TITLE:  Qwest Communications International, Inc., B-287459; B-287459.2, June 25, 2001
BNUMBER:  B-287459; B-287459.2
DATE:  June 25, 2001
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Qwest Communications International, Inc., B-287459; B-287459.2, June 25,
2001

Decision

Matter of: Qwest Communications International, Inc.

File: B-287459; B-287459.2

Date: June 25, 2001

Rand L. Allen, Esq., John McCullough, Esq., and Derek Yeo, Esq., Wiley, Rein
& Fielding, for the protesters.

David S. Cohen, Esq., and John J. O'Brien, Esq., Cohen Mohr, and George J.
Affe, Esq., for Sprint Communications Company, LP, and C. Stanley Dees,
Esq., and Alison L. Doyle, Esq., McKenna & Cuneo, for AT&T Communications,
Inc., intervenors.

Michelle Harrell, Esq., and Michael J. Ettner, Esq., General Services
Administration, for the agency.

David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest of General Services Administration's sole-source extensions of
FTS 2000 bridge contracts is dismissed where, because protester is subject
to restrictions under section 271 of the Communications Act of 1934, as
amended, 47 U.S.C. sect. 271, there is no basis for concluding that protester
would be able to meet requirement for ubiquitous, nationwide long-distance
service even had agency competed the requirement; accordingly, protester is
not interested party for purpose of challenging sole-source awards.

DECISION

Qwest Communications International, Inc. protests the General Services
Administration's (GSA) sole-source extensions of the agency's FTS 2000
bridge contracts with AT&T Communications, Inc. (GS-00T-99NSD-0003) (AT&T
Bridge Contract), and Sprint Communications Company, L.P.
(GS-00T-99NSD-0002) (Sprint Bridge Contract), for long-distance
telecommunications services. Qwest, which maintains that it can meet the
agency's needs, argues that the sole-source extensions were improper.

We dismiss the protest.

In December 1988, GSA awarded separate 10-year contracts to AT&T
(No. GS-00K-89AHD-0008) and Sprint (No. GS-00K-89AHD-0009), the original
FTS 2000 contracts, for a comprehensive set of long-distance
services--including switched voice services, packet switched services,
dedicated transmission services, video transmission services, and switched
digital integrated services--to be furnished on the basis of ubiquitous
service throughout the continental United States, Alaska, Hawaii, and Puerto
Rico. The contracts provided for each FTS 2000 contractor to serve as a
single point of contact with customer agencies and to furnish multi-level
hierarchical billing customized for each agency user. Contracting Officer's
Statement (COS) at 1; see, e.g., Agency Report (AR), Sprint FTS 2000
Contract, sect.sect. C.1.1, C.1.3.1, C.2.1.3, C.3.2.4.4.

On December 1, 1998, prior to the award of competitive contracts under the
FTS 2001 program, the successor to the FTS 2000 program, GSA awarded
sole-source extension of service bridge contracts to AT&T and Sprint for the
continuation of FTS 2000 service for up to 2 years (a base year and two
6-month options). COS at 1; AR, Tab 22, AT&T Bridge Contract; AR, Tab 23,
Sprint Bridge Contract. Subsequently, GSA made a competitive award of one
FTS 2001 contract to Sprint (No. GS-00T-99NRD-2001) on December 18 and, on
January 11, 1999, awarded another FTS 2001 contract to MCI Worldcom
(No. GS-00T-99NRD-2002). The FTS 2001 contracts continued the requirement to
furnish basic FTS 2000 services, added additional service offering
requirements, maintained a ubiquitous domestic coverage requirement for such
basic services as switched voice service, and extended the geographical
coverage of the contracts to international locations. COS at 2; AR, FTS 2001
Solicitation, Statement of Work sect.sect. C.1.2, C.1.3, C.2.1.1.1.1, C.2.1.3; see,
e.g., Sprint FTS 2001 Contract at sect.sect. C.2.1.1.1.1, J.8.3.1.

GSA reports that when it awarded the bridge contracts in 1998, it expected
that the potential 2-year period of the contracts would afford sufficient
time for the agency to award the FTS 2001 contracts and to complete customer
agency transitions to FTS 2001 service. COS at 1. GSA further reports that,
as late as July 2000, the agency still believed the transition could be
completed by the December 6, 2000 expiration of the bridge contracts. Id. at
2. However, on or around August 1, the program office advised the
contracting office that some agencies would not complete the transition from
FTS 2000 to FTS 2001 by December 6. AR at 9 n.14, 10. Subsequently, on
December 5, after negotiating with both contractors, GSA modified AT&T's and
Sprint's bridge contracts, extending AT&T's by 1 year and Sprint's by
6 months. AR, AT&T Bridge Contract Modification No. PS39, and Sprint Bridge
Contract Modification No. PS21. Although some service offering requirements
were eliminated in the extended AT&T contract, the FTS 2000 requirements for
nationwide ubiquitous service and a single contractual point of contact for
service responsibility were maintained under both extended contracts. Id.;
COS at 2-6.

