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GSA Extends Another WorldCom Contract

Just days after the Veterans Administration came under fire from the Communications Workers of America (CWA) and senior citizens for extending a contract with bankrupt WorldCom, the U.S. General Services Administration (GSA) announced it is exercising an additional one-year contract option with WorldCom subsidiary MCI, which provides a number of telecommunication services to many U.S. agencies.

The first four years of the contract has earned MCI WorldCom (MCIW) almost $800 million.

The CWA and the Gray Panthers have been lobbying Congress to bar WorldCom, which is facing civil charges for inflating earnings by as much as $9 billion, from doing business with the government, claiming the scandal-ridden firm lacks the integrity to earn contracts from the taxpayers.

GSA said on Wednesday that MCIW's performance "has been consistent with the terms of the contract even after the announcements early this year of WorldCom's financial difficulties and its Chapter 11 bankruptcy filing."

The agency, the centralized procurement and office management arm of the government, said it is working closely with the Department of Justice, which is representing the government's interests in bankruptcy court to insure that "contract interests are being taken into account and are not impaired."

However, the GSA did suspend former WorldCom Chief Financial Officer Scott Sullivan and former controller David Myers from doing business with the government.

According to a GSA statement, the decision was based on "adequate evidence of criminal wrongdoing. Mr. Sullivan has been indicted on seven criminal counts, including securities fraud, conspiracy to commit securities fraud and filing false statements with the Securities and Exchange Commission, and those charges are pending. Mr. Myers pled guilty to securities fraud, conspiracy to commit securities fraud and filing false statements with the SEC. Under federal law, an indictment or a guilty plea for such offenses is adequate evidence of misconduct to support suspension of these individuals from future government business."

The suspensions, which will remain in effect for the duration of legal proceedings, are effective throughout the executive branch of the federal government and apply to all new business with the federal government.