GSA urged to take steps against MCI

First interim report of Richard Thornburgh

The General Services Administration's inspector general has told the agency to consider initiating suspension procedures against MCI, a GSA spokesperson confirmed.

The action is one more obstacle as the telecom provider formerly known as WorldCom Inc. struggles to emerge from bankruptcy and maintain its standing as a federal contractor. The IG's referral was filed earlier this month, the spokesperson said. Details are not public.

Two reports released last week examined the accounting fraud that led the company to admit in 2002 that it had misstated its income by more than $9 billion. Former Attorney General Richard Thornburgh wrote one of the reports at the behest of the bankruptcy court. The other was MCI's own internal report, prepared for its board of directors. Thornburgh also had filed an earlier report late last year.

Members of Congress, meanwhile, are questioning whether MCI is fit to continue to serve as a federal contractor. Sen. Susan Collins (R-Maine), chairwoman of the Senate Governmental Affairs Committee, has been exchanging letters with GSA Administrator Stephen Perry, demanding that the agency put MCI under a microscope.

Jerry Edgerton, senior vice president of MCI Government Markets, said the company's government division had nothing to do with the ethical lapses. He argued that any malfeasance by the company's corporate headquarters should not reflect on its government operations.

"It is our intention to be a good government provider," he said.

Consultant Warren Suss, president of Suss Consulting, said MCI has managed its credibility well throughout the crisis.

"Most federal customers are concerned with getting good quality service and getting good prices. They're concerned with getting a good procurement," Suss said. "On all of those fronts, all of the scandals at MCI have barely touched the federal community in a direct way. From all reports, MCI made a concerted effort to maintain service at high levels throughout this period. They also kept their customers informed."