“What do you have to do to become ineligible for government deals?” Schatz wonders

(Washington, D.C.) – Citizens Against Government Waste (CAGW) today questioned the General Services Administration’s (GSA) decision to grant a massive telecommunications contract to the bankrupt WorldCom company.

“What does a company have to do to become ineligible to do business with Uncle Sam?” CAGW President Tom Schatz said.  “WorldCom is enmeshed in a securities fraud investigation and an accounting scandal with more than $9 billion in misstated earnings.  Federal law requires that unethical companies be dropped as contractors, which is why GSA acted swiftly to bar Enron and Arthur Anderson from doing business with the federal government soon after their respective scandals erupted.  Taxpayers deserve to know why GSA decided WorldCom is different.”

The contract renewal applies to WorldCom’s position on the FTS 2001 contract, which the company shares with Sprint Communications.  The estimated value of the contract is $11 billion over its lifespan.  Agencies pay for service based on how much they use.  WorldCom and Sprint are guaranteed minimum revenue payments of $750 million each.  GSA said WorldCom would continue to provide service to the 75 agencies that purchase long-distance telephone and date service under FTS 2001, including the Departments of Commerce, Defense, and Interior, as well as the Federal Aviation Administration, the Social Security Administration, and the Nuclear Regulatory Commission.

“In this perilous time when war may be imminent, how sure are we that WorldCom, already in bankruptcy, is going to be a reliable telecom provider to the Pentagon and other agencies?” Schatz also said.  “Why take the risk with taxpayer dollars?”

Meanwhile, GSA did announce that former WorldCom officials Scott Sullivan and David Myers were suspended from conducting business with the federal government.  GSA indicated the suspensions would stay in effect until the conclusion of legal proceedings against the former executives.

“Federal laws and regulations are clear that the government may only award contracts to contractors with a satisfactory record of integrity and business ethics, along with the required organization, accounting, and operational controls,” Schatz concluded.  “By continuing to do business with WorldCom, the GSA undermines existing law as well as the purpose of the new Corporate Accountability Act.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.