Agency Senior 

Procurement Executives regarding “Competition and Multiple Award Task 

and Delivery Order Contracts”), as well as MAA contract language 

outlining the fair consideration procedure. We then reviewed the 

documentation maintained by GSA’s regional offices to support fair 

consideration decisions. This documentation included, where available, 

contractor price information, GSA’s analyses that compared contractor 

prices, and other memorandums supporting and documenting the decision 

process. We also reviewed the task order documentation prepared by GSA 

following its fair consideration decision, in order to match the service 

ordered with the decision reached. 

To determine whether the use of Requests for Quotations (RFQ) in the fair 

consideration processes followed by GSA is cost-effective, we reviewed 

regional offices’ documentation to determine whether data were available 

that would permit the evaluation of time taken to complete the fair 

Appendix II: Objectives, Scope, and 

Methodology 
Appendix II: Objectives, Scope, and 

Methodology 

Page 25 GAO-03-369 Telecommunications 

consideration process. Following our review of the documentation, we 

selected Denver as a multiple-award MAA city where the documentation 

available was sufficient to permit evaluation of key aspects of that 

process, such as determining the approximate time taken to complete the 

RFQ process and the benefits derived from that additional competition. 

Specifically, we used data regarding the RFQ issue date and the date when 

Denver completed its analysis to determine the time taken to complete 

that process in the 79 decisions where those data were available. In the 40 

other decisions where data were not available regarding the complete 

process (3 cases pertaining to PBX service and 37 cases pertaining to 

switched voice services), we assumed that the process was completed at 

the same time that GSA received the final contractor RFQ response.22 We 

also examined documentation to determine, for each decision, any 

additional benefit realized as a result of the RFQ process, such as lowered 

monthly prices or waived or reduced service initiation charges. Where 

data were available to determine whether the value of benefits derived 

from the RFQ process justified the time required to complete that process, 

we compared pre-MAA prices for services with MAA prices, in order to 

calculate a baseline savings provided by the MAA contracts. We then 

evaluated the cost of the RFQ process exclusively in terms of the monthly 

savings that were deferred until the fair consideration process was 

completed. We did not include the labor cost expended by GSA or its MAA 

contractors in completing this process. 

To determine the effect of contract termination charges and service 

initiation charges on fair consideration decision results, we reviewed the 

price comparisons that were prepared by GSA regional offices. Where 

applicable, we calculated prices for services with and without these 

additional charges to determine whether the decision supported was 

influenced by these charges. 

 22 Because this assumption may reflect a shorter time period for these cases, the effect of 

this assumption is to minimize the time taken to complete the RFQ process, and therefore 

the value of savings deferred during that period. As a result, our estimates may overstate 

the potential net savings and may understate any potential net loss. 
Appendix II: Objectives, Scope, and 

Methodology 

Page 26 GAO-03-369 Telecommunications 

We conducted our review from May 2002 through February 2003, in 

accordance with generally accepted government auditing standards. 
Appendix III: Comments from the General 

Services Administration 

Page 27 GAO-03-369 Telecommunications 

Appendix III: Comments from the General 

Services Administration 
Appendix III: Comments from the General 

Services Administration 

Page 28 GAO-03-369 Telecommunications (310341) 
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