TELECOMMUNICATIONS

Metropolitan Area

Acquisition Program

Implementation and

Management

Statement of Linda D. Koontz

Director, Information Management Issues

United States General Accounting Office

GAO Testimony

Before the Subcommittee on Technology and Procurement

Policy, Committee on Government Reform, House of

Representatives

For Release on Delivery

Expected at

2 p.m. EDT,

Wednesday,

June 13, 2001

GAO-01-798T
Mr. Chairman and Members of the Subcommittee:

Thank you for inviting us to participate in today’s hearing on the implementation

and management of the General Services Administration’s (GSA) Metropolitan

Area Acquisition (MAA) program. As you know, GSA initiated its MAA program in

1997 in order to achieve immediate, substantial, and sustained price reductions

for local telecommunications in selected metropolitan areas, to expand agencies’

choices of high-quality services, and to encourage cross-agency sharing of

resources. Further, service providers awarded contracts under GSA’s MAA

program may eventually be allowed to compete for FTS2001 long distance service,

so that federal agencies could potentially acquire end-to-end local and long

distance telecommunications services from one source.

Mr. Chairman, in an April 2001 letter, you requested us to review the MAA

program. Specifically, as agreed with your staff, our work to date has focused on

• the status of MAA contract implementation,

• the fees charged customer agencies by GSA for managing and administering

those contracts, and

• the steps being taken by GSA to enable the MAA and FTS2001 contractors to

cross over between these programs and offer both local and long distance

services.

My testimony this afternoon provides the interim results of our work. This work is

continuing and should be completed later this year.

Results in Brief

As of June 2001, GSA had awarded 37 MAA contracts for 20 metropolitan areas.

These contracts required transition from existing GSA contracts to the MAA

contracts to be completed within 9 months after contractors were authorized to

begin implementation. Of the 14 metropolitan areas in which authorization was

given 9 months ago or earlier, this time goal was met in 2 areas, but in the 12
2

others it was not. For example, the MAA transitions for New York, Chicago, and

San Francisco are not yet complete almost 2 years after the contractors were

authorized to begin implementation.

GSA and the MAA contractors have faced significant challenges in implementing

this program. First, in New York City, the newly deregulated local telecommunications environment has produced unexpected barriers to implementation, which

will take time to resolve. In addition, GSA and the MAA contractors have raised

numerous other factors that they believe have contributed to implementation

delays, including contractor performance, customer budgets, and the process

used by GSA to allocate business among contractors in multiple award cities.

These delays, in turn, postpone the realization of savings under the MAA program.

GSA charges customer agencies two types of fees to recover the costs of their

contract management and administration activities. Depending on the specific

metropolitan area, these fees (which are assessed as a percentage of the amount

charged by the contractor for services), in total, currently range from about 28 to

84 percent. According to GSA, while these percentages appear substantial, the

total cost of services, including these fees, is substantially lower than the prices

under other GSA contracts for local services. GSA does not separately disclose

these fees and instead requires the contractors to embed them in the contract

prices. As a result, agencies do not have complete information to help them

determine whether using GSA’s services is their most economical option.

Although GSA has not yet allowed MAA contractors to offer FTS2001 services, it

is taking steps to allow crossover between the two programs. In December 2000,

GSA permitted FTS2001 contractors and other MAA contractors to offer local

services in three of the MAA markets. In addition, GSA has drafted a paper to

clarify its position on permitting additional competition in the FTS2001 program.

This paper states that with the transition to FTS2001 nearing completion, GSA has

concluded that it is appropriate to proceed with determining when to allow

additional competition for FTS2001 services. As one of the first steps in this
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process, GSA plans to present this clarification to industry for comment on

June 28, 2001.