GSA did not synopsize the sole-source extensions prior to extending the
bridge contracts, and the justifications and approvals (J&A) for the
extensions were not executed until December 22. However, the J&As indicate
that the agency relied on 41 U.S.C. sect. 253(c)(2) (1994) as authority for the
use of other than full and open competition. That section provides that
other than competitive procedures may be used where the "agency's need for
the property or services is of such unusual and compelling urgency that the
Government would be seriously injured unless the executive agency is
permitted to limit the number of sources from which it solicits bids or
proposals." After observing that the remaining sites to be transitioned were
"mainly of large complex data systems and remote sites," each J&A explained
the sole-source extension on the basis that:

No other contractor could provide the ‘seamless' telecommunications
services, including billing and legacy software developed for reporting
systems that meet the clients mission critical needs. Issuance and
negotiation of a new competitive acquisition is not practical as it would
cause significant time delays, cause duplicative costs for the minimally
non-transitioned services, and would not offer lower pricing due to the
extremely small customer base of non-transitioned service.

. . . . .

Because of the constraints imposed by the immediacy of the situation, it is
reasonable to conclude that only the incumbent FTS2000 firm is capable of
meeting all of the requirements because of its detailed familiarity with the
totality of the agencies' requirement. Alternative sources lacking the
necessary familiarity were therefore not considered.

AR, J&As for Other than Full and Open Competition, AT&T and Sprint. Upon
learning of the extensions, Qwest filed an agency-level protest, arguing
that the sole-source awards were unjustified, and that it should have been
given an opportunity to compete for the requirement. GSA denied the protest,
and Qwest then raised the same arguments in this protest filed with our
Office.

It is GSA's position that Qwest could not satisfy the agency's requirement
for ubiquitous, nationwide long-distance service in which "the contractor
shall coordinate all activities with its subcontractors providing services
to or as part of FTS 2000," AR, Sprint FTS 2000 Contract sect. C.1.3.2, and that
Qwest therefore was not a potential competitor and is not in a position to
question the propriety of the awards. [1] Specifically, GSA notes that, as a
result of Qwest's having merged in 2000 with U.S. West Communications, Inc.,
a regional Bell Operating Company (BOC) providing local telephone service in
14 western states, Qwest assumed the status of a BOC subject to restrictions
imposed by section 271 of the Communications Act of 1934, as amended. 47
U.S.C. sect. 271; see 41 U.S.C. sect. 153(4), (21). Section 271 precludes any BOC,
as well as any affiliate of a BOC, from providing long-distance
("interLATA") service originating in the region where it provides local
service, unless and until the Federal Communications Commission (FCC)
determines that various conditions relating to enabling competition in local
telephone service are satisfied. 47 U.S.C. sect. 271; see 41 U.S.C.
sect. 153(4), (21); AT&T Corp. v. US West Communications, Inc., Nos. E-97-28,
E-97-40A, Feb. 14, 2001, at para.para. 1, 9. The record in this regard indicates
that, at the time of the extension of the bridge contracts, Qwest had not
received section 271 approval to provide long-distance service in its
14-state service region. AT&T Corp. v. US West Communications, Inc., supra,
at para. 1; Protest at 5. GSA concludes that, since its requirement was for
ubiquitous, nationwide long-distance service, and Qwest was unable to offer
such service in 14 states, Qwest was not in a position to compete for the
bridge contract extensions.

Qwest acknowledges the overall section 271 limitation on its furnishing
long-distance service in its 14-state service area. According to Qwest,
however, it "is not proposing that Qwest itself would provide in-region
long-distance service," Qwest Comments, Apr. 17, 2001, at 7; rather, Qwest
maintains that it can avoid the section 271 limitation, and still satisfy
the agency's needs, by teaming with Intermedia Communications, Inc. Qwest
states in this regard that (1) "[u]nder Qwest's proposed teaming arrangement
with Intermedia, the two companies would provide ubiquitous, nationwide
service--Qwest would provide out-of-region service and Intermedia would
provide in-region service"; (2) "Qwest would serve as the initial point of
contact for all Government inquiries"; and (3) if "GSA determines, according
to [Federal Acquisition Regulation] Part 11 procedures, that its competitive
requirements include" use of the current, legacy billing systems, Qwest and
Intermedia would "accommodate" this need. Qwest Comments, Apr. 30, 2001,
at 33.

