Tech Insider: A new dawn in telecommunications?

When entrepreneur Richard Branson, founder of the Virgin label that has produced a record company, a cola and an international airline, took his fledgling carrier to war with British Airways, he remarked that it was "like getting into a bleeding competition with a blood bank." Carriers from all over the world offered service to the United Kingdom of course, but in the mid-1980s, when the battle began, British Airways was the only name brand in British aviation. The company carried unrivaled cachet and had fierce control of the market. Oddly enough, the same David-and-Goliath story has played out in the federal telecommunications market. For the past several years, agencies have been able to buy long-distance, local and data services from a multitude of companies, but through very few contracts. The General Services Administration's Federal Technology Service runs telecom contracts for most agencies, and pre-negotiates the rates and terms of those agreements. Only in the past few years have agencies been allowed to stray from the FTS contracts, but they've still had few other options. FTS dominates the government telecom market the way few others have been able to do. That might be about to change. On Feb. 28, GovWorks, the fee-for-service acquisition department of the Interior Department's Minerals Management Service, announced a long-anticipated telecom contract that experts agree has the potential to stand in direct competition to FTS. The GovWorks model lets telecom vendors design contracts in consultation with individual agencies, as opposed to the FTS model that sets terms and then offers them up to agency customers. This new contracting duel is fanning the flames of a much larger argument about whether agencies should compete against one another for the government's business. Dozens of agencies run fee-for-service, governmentwide contracts for information technology goods and services that have brought low prices and leading technologies into the market in a very short time. But federal telecom has failed to experiment widely with interagency competition. Now, the market has been divided into two broad camps: those who are excited about allowing other agencies to get into the game, and those who aren't. The proponents of increased competition say what's good for the commercial market is good for the government. "The more choices that agencies have, the better," said Anthony D'Agata, vice president and general manager of Sprint's government systems division, which holds the FTS 2001 long-distance contract along with WorldCom, another supporter of GovWorks' telecom debut. Generally, the industry is looking for more opportunities to compete, said Dennis Smith, vice president of Wheat International Communication Corp. and chairman of the telecom shared interest group of the Industry Advisory Council, a coalition of government technology contractors. "I think the industry will play," he said of the GovWorks deal. But while industry advocates and open market evangelists are publicly optimistic, some in government circles aren't so excited. From the moment GSA Administrator Stephen Perry took office early last year, rumors abounded that the new chief was worried about too much competition within his own agency between the Federal Supply Service and the FTS. Both manage technology contracts awarded to the same vendors and used by the same customers. Privately, FTS employees in regional offices argued that their agency, not FSS, should control those lucrative contracts. Now, the rumor mill is churning again that GSA, the top dog of all contracting outfits, doesn't want to see competition outside the agency, either. Some industry insiders wonder whether GSA's hesitancy to see new blood in the telecom game has led Interior officials to drag their feet on giving their final approval to the GovWorks plan. As of Monday, they still hadn't done so. GovWorks had planned for months to formally announce its contract, and briefed industry officials on the plan in October, said Smith. GSA officials have likewise known since last year about the plan, and some have privately expressed their disbelief that a small agency like GovWorks, which has only a few dozen employees to FTS' more than 5,000, can even manage a contract in the fierce telecom market. When he announced the contract last month, GovWorks chief David Sutfin said his team was not only taking on GSA, but also other fee-for-service acquisition shops, as well as various governmentwide contracts. Few doubt that the entrance of GovWorks into the market is a historic event. "I think GovWorks becomes the Carterphone of inter-agency competition," said James Payne, vice president of Qwest Communication's government division, referring to a 1968 ruling by the Federal Communications Commission that forced AT&T to open its network to competitors and paved the way for the company's breakup. (The decision was named for a two-way radio device called a Carterphone that could be hooked up to AT&T's standard telephone equipment, something the company tried to prevent.) Smith said he thinks GSA is in a "wait-and-see mode" on the GovWorks deal. But he added that he believes GSA takes the move seriously, and that it might change its strategy as a result. "If GovWorks does break new ground, I would expect GSA will follow shortly" with some new offering, Smith said. GovWorks is wasting no time winning converts to its way of thinking. The agency has launched a print marketing campaign and taken out ads promoting the new telecommunications contract in Washington publications, including Government Executive. And the agency has signed a contract with Internet direct marketing firm biznews24 of Arlington, Va., which will produce online media packages showcasing the GovWorks deal. All this has occurred even though GovWorks officials are still awaiting final approval from Interior higher-ups. Meanwhile, the telecom industry is gearing up for one of the biggest federal events of the year, the FTS Network Service Conference in Orlando, where the GovWorks situation will be one of the most hotly discussed topics. By all accounts, both GSA and GovWorks are watching each other more closely than ever.