Background

The MAA program was conceived just a few months after passage of the Telecommunications Act of 1996, which was intended to increase competition and reduce

regulations in the telecommunications industry. The MAA program sought to take

advantage of emerging competition in the local services market; the program

focused on the largest cities in the country, whose population density would be

likely to draw competitors into their markets. GSA believed that this emerging

competition would create an opportunity for the government to gain an immediate

price reduction in local telecommunications services. Further, it envisioned the

MAA contracts as a complement to existing contracts in metropolitan areas, as

well as a solution for local service contracts that are expiring.

The MAA program is a contractual vehicle for offering local voice and selected

data services. Each 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. The contracts state that all initial service locations

identified in these contracts are to be transitioned from existing GSA contracts to

the MAA contracts within 9 months after GSA gives “notice to proceed”—

authorization for the contractor to begin implementation.

The initial stage of the MAA program (Phase I) consisted of pilot acquisitions in

the New York, Chicago, and San Francisco metropolitan areas in May 1999.

Bolstered by substantially lower prices in these three pilot cities, GSA expanded

the MAA program to other metropolitan areas throughout the country, and

awarded contracts in 17 additional cities (Phase II) between February 2000 and

February 2001. In Phase III, awards are expected to be made by the end of this

calendar year in seven additional cities: Detroit, Kansas City, Norfolk, Oklahoma

City, Salt Lake City, San Antonio, and Seattle. GSA estimates that the federal
4

government could save about $1.1 billion over the 8-year life of the 37 MAA

contracts awarded to date.1

Each MAA contract also has a minimum dollar guarantee that is divided equally

among all original contract awardees for a given metropolitan area. These

guarantees were largest in the pilot cities, which were the first (and largest) MAA

markets: for New York, the guarantee was $7 million; for Chicago, $3 million; and

for San Francisco, $2 million. Guarantees in the most recent contracts have been

significantly lower, at $100,000.

GSA’s Federal Technology Service (FTS) has responsibility for the MAA program.

FTS headquarters is responsible for planning and program management, while

FTS staff in GSA’s field offices implement and administer the MAA contracts. As a

self-sustaining organization, GSA FTS assesses customer agencies two types of

management fees to finance its activities: a contract management fee and a fullservice fee. The contract management fee is to cover general program,

acquisition, and contract management activities and is applied as a percentage of

service cost. The full-service fee covers service ordering, implementation planning

and coordination, and billing. The full-service fee is an additional percentage

applied on top of the total service cost plus the contract management fee.

Federal agencies are not required to use the MAA contracts. Depending on their

specific requirements, federal agencies may use the telecommunications services

provided through a GSA regional telecommunications services program2 (using

either GSA’s MAA contracts or one of GSA’s other local services contracts or

agreements), or they may acquire and manage their own local telecommunications services and the associated equipment. A substantial number of

 1

 GSA based these savings estimates on the difference between current service prices in effect for

each of the 20 MAA cities and the total amount of the lowest offeror’s prices for a given city. 2

 FTS offers a variety of programs through which agencies can acquire local telecommunications

service. For example, the Aggregated System Procurement Program consolidated local

requirements into an overall system procurement based on the Bell Operating Company

boundaries. The Individual System Procurement Program serves locations where the aggregated

program does not. In addition, regional FTS offices have also obtained Rate Stabilization

Agreements that allow agencies to acquire local tariffed telecommunications services at short-term

discounts.
5

agencies do choose to acquire services through GSA: in FY2000 for example,

GSA’s local telecommunications services program provided approximately

540,000 active service lines to government agencies, at an average monthly cost

per line of $18.81.

Although it focuses on local services, the MAA program also has implications for

the long distance market. Part of the overall FTS program strategy, developed in

1997 in consultation with industry and the Congress, was to eventually permit

contractors to offer both local and long distance services through crossover

between the local MAA contracts and the long distance FTS2001 contracts,

thereby allowing further competition in both markets. Specifically, MAA

contractors would be permitted to compete for FTS2001 long distance business

(1) where allowed by law and regulation, (2) after the FTS2001 contracts have

been awarded for a year (known as the forbearance period), and (3) if GSA

determines that it is in the government’s best interests to allow such additional

competition.

