House committee questions Global Crossing on military contract

Rep. Billy Tauzin

A House committee is investigating the Pentagon's controversial decision to award and then rescind a $400 million telecommunications contract to troubled Global Crossing Ltd.

In a letter sent March 12, the House Energy and Commerce Committee asked Global Crossing to provide all records related to the Defense Research and Engineering Network contract, called DREN, including the solicitation and bidding process. The Defense Information Systems Agency awarded the contract to Global Crossing last July and then rescinded the award a month later following protests from the four losing bidders that the company did meet the contract's security requirements.

The committee also asked Global Crossing to "explain the circumstances by which the contract was obtained and provide the reasons for termination of the contract on August 17, 2001."

The questions about the DREN contract are part of a larger investigation by the committee into Global Crossing's accounting and business practices. The Bermuda-based telecom company filed for bankruptcy protection Jan. 25 amid accusations that its executives incorrectly reported its earnings and misled investors.

The Energy Committee's oversight and investigations subcommittee will examine Global Crossing's internal and outside legal advisers at a March 14 hearing.

The committee letter, signed by Chairman Billy Tauzin, R- La., ranking member John Dingell, D-Mich., oversight and investigations subcommittee chairman James Greenwood, R-Pa., and ranking subcommittee member Peter Deutsch, D-Fla., gives the company until March 26 to respond.

The DREN contract has been surrounded by controversy since its award to Global Crossing. After DISA withdrew the award it decided to give all five companies a chance to recompete for the contract. It revised ? many industry observers said relaxed ? the security provisions in the new request for proposal. Since then, the agency has twice requested the companies to extend their bids, most recently asking for an extension to April 18.

Along with Global Crossing, the companies bidding on the contract are AT&T Corp., Sprint Communications Inc., Qwest Communications International Inc. and WorldCom Inc.

The House Financial Services Committee also has scheduled a hearing for March 21 to investigate allegations that the company misreported earnings and disguised debt.

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