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MCI/WorldCom Barred from New Government Contracts
In the wake of President Bahr's congressional testimony on MCI/WorldCom's pending bankruptcy settlement, the General Services Administration on July 31 announced the suspension of the company from receiving new federal government contracts.
The U.S. Government, through GSA, has been MCI/WorldCom's largest customer. Government contracts provided $500 million to the company in 2002 and, according to industry analysts, that amount could rise to as much as $800 million for 2003.
The suspension and "proposed debarment" immediately stops government agencies from entering into any new contracts with MCI/WorldCom. Though the company has 30 days to challenge it, if the GSA upholds the decision, many of those contracts will not be renewable and the "debarment" will stop MCI/WorldCom from bidding on government contracts for as long as three years.
"Finally MCI/WorldCom is being held responsible for the irreparable harm it has caused to telecommunications companies that play by the rules and, by extension, to tens of thousands of our members who have lost their jobs due to layoffs," Bahr said.
"It is important that all companies and individuals doing business with the federal government be ethical and responsible," said GSA Administrator Stephen Perry. After reviewing a report by its Office of Inspector General, the GSA determined that the company is not "presently responsible" and that it lacks necessary internal controls and business ethics.
Both Bahr and Verizon Executive Vice President William Barr called for a Justice Department probe and prosecution of MCI/WorldCom when they testified at an oversight hearing conducted July 20 by the Senate Judiciary Committee.
Also at that hearing they challenged the adequacy of a $750 million fine MCI/WorldCom agreed to pay to settle an $11 billion fraud case brought by the Securities and Exchange Commission. The settlement must be approved by a federal judge who will decide this fall whether to allow a restructured MCI/WorldCom to emerge from bankruptcy and continue doing business under the name MCI. CWA maintains that the settlement will give MCI an unfair competitive advantage, causing further destabilization and job loss throughout the telecom industry.
WorldCom's fortunes started to unravel earlier this week when the Justice Department announced it is looking into allegations that MCI/WorldCom evaded paying billions of dollars in access fees to local phone companies. On July 30 the Federal Communications Commission launched its own probe into the matter. The FCC regulates access fees and has the power to fine WorldCom if it finds wrongdoing. In addition, House Energy Committee Chair Rep. W. J. "Billy" Tauzin plans to conduct a hearing on the charges in September.
The U.S. Government, through GSA, has been MCI/WorldCom's largest customer. Government contracts provided $500 million to the company in 2002 and, according to industry analysts, that amount could rise to as much as $800 million for 2003.
The suspension and "proposed debarment" immediately stops government agencies from entering into any new contracts with MCI/WorldCom. Though the company has 30 days to challenge it, if the GSA upholds the decision, many of those contracts will not be renewable and the "debarment" will stop MCI/WorldCom from bidding on government contracts for as long as three years.
"Finally MCI/WorldCom is being held responsible for the irreparable harm it has caused to telecommunications companies that play by the rules and, by extension, to tens of thousands of our members who have lost their jobs due to layoffs," Bahr said.
"It is important that all companies and individuals doing business with the federal government be ethical and responsible," said GSA Administrator Stephen Perry. After reviewing a report by its Office of Inspector General, the GSA determined that the company is not "presently responsible" and that it lacks necessary internal controls and business ethics.
Both Bahr and Verizon Executive Vice President William Barr called for a Justice Department probe and prosecution of MCI/WorldCom when they testified at an oversight hearing conducted July 20 by the Senate Judiciary Committee.
Also at that hearing they challenged the adequacy of a $750 million fine MCI/WorldCom agreed to pay to settle an $11 billion fraud case brought by the Securities and Exchange Commission. The settlement must be approved by a federal judge who will decide this fall whether to allow a restructured MCI/WorldCom to emerge from bankruptcy and continue doing business under the name MCI. CWA maintains that the settlement will give MCI an unfair competitive advantage, causing further destabilization and job loss throughout the telecom industry.
WorldCom's fortunes started to unravel earlier this week when the Justice Department announced it is looking into allegations that MCI/WorldCom evaded paying billions of dollars in access fees to local phone companies. On July 30 the Federal Communications Commission launched its own probe into the matter. The FCC regulates access fees and has the power to fine WorldCom if it finds wrongdoing. In addition, House Energy Committee Chair Rep. W. J. "Billy" Tauzin plans to conduct a hearing on the charges in September.