Objectives, Scope and Methodology

The objectives of our ongoing review are to provide information on (1) the status

of MAA contract implementation, (2) the fees charged customer agencies by GSA

for the management and administration of those contracts, and (3) the steps being

taken by GSA to enable the MAA and FTS2001 contractors to cross over between

these programs and offer both local and long distance services.

In our work to date, we have addressed these objectives by reviewing MAA

contract documentation, including solicitations, contracts, and associated

modifications. We also reviewed an internal GSA management report on MAA

implementation challenges prepared by GSA’s Office of Inspector General (OIG),

and interviewed the staff who prepared this report.

To evaluate the status of MAA implementation efforts, we reviewed reports

generated by GSA’s automated MAA status tracking system, verifying the
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information in the reports against other available documentation such as billing

system reports. To better understand how the program is being implemented, we

visited the New York City FTS Region 2 office, reviewed contract management

documentation, and interviewed GSA FTS regional management staff responsible

for program implementations in New York and in Buffalo. To gain the customers’

perspective on MAA implementation, we also interviewed agency managers at the

Department of Housing and Urban Development in New York City and at the

Office of U.S. Trustees and the U.S. Attorney’s Office in Washington, D.C. We also

met with AT&T MAA managers in Washington, D.C., and in New York, as well as

Verizon MAA program managers in Washington, D.C., to gain additional

information and documentation pertaining to program implementation and

management.

To determine the management fees charged by GSA and how those fees are

derived, we reviewed documentation on those fees as well as MAA management

roles and responsibilities, and interviewed FTS program managers as well as the

FTS Financial Service Center manager responsible for developing those rates.

To determine the steps being taken by GSA regarding FTS crossover, we obtained

and reviewed an initial draft policy clarification prepared by GSA, analyzed

documentation pertaining to GSA’s December 2000 decision to lift forbearance in

the MAA pilot cities, and reviewed documentation pertaining to GSA's first

crossover award. We also discussed the draft policy clarification with GSA FTS

managers.
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MAA Implementation Status

As of June 2001, GSA had awarded 37 MAA contracts for 20 metropolitan areas.

Table 1 summarizes MAA contract awards and GSA’s estimated savings for each

area. As indicated in the table, in 8 of the 20 metropolitan areas, a single contract

was awarded. In addition, GSA recently decided to allow MAA contractors to

cross over between cities and offer services in areas other than those in which

they were awarded an MAA contract.3 Two contractors have so far responded to

this decision: In March 2001, GSA accepted Verizon’s proposal to offer MAA

services in New York, and Winstar has submitted proposals to offer services in all

three Phase I cities.

 3

 These crossovers are not reflected in the table because they do not represent new awards.
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Table 1. MAA Contracts Awarded as of June 5, 2001

Metro area Award date

Estimated savings

(millions of dollars) Contractor(s)

Phase I (pilot)

New York 20 May 1999 $150 AT&T

Chicago 20 May 1999 75 AT&T

San Francisco 20 May 1999 32 AT&T

Phase II

Buffalo 24 Feb 2000 6.4 AT&T

Verizon

Cincinnati 23 Mar 2000 36.6 Winstar

Cleveland 24 Mar 2000 20 Ameritech (SBC)

AT&T

Los Angeles 24 Mar 2000 47 Pacific Bell (SBC)

Winstar

Baltimore 28 Mar 2000 44 Winstar

Atlanta 26 Apr 2000 174 Bell South

Winstar

Miami 26 Apr 2000 44 Bell South

Winstar

Indianapolis 27 Apr 2000 51 AT&T

SBC Global

Winstar

St. Louis 27 Apr 2000 36 Southwestern Bell (SBC)

Winstar

Minneapolis 31 May 2000 13 Qwest

Winstar

Dallas 30 Jun 2000 128 AT&T

Southwestern Bell (SBC)