We conclude that GSA's position--that Qwest's teaming approach could not
satisfy the agency's needs without running afoul of section 271--is
reasonable. In this regard, the FCC, in discussing its decision in AT&T v.
Ameritech Corp., 13 F.C.C.R. 21,438 (1998), aff'd sub nom. US West
Communications, Inc. v. FCC, 177 F.3d 1057 (D.C. Cir. 1999), cert. denied,
528 U.S. 1188 (2000), has stated that it "interpreted section 271's
statutory ban on BOC provision of prohibited long-distance in-region
interLATA services to bar certain business arrangements even when the BOC
did not actually perform the prohibited interLATA transmission." In the
Matter Qwest Communications International, Inc. and US West, Inc.,
15 F.C.C.R. 11,909 (2000) at para. 7. In determining which business arrangements
are permissible under section 271, the FCC appears to use a case-by-case
approach, under which it

balances the following non-exclusive factors: ‘whether the BOC obtains
material benefits (other than access charges) uniquely associated with the
ability to include a long-distance component in [the challenged offering],
whether the BOC is effectively holding itself out as a provider of long
distance service, and whether the BOC is performing activities and functions
that are typically performed by those who are legally or contractually
responsible for providing interLATA service to the public.' In evaluating
the challenged BOC actions, the Commission considers ‘the totality of
[the BOC's] involvement, rather than focus[ing] on any one particular
activity.'

AT&T Corp. v. US West Communications, Inc., supra, at para. 11. [2]

Qwest, applying the above balancing analysis, attempts to establish that its
proposed arrangement with Intermedia would not be prohibited under section
271. However, even if in-region interLATA service in the 14 states were
directly provided by Intermedia, not Qwest, it is not clear how Qwest, as a
prime contractor--responsible for ubiquitous service with a single point of
contact for service responsibility--could avoid being viewed by the FCC as
the ultimate provider of those services, in contravention of section 271. As
quoted above, one of the factors included in the FCC's balancing test is
"whether the BOC is performing activities and functions that are typically
performed by those who are legally or contractually responsible for
providing interLATA service to the public." At minimum, there appears to be
a reasonable possibility that the FCC could view Qwest's role as a prime
contractor as including such activities and functions. Certainly, Qwest can
point to no applicable regulation or ruling that conclusively establishes
its ability to accept responsibility for satisfying the agency's requirement
consistent with section 271. Under these circumstances, we find reasonable
GSA's position that Qwest was not a viable potential source for the bridge
contract services. [3]

Under the bid protest provisions of the Competition in Contracting Act of
1984, 31 U.S.C. sect.sect. 3551-56 (Supp. IV 1998), only an "interested party" may
protest a federal procurement. See Bid Protest Regulations, 4 C.F.R. sect.
21.0(a) (2001). As we are unable to conclude that Qwest was in a position to
satisfy the agency's FTS 2000 bridge contract needs, Qwest is not an
interested party to question the extension of AT&T's and Sprint's bridge
contracts. Peachtree 25th LLC d/b/a/ American Management. Co., B-281185,
B-281185.2, Dec. 4, 1998, 98-2 CPD para. 126 at 5 n.5; see 440 East 62nd St.
Co., B-276787, July 24, 1997, 97-2 CPD para. 30 at 4 n.3.

The protest is dismissed.

Anthony H. Gamboa

General Counsel

Notes

1. Although Qwest has suggested that some of the FTS 2000 requirements may
no longer be valid, and could change if a competition were held, the
protester has acknowledged that "[s]ome requirements, such as nationwide
service, would probably remain under a competition." Qwest Comments, Apr.
30, 2001, at 31 n.7.

2. As an example of the FCC's approach, in AT&T v. Ameritech Corp., supra,
it found an arrangement impermissible under section 271 where the BOC
developed a package of services for its local service customers that
included a long distance service component; selected a non-BOC carrier to
transmit the long distance service; established and exercised control over
the price, terms and conditions under which the long-distance service would
be offered; served as the initial and primary point of contact for the
customer for all service inquiries; relied on its brand name in marketing
the combined offering; and expressly recommended the non-BOC's long distance
service. AT&T v. Ameritech Corp., supra, at para. 1; see AT&T Corp. v. US West
Communications Corp., supra, at para. 3.

3. Although our Office afforded the FCC an opportunity to comment as to
whether the approach proposed by Qwest was consistent with the section 271
limitations on BOCs, the FCC declined to furnish a report.