MCI defends its federal contracts

The top official in charge of federal government contracts for WorldCom Inc. defended the company's ethics and service record Wednesday and said the carrier, which is in the process of rebranding itself as MCI, has not received any special consideration in winning government bids for voice and data services.

"I don't see in that (federal bidding) process, as rigorous as it is, how MCI could be shown any favoritism," Jerry Edgerton, senior vice president of MCI government markets, said during an afternoon news conference held in Washington. "We've won this stuff fair and square."

MCI is now based in Ashburn, Va., and is operating under Chapter 11 bankruptcy protection after admitting to improper accounting that exceeded US$9 billion. The company expects to emerge from bankruptcy later this year.

Sen. Susan Collins, (R-Maine), chairman of the Senate Governmental Affairs Committee, has launched an investigation into federal government dealings with the company, including bid awards to WorldCom by the U.S. General Services Administration (GSA).

The GSA released documents to the committee yesterday, saying it continued to do business with WorldCom -- even after disclosures of the massive accounting problems -- because WorldCom was moving to deal with the fraud and had provided reliable network service and quick repairs.

Edgerton repeated some of those same themes today, noting that the company has the best network uptime and shortest time for repairs of any network provider. A 15-year employee of MCI and its predecessors, he also noted that his unit of 1,500 workers has a strong reputation for ethics, with annual ethics training sessions that have become a model for the rest of MCI's 55,000 workers.

He suggested that recent criticism of MCI was coming from activist groups that might be backed by MCI's competitors, including those who have lost bids to the government that MCI has won and Baby Bell companies. "We come out of this bankruptcy in a very competitive environment," he said. "We will be very successful."

Despite hundreds of millions of dollars in contract wins in recent years, revenue from the government division accounts for only 5 percent to 7 percent of total MCI revenue annually, Edgerton said. And he bragged that during the fraud revelations, his staff remained in place and even grew somewhat to accommodate more government business.

MCI, along with Sprint Corp., were each guaranteed $750 million from federal agencies for voice and data network services, including wireless and Web hosting, in the Federal Technology Services (FTS) 2001 contract, according to GSA records.

The ceiling for the multiyear FTS 2001 contract is $11.5 billion for both carriers, and both are currently in the fifth year of a possible eight-year contract. The contract had an original term of four years, with an option to be extended four more years in one-year increments. MCI had already received $835 million in January, according to a GSA spokeswoman.

On May 20, MCI won a seven-year contract for high-speed data communications from the National Oceanic and Atmospheric Administration that has a ceiling value of $11 million, said an MCI spokeswoman. Also last month, MCI won a $20 million contract from the Department of Defense to provide a cellular telephone system in Baghdad, Iraq, to assist with communications among U.S. personnel there (see story). Edgerton said the cellular contract is separate from the FTS 2001 contract.

"We are an important provider to the government," he said. "The government has realized millions and millions of dollars in savings" through MCI.

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