Winstar

Denver 12 Jul 2000 68 AT&T

Qwest

Winstar

Boston 31 Jul 2000 78 AT&T

Southwestern Bell (SBC)

Verizon

Winstar

Albuquerque 31 Aug 2000 19 Qwest

Boise 31 Aug 2000 6.5 Qwest

New Orleans 16 Oct 2000 11 Bell South

Philadelphia 27 Feb 2001 $66 AT&T

Winstar

Source: GSA Federal Technology Service
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MAA Implementation Has Been Delayed

Although the MAA contracts require transition to be completed within 9 months

after contractors are given notice to proceed, GSA’s implementation of these

contracts has not been as fast as anticipated. As shown in table 2, for example,

almost 2 years after notice to proceed was given, 66 percent of users in San

Francisco, 43 percent of users in Chicago, and only 12 percent of users in New

York are converted to MAA contracts.

Table 2: Percentage of GSA Local Telecommunications Users

Converted to MAA Services as of June 1, 2001

Metro area Award date

Notice to

proceed date

Implementation

status

New York 20 May 1999 18 Jul 1999 11.74%

Chicago 20 May 1999 15 Jul 1999 42.92%

San Francisco 20 May 1999 19 Jul 1999 65.76%

Buffalo 24 Feb 2000 15 Jun 2000 100.00%

Cincinnati 23 Mar 2000 14 Jul 2000 100.00%

Cleveland 24 Mar 2000 06 Jul 2000 0.00%

Los Angeles 24 Mar 2000 14 Jul 2000 13.54%

Baltimore 28 Mar 2000 29 Jun 2000 7.01%

Atlanta 26 Apr 2000 29 Jun 2000 0.10%

Miami 26 Apr 2000 29 Jun 2000 0.00%

Indianapolis 27 Apr 2000 06 Jul 2000 1.20%

St. Louis 27 Apr 2000 17 Aug 2000 16.49%

Minneapolis 31 May 2000 19 Sep 2000 84.7%

Dallas 30 Jun 2000 11–22 Sep 2000 28.22%

Denver 12 Jul 2000 13 Sep 2000 28.59%

Boston 31 Jul 2000 12 Sep 2000 5.43%

Albuquerque 31 Aug 2000 03 Oct 2000 0.00%

Boise 31 Aug 2000 23 Feb 2001 0.00%

New Orleans 16 Oct 2000 09 Nov 2000 75.64%

Philadelphia 27 Feb 2001 None to date 0.00%

Source: GSA Federal Technology Service

Progress to date implementing the more recently awarded contracts in the Phase

II cities has also been mixed. Of the 11 phase II cities where notice to proceed was

issued 9 months ago or more (September 13, 2000, or earlier), two—Buffalo and

Cincinnati—have completed the conversion to the MAA contracts; implementation in the other 9 cities ranged from 0 to 29 percent complete, as of June 1. In the
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six cities where notice was given to proceed after September 13, 2000, completion

rates varied from 0 to 85 percent as of June 1.

GSA and Contractors Face Challenges in Completing MAA

Implementation

Although they are making progress, GSA and the MAA contractors have faced

significant challenges in completing this transition. First, in New York City, the

newly deregulated local telecommunications environment has produced

unexpected barriers to implementation, which will take time to resolve. In

addition, GSA and the MAA contractors have raised numerous other factors that

they believe have contributed to implementation delay. These factors include

contractor performance, local number portability, contractor marketing, customer

budgets, and the process used by GSA to allocate business among contractors in

multiple award cities.

