WASHINGTON-The inspector general of the General Services Administration is investigating WorldCom Inc.’s contracts with the federal government and may issue recommendations to Congress shortly on whether the Bush administration should continue doing business with the embattled long-distance company, according to a source familiar with the situation.
“We neither confirm nor deny that we have a report,” said Jack Lebo, assistant inspector general for administration at GSA. Until now, it was not public knowledge that GSA’s inspector general was investigating WorldCom’s business relationship with the U.S. government.
WorldCom, now marketed as MCI, recently snagged an Iraq mobile-phone contract valued at $34 million from the Pentagon. WorldCom was the nation’s top paging and mobile-phone reseller before exiting the wireless business.
Whether the spotlight on GSA contracts with WorldCom will impact military procurement of wireless and other telecom services from WorldCom is unclear. A Pentagon spokesman today said he did not know what the potential fallout of the Collins probe might be regarding Department of Defense contracts with WorldCom.
“We have not been formally notified of any such report,” said Natasha Haubold, a spokeswoman for WorldCom, referring to the GSA inspector general investigation. Haubold added: “Our service record has exceeded government requirements. We provide the best service at the best price.”
Senate Governmental Affairs Committee Chairman Susan Collins (R-Maine) this week blasted GSA Administrator Stephen Perry for his responses to questions from the lawmaker on WorldCom’s qualifications to bid on government contracts in a May 16 letter.
“The GSA appears to have focused on WorldCom’s capacity to perform the contract without consideration of the company’s business ethics and integrity, both of which are integral in determining whether a company is a ‘responsible’ government contractor,” said Collins.
GSA insists WorldCom is qualified to continue government contract work.
“Based upon . regulations and available information, GSA has not determined that MCI WorldCom should be suspended or debarred,” stated GSA general counsel Raymond McKenna in a May 30 memo to Perry, which was supplied to Collins.
WorldCom has admitted to fraudulently overstating revenue by at least $9 billion. Last month, WorldCom, attempting to emerge from bankruptcy reorganization later this year, agreed to pay a $500 million fine levied by the Securities and Exchange Commission.
Collins said the committee will continue its examination of GSA’s activities regarding WorldCom. Verizon, the No. 1 wireless and wireline telecom carrier in the United States and a major campaign donor to Collins, has made no secret of its desire to see WorldCom liquidated.
Citizens Against Government Waste today launched an ad campaign inside the Beltway in an attempt to discourage federal agencies from awarding contracts to WorldCom. The ads will appear in The Washington Post, The Washington Times, Roll Call and The Hill.
House and Senate bills would require the Bush administration to justify non-competitive contracts awarded for Iraq reconstruction. There has been some question about whether the contract to equip officials in Baghdad with L.M. Ericsson mobile phones was put out for competitive bid, given the urgency to improve communications in the Iraqi capital.
Today, WorldCom’s Haubold answered skeptics by declaring the mobile-phone contract with DoD was competitively bid.
