WASHINGTON-Senate Governmental Affairs Committee Chairman Susan Collins (R-Maine) today urged the General Services Administration to consider cutting ties with WorldCom Inc., potentially putting lucrative government wireline and wireless contracts in jeopardy.
Collins’ terse two-page letter to GSA Administrator Stephen Perry, obtained by RCR Wireless News, is based on a June 2 recommendation by the GSA inspector general that the agency consider initiating suspension proceedings against the troubled long-distance giant pursuant to the public interest standard in federal acquisition regulations.
Earlier this week, Collins criticized Perry for answers to questions she posed to the GSA administrator in a May 16 letter on WorldCom’s qualifications to provide telecom services to the federal government.
With the GSA inspector general’s recommendation in hand, Collins continued to voice anger and frustration with the agency’s handling of the matter.
“Earlier revelations concerning WorldCom’s financial fraud should have triggered a thorough evaluation of the corporation’s suitability as a significant contractor with the federal government. . Although I reserve judgment on the ultimate question of suitability, I hope that you will promptly follow the IG’s recommendation and perform the type of probing investigation and analysis that, in my view, should have occurred months ago,” said Collins.
The loss of federal business could hurt the bankrupt telecom carrier’s survival prospects. Today’s Wall Street Journal, citing knowledgeable sources, reports an independent review of WorldCom accounting improprieties implicates Bernard Ebbers, former chief executive officer.
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. “Our service record has exceeded government requirements. We provide the best service at the best price.”
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 yesterday 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 noncompetitive 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.