Implementing the MAA contract in the newly deregulated local telecommunications environment has created challenges for both GSA and the MAA

contractors in New York City. Specifically, more than half the business lines

served within this MAA are affected by a regulatory interpretation of access

rights, and the associated connection and usage costs, to a building’s riser cable (a

cable that carries telecommunications services from the network demarcation

point, typically in the basement of a building, to distribution facilities within the

building). The Federal Communications Commission (FCC) has reviewed this

issue and ruled that the incumbent local exchange carrier would retain ownership

of the inside wiring, including the riser cable, but that the carrier could not

impose fees on the use of this wiring. As a result, the MAA contracts were written

under the assumption that the riser cable would be available free of charge to the

MAA contractor. However, in New York, the incumbent carrier, Verizon, requires

payment from the MAA contractor, AT&T, under a ruling by the New York Public

Service Commission (a state regulatory body) that the incumbent carrier could

charge for use of the riser cable. As a result, GSA and AT&T have had to delay
11

implementation efforts in the affected buildings until they can determine a

mutually acceptable strategy for dealing with this problem.

In our work to date, GSA and the MAA contractors have raised numerous other

factors that they believe have contributed to implementation delays. These

include the following:

Contractor performance. According to GSA, AT&T has experienced systemic

performance problems that have resulted in untimely service delivery and service

outages during implementation and have reduced the willingness of customers to

use MAA services. For example, GSA FTS officials told us that implementation in

San Francisco was delayed because of recurring equipment problems that AT&T

encountered as it installed Integrated Services Digital Network (ISDN) services.

According to GSA, these equipment problems resulted in AT&T transitioning only

a few lines at time, significantly adding to implementation time.

When we discussed these issues with AT&T MAA program managers, they

acknowledged that there had been some performance issues. However, they told

us that they recently changed hardware suppliers in order to resolve the

equipment problems they had experienced in installing ISDN services. In addition,

they stated that GSA had contributed to delays by failing to submit customer

service orders to them in a timely manner. They added that discrepancies between

the customer information maintained by the incumbent carrier and GSA billing

records have been a continuing problem that has added to implementation time.

Local number portability. Local number portability, which allows customers to

retain local phone numbers while changing local service providers, has

contributed to implementation delays, according to GSA. According to GSA’s

MAA tracking reports, scheduled implementations in Atlanta and Miami were

delayed between 2 and 5 weeks specifically by problems with implementing local

number portability. In an internal management report prepared by GSA’s OIG,

number portability problems were ascribed both to technical difficulties and to
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the fact that the incumbent carrier typically has little incentive to assist in this

process.

MAA contractor marketing. According to AT&T MAA program officials, GSA has

not permitted AT&T to directly market MAA services to customer agencies in

New York—a factor these officials believe has delayed implementation efforts.

GSA officials, however, told us that AT&T is permitted to directly market these

services and must only inform GSA of its plans to do so.

Customer budgets. According to an internal management report prepared by

GSA’s OIG and discussions with AT&T MAA managers, customers did not budget

funding to cover service initiation charges and (in some cases) the cost of

upgrading hardware, required as part of MAA implementation. The report cited

this as one of the factors that has caused implementation to proceed less quickly

than initially projected.

Fair consideration. In multiple-award MAA cities, delays were caused by the fair

consideration process4 that GSA uses to distribute service orders to contractors in

cities where there is more than one MAA contractor. In Buffalo, for example, this

process was not completed until 3 months after notice to proceed was issued, due

in part to the time required by GSA to review all contractor deliverables.

All the delays described affect the potential savings under the MAA program. GSA

has estimated that the MAA program could save about $1.1 billion. GSA based its

savings estimate on the difference between current service prices in effect for

each of the 20 MAA cities and the total amount of the lowest MAA offeror’s prices

for a given city. However, this estimate does not consider the time required to

actually implement these contracts. Because savings are not realized until the

service is actually implemented, delays in implementing the contracts in turn

 4

 The fair consideration process identified in the MAA contracts is a means for the government to

provide contractors a fair opportunity to compete for MAA service orders. According to these

contracts, the government may base its fair consideration decision on (1) relative contract prices

without further consideration of other factors or (2) a combination of price, technical, and past

performance considerations.
13

delay the realization of savings and limit what can be realized over the 8-year term

of the contracts.

