“The company does not deserve the taxpayers’ trust,” Schatz says

(Washington, D.C.) – Citizens Against Government Waste (CAGW) today commended the General Services Administration (GSA) for announcing the immediate suspension and proposed debarment of MCI, formerly WorldCom, from all federal contracts.  The company has 30 days to appeal the decision, which if not accepted could result in the company being barred from new contracts with the federal government.

“Finally GSA has taken a step in the right direction to protect taxpayers’ money by suspending MCI,” CAGW President Tom Schatz said.  “Now, they need to act further by permanently debarring the company.  In the year since the Securities and Exchange Commission launched their initial investigation into what was then WorldCom, the government has awarded MCI more than $1.2 billion in contracts.  GSA should have taken action much sooner.”

GSA based its decision on reports from former U.S. Attorney General Richard Thornburgh, the Special Investigative Committee of WorldCom’s Board of Directors, a report from the company’s own ethics office, and a June 3, 2003 report by the MCI’s outside auditors, KPMG.  The GSA inspector general specifically noted the ten “material weaknesses” in the KPMG report.  MCI will be added to the Excluded Parties Listing System and is immediately prohibited from competing for new government contracts, but there is no assurance that this ban will be permanent.

“When MCI appeals its case, GSA should stick by its decision,” Schatz continued.  “The Thornburgh report is not finalized and recent allegations that MCI used fraudulent methods to reduce the access charges it pays to other companies have yet to be fully investigated.  Rather than reduce the penalty imposed by GSA, these new accusations against MCI should convince the agency to remove the company from current government contracts, as they may have been obtained under fraudulent circumstances.”

CAGW has been calling for MCI’s debarment from government contracts since November, 2002 on the basis that the Federal Acquisition Regulations required such a conclusion, as well as that the agreements unnecessarily put taxpayer dollars at risk and amounted to a hidden government bailout of the company.  The taxpayer watchdog has been running an ad campaign over the last two weeks, entitled “Crime Doesn’t Pay,” demanding debarment.

“With all of these allegations of wrongdoing, one has to wonder what more MCI may be hiding,” Schatz concluded.  “The company has already proven that it will engage in unacceptable, unethical, and fraudulent behavior in order to obtain contracts.  GSA needs to permanently disconnect MCI through debarment.”

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.  For more information, please visit www.cagw.org.