WorldCom nets recompete of VA long-distance services

WorldCom Inc. won a five-year contract from the Veterans Affairs Department's Canteen Services division as the preferred long-distance service provider for patient phones in 175 VA medical centers and clinics.

WorldCom of Clinton, Miss., will provide the centers and clinics with calling cards, operator services and collect calling for inpatient bedside telephones and pay phones in facilities in the United States and Puerto Rico. WorldCom held the previous five-year contract for these services, as well as for prepaid calling cards. The prepaid card portion of the contract this time around went to Sprint Corp.

"We sell a lot of prepaid calling cards," said Anthony Kapp, purchasing contract specialist for the Canteen Service. The patient doesn't get a bill from the VA hospitals, "so there is no way to provide long-distance telephone service," except through collect calls or phone cards, he said.

Canteen Services is a self-sustaining organization, funded through revenue from food courts, cafeterias, vending machines and retail shops it operates in VA centers, as well as from telephone services.

Despite the financial scandal that drove WorldCom into bankruptcy earlier this year, the company continues to be one of the largest providers of telecommunications services to the federal government.

"I was surprised by the announcement," said Warren Suss, president of Suss Consulting Inc. of Jenkintown, Pa. "Even though I was aware that agencies with current contracts are using WorldCom, I didn't expect agencies to move major new pieces of business to WorldCom until the issues related to securities fraud were behind them. ... It was surprising, because most agencies are risk-averse and this has political risk."

WorldCom's proposal was submitted before the company sought protection under Chapter 11 bankruptcy. Kapp said the company's financial and accounting problems were not an issue in the selection.

"Just because a company files for Chapter 11 protection doesn't mean we can disqualify them," he said. "They came in with the best bid in every respect, and there was no way we could not give it to them."

The award shows that WorldCom still is a viable government service provider, a company spokesperson said. "This shows that WorldCom is bidding on new contracts, we're winning new business and we're providing the services they are looking for," Natasha Haubold said.

The last award the company announced publicly was the Defense Information Systems Agency's April 4 selection of WorldCom for the Defense Research and Engineering Network project, a $450 million contract to provide long-haul communications services to more than 5,000 users of the Defense Department's high-performance computing network.

"We're continuing to get new business, new orders, and continuing to bid on new opportunities," Haubold said. "This is just the first one we've issued a press release for [since DREN]."

About the Authors

William Jackson is a Maryland-based freelance writer.

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