More Transparency Is Needed for Management Fees

GSA’s two fees—a contract management fee and a full-service fee—vary among

the metropolitan areas served. GSA’s contract management fee ranges from a low

of 9.5 percent in St. Louis to a high of 60 percent in Baltimore, for the 19 MAA

cities where fees have been determined. GSA’s full-service fee (which is applied

on top of the contract management fee) ranges from a low of less than 2 percent

in Albuquerque, Dallas-Fort Worth, and New Orleans, to a high of 20 percent in

San Francisco.

Table 3 identifies the fees that GSA has set for its MAA contracts. For purposes of

comparison, we have also computed a composite fee that combines the contract

management and full-service fee rates. To offer some additional perspective, the

table also displays the single management fee that GSA currently assesses in MAA

cities for non-MAA local telecommunications contracts. (It should be noted,

however, that these fees are applied to a much higher base contract price.)
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Table 3: GSA Local Telecommunications Management Fees

Metro area Contract

management fee

Full-service

fee

Composite

feea

Non-MAA

management fee

Chicago 30.00% 10.00% 43.00% 56.73%

New York 30.00% 10.00% 43.00% 20.19%

San Francisco 50.00% 20.00% 80.00% 38.60%

Buffalo 40.00% 10.00% 54.00% 20.19%

Cincinnati 32.00% 5.00% 38.60% 56.73%

Cleveland 32.00% 6.00% 39.92% 56.73%

Los Angeles 44.20% 6.20% 53.14% 38.60%

Baltimore 60.00% 15.00% 84.00% 27.26%

Atlanta 26.00% 7.00% 34.82% 34.41%

Miami 28.00% 9.00% 39.52% 34.41%

Indianapolis 22.00% 5.00% 28.10% 56.73%

St. Louis 9.50% 15.79% 26.79% 5.00%

Minneapolis 30.00% 7.00% 39.10% 56.73%

Dallas 30.00% 1.84% 32.39% 30.00%

Denver 30.95% 9.60% 43.52% 27.42%

Boston 38.44% 11.16% 53.89% 32.03%

Boise 24.59% 2.93% 28.24% 33.60%

Albuquerque 30.01% 1.84% 32.40% 30.00%

New Orleans 30.01% 1.84% 32.40% 30.00%

Philadelphia TBD TBD — 27.26%

aThe formula used for the composite fee is (CMF + FSF) + (CMF × FSF),

where CMF = contract management fee and FSF = full-service fee.

Source for contract management and full-service fee percentages: GSA Federal Technology Service

As previously stated, use of the MAA contracts is not mandatory; agencies can

choose to procure local services on their own, if they believe they could do so

more economically than GSA. In addition, to avoid paying the full-service fee, a

customer agency can opt to use the MAA contracts’ direct ordering and direct

billing option. In so doing, the agency assumes responsibility for its service

ordering, implementation planning and coordination, and billing management. To

date, only the Internal Revenue Service in the Dallas-Fort Worth MAA has chosen

to exercise this option.

GSA, like other federal agencies that provide centralized services, charges these

fees to recover the costs of managing the program. In this type of service model,

making fees transparent to users is an appropriate and valuable service. First,
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disclosing fee amounts provides user agencies with key input to deciding whether

to acquire services from the service provider or from alternative sources. Second,

such disclosure makes the service provider accountable to customer agencies for

providing a level of service commensurate with the fees charged.

The MAA contracts, however, require contractors to embed the GSA fees in the

service pricing that they disclose to agencies during marketing activities, as well

as on the invoices submitted for payment of services. According to the Assistant

Commissioner for Regional Services, GSA took this approach to focus agencies’

attention on making decisions based on the total cost of services rather than on

the fee percentage. She pointed out that even with the management fees included,

the total cost of services under the MAA contracts is dramatically lower than what

is available under other local service contracts. For example, in Baltimore, the

composite fee is about 84 percent; however, the total MAA monthly cost per

service line—including all management fees—is $8.92, compared to $23.92 under

another GSA local services contract. As another example, composite fees in

Cleveland total about 40 percent. However, the total MAA monthly cost per

service line is $22.02, inclusive of fees, compared to $28.67 under another GSA

contract vehicle.

