The General Services Administration Thursday selected AT&T as the sole winner of an eight-year contract potentially worth $700 million to provide local telecommunications services to federal agencies in Chicago, New York and San Francisco.
AT&T beat out Ameritech, WinStar, Bell Atlantic and Pacific Bell for the contracts, after losing out to MCI WorldCom and Sprint for the government's long-distance telecommunications contracts last winter.
Under the contract arrangements, AT&T can also offer long-distance service to its local customers. MCI WorldCom and Sprint will be allowed to offer local phone services to federal facilities as well.
GSA is calling its telecommunications contracting strategy "ruthless competition," in which the government harnesses its bulk buying power to extract the lowest rates from telecommunications companies. The new local rates will be 66 percent lower than current government rates-saving the government more than $250 million over the life of the eight-year contract, GSA estimates.
GSA also announced Thursday it is targeting nine more metropolitan areas for telecom contract competitions: Baltimore, Cincinnati, Cleveland, Dallas, Denver, Los Angeles, Miami, New Orleans and St. Louis.
Dennis Fischer, commissioner of GSA's Federal Technology Service, wants to see how low telecom prices can go.
"We are excited that these [local] contracts will meet our agency users' telecommunications needs well into the future," Fischer said Thursday. "In addition to the superior prices we have locked in today, we look forward to even more price competition over the life of these [local] contracts."