Global Crossing to Lose $400 Million Contract

The Defense Information Systems Agency is yanking a $400 million contract away from Global Crossing Ltd., which the Bermuda-based company won last month, after the four losing bidders protested the award, according industry sources.


DISA officials apparently were so taken aback by all the disappointed bidders filing protests, the agency is retracting the award and plans to re-open bidding in the next three months, sources said.


The contract, known as the Defense Research Engineering Network, or DREN, is a 10-year pact for long haul communication services for the Defense Department's high-performance computing modernization program.


DISA officials would not comment on the status of the protests, saying the matter is under protective order from the General Accounting Office.


Paul Kayatta, president of Global Crossing's government unit, said there hasn't been a resolution yet of the protests, so it's premature to say the contract has been pulled. DISA is "talking about some possible corrective action, but nothing has been done as yet," Kayatta said.


However, industry sources said the decision to withdraw the award has already been made.


Ray Bjorklund, vice president of Federal Sources Inc., a market research and consulting firm in McLean, Va., said that all the unsuccessful offerers protested in a series of independent actions.


DREN "is a rather important program for a very significant segment of the telecom industry," Bjorklund said. Significant changes in the telecommunications marketplace are pushing industry players to new heights of competition, he said; when companies lose out on a premier contract such as DREN, they "tend to scream louder."


Each of the four losing bidders filed a protest. They are: AT&T Corp. of New York, the contract incumbent; Sprint Communications Inc. of Westwood, Kan.; Qwest Communications International Inc. of Denver; and WorldCom Inc. of Clinton, Miss.. According to sources close to the matter, each company cited different reasons for its protest.