Although the total cost of services is obviously a critical factor in making

decisions on how to buy local services, specific information on fees would further

inform agency decisionmaking. Without such information, an agency in St. Louis,

for example, would not be aware that it could lower its local MAA service costs by

almost 18 percent if it assumed additional service ordering, billing, and

administration responsibilities. Lacking full information on these fees, agencies

cannot readily determine whether it is more economical for them to procure their

own local services, to procure services through GSA but perform contract and

management support activities themselves, or to procure services through GSA

and pay GSA for support. Further, agencies cannot accurately discern whether the

services provided by GSA are worth the management fees charged. For these
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reasons, GSA should consider reassessing its decision not to disclose its fees to

user agencies.

MAA Contractor Crossover to the FTS2001 Market

As you know, Mr. Chairman, part of GSA’s overarching FTS strategy was to

eventually permit MAA and FTS2001 contractors to offer both local and long

distance services. Although GSA has delayed allowing MAA contractors to offer

FTS2001 services until it could be sure that the minimum revenue guarantees to

the current FTS2001 contractors are met, GSA has taken two steps in the past six

months to initiate crossover5

 between the MAA and FTS2001 programs. First, in

December 2000 GSA lifted forbearance in the three pilot MAA cities, allowing

FTS2001 and other MAA contractors to submit proposals to offer local services in

those areas. In March 2001, GSA accepted Verizon’s proposal to offer MAA

services in New York. Winstar has also submitted proposals to offer services in

the three pilot cities (New York, Chicago, and San Francisco). Second, GSA has

drafted a paper to clarify its position on crossover between and among the

FTS2001 and MAA contracts, which the FTS Commissioner has approved. This

paper states that with the transition to FTS2001 nearing completion, GSA has

concluded that it is appropriate to proceed with determining when to allow

additional competition for FTS2001 services. As one of the first steps in this

process, GSA plans to present this clarification to industry for comment on

June 28, 2001.

__ __ __ __ __

Mr. Chairman, that concludes my remarks regarding the interim results of our

review of GSA’s ambitious MAA program. We will continue our work, focusing on

the barriers to timely MAA contract implementation and GSA’s efforts to

 5

 Three types of contractor crossover are envisioned between and among the FTS2001 and MAA

contracts: (1) where a local MAA service provider is allowed to cross over to offer FTS2001 long

distance services; (2) where an FTS2001 contractor is allowed to cross over to offer MAA local

services; and (3) where an MAA contractor is allowed to cross over into an MAA city in which it

did not receive one of that city’s initial MAA contracts.
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surmount these barriers. In addition, we will more thoroughly evaluate the

management fees that GSA is collecting on these contracts, as well as the support

that GSA is in turn providing to agencies.

We would like to offer two observations at this time. First, there is a need for

greater transparency of the MAA contracts’ management fees. An opportunity

exists for agencies to make a more informed business decision on whether to buy

GSA’s management and administrative services or to perform these functions

themselves. However, because GSA does not disclose fee information to its

customers, they cannot make such fully informed decisions. In addition,

disclosing these fees would make GSA more accountable to agencies for the

amount of these fees.

Second, our work on the New York MAA indicates that AT&T and GSA have

different perspectives on the transition to date. Given the complexity and

newness of this implementation endeavor, some of these differences are

understandable. However, this situation also suggests the need for an increased

quantity and quality of communication between these two parties.

Mr. Chairman, that concludes my statement. I would be happy to respond to any

questions that you or other members of the Subcommittee may have at this time.

GAO Contacts and Staff Acknowledgments

For information about this testimony, please contact Linda Koontz at (202) 512-

6240 or by e-mail at koontzl@gao.gov. Individuals making key contributions to this

testimony included Scott Binder, Kevin Conway, and Mary Marshall.

(310318)