GSA decides not to debar MCI, puts company on 'short leash'

WorldCom Inc. will not be debarred from government contracting and is now free to pursue any government work, including the option year on one of its biggest contracts, FTS 2001, the General Services Administration announced Wednesday.

But the Ashburn, Va.-based telecommunications giant "isn't out of the woods yet," said GSA official David Drabkin in a conference call with reporters.

WorldCom, which operates under the brand name MCI, and the agency have entered into a 14-page administrative agreement that requires the company to provide data to GSA that companies don't usually have to provide in the course of doing business with the government, said Drabkin, deputy associate administrator for acquisition policy.

In July, GSA suspended the company from government contracting and proposed that it be debarred because of charges of accounting fraud and other illegal activities. Today's decision means that the proposed debarment has been terminated, and MCI can make offers on all government contracts, Drabkin said.

The agreement with GSA will be in effect for three years, Drabkin said. Its requirements include:

  • Periodic reports to GSA that will allow the agency to monitor the company's behavior

  • Immediate reports to GSA if any one of numerous things happen, such as changes to the company's board of directors or executive management, a search warrant is executed or the company is subpoenaed.


  • "This is kind of like a probationary period where we have a very short leash on WorldCom. Should they step over any line we should be able to step in much more quickly than usual, and propose debarment again or suspend the company from government contracting," Drabkin said.

    GSA made the decision to allow WorldCom to fully participate in government contracting by finding it is currently "responsible." If GSA's investigation had found that the company was not responsible, it would no longer be allowed to do business with the government.

    "MCI WorldCom is responsible," Drabkin said. He cited improvements that WorldCom made to its operations, including improved accounting controls and an overhaul of its ethics program. WorldCom hired a new ethics officer with substantial responsibility and trained all employees in ethics, he said.

    But "we are concerned, given the gravity of problems that led to our proposal, and we will continue to watch them until these changes become a part of their corporate culture, not a change in immediate behavior," Drabkin said.

    WorldCom was particularly motivated to correct its problems so it would be eligible to win the option year on the FTS2001 long-distance contract, Drabkin said. The current contract expires Jan. 10.

    Because the proposed debarment has been lifted, the contracting officer is not prohibited from awarding the option year to WorldCom, Drabkin said. In 2003, MCI earned $396.5 million from the FTS2001 contract, he said.

    "MCI was very aware that they had to address all the concerns we had before the end of the contract if they had any hope of exercising the option year," Drabkin said.

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