Senator: Why is MCI receiving federal contract money?

WASHINGTON (10/28/2003) - The chairman of the Senate committee that oversees the federal contracting process wants to know why several government agencies continue to do business with the telecommunications company responsible for the largest corporate accounting scandal in U.S. history.

Although the General Services Administration on July 31 proposed that WorldCom Inc., now doing business under the moniker MCI, be debarred from holding federal contracts, several government agencies are still doing business with the company, citing "compelling reasons," according to Sen. Susan Collins (R-Maine), chairman of the Senate Governmental Affairs Committee. Under the Federal Acquisition Regulations (FAR), agencies may conduct business with suspended contractors if a department head determines that there are compelling reasons to do so, such as national security reasons.

However, a spokesman for the committee said the reasons cited so far by the agencies -- including the Defense Department, Department of Justice, Social Security Administration and Armed Forces Retirement Home -- remain unclear. As a result, Collins has asked each agency to outline by Nov. 7 all of the contracts with MCI that have been initiated or extended since the debarment and to spell out the specific reasons for doing so.

The committee spokesman said the federal contracts in question range in value from US$2 million to more than $400 million.

"These waivers raise serious questions about the effectiveness of the suspension," Collins said in a statement. "I intend to find out whether these agencies had truly compelling reasons to continue business with MCI, and whether they adequately considered alternatives to contracting with MCI."

MCI, now based in Ashburn, Va., is operating under Chapter 11 bankruptcy protection after admitting to accounting irregularities that exceeded $9 billion.

In a letter to GSA administrator Stephen Perry, Collins said she has "long been concerned" with the federal government's approach to contracting with MCI and the time it took to suspend and debar the company.

Maryalice Johnson, a spokeswoman for the GSA, said it would be inappropriate for her to comment on the decisions of individual agencies, since each agency has the authority under the FAR to extend contracts with suspended or debarred contractors.

Officials from the departments of Defense, Justice and Veterans Affairs could not be reached for comment.

However, in an interview in August, Hord Tipton, CIO at the Department of the Interior, said the GSA's debarment decision could have "a big impact" on his agency's IT operations. "We have all sorts of contracts with MCI that are subject to renewal coming up the first of October," he said. "The big cost would be in dollars and time to migrate to another carrier."

GSA officials have acknowledged that debarment could have a wide impact. In a May 30 memo, GSA general counsel Raymond McKenna said that any shift away from MCI would disrupt telecommunications services to many agencies, including military, law enforcement and homeland security organizations.

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