GSA ponders Sprint debarment

First MCI, now Sprint.

The General Services Administration is considering whether to bar Sprint from federal contracts following a billing dispute this summer that led to a $5.2 million settlement. The revelation comes as federal officials ponder the possibility of debarring MCI, which has been accused of masking long-distance calls from federal agencies to cut fees due to other telecom carriers.

The GSA Inspector General requested the agency to consider the case against Sprint, which learned of it last week, said company spokesman James Fisher. If the federal government debars both Sprint and MCI — the two prime vendors on the FTS2001 telecommunications contracts — AT&T, Verizon and Qwest would face a field without two of their fiercest competitors.

GSA last week recommended that MCI be debarred, which would stop the company from taking new federal contracts for up to three years, because the agency is not convinced that MCI has adequately solved the internal problems that led it to overstate its profits last year.

Fisher said the action against Sprint stems from an inadvertent billing discrepancy in which Sprint billed agencies for certain access fees at the market rate rather than the lower FTS2001 contract rate.

"As soon as we were alerted to this, we stopped billing immediately. We sat down to figure out what happened, and we reached a settlement" with GSA, Fisher said. "We think it is outrageous to link a simple and settled billing dispute of $5 million with more than $11 billion in fraud by MCI. We think the suggestion by the IG to consider debarment is unprecedented."

The Inspector General's recommendation means that the agency should consider whether Sprint should be barred from contracts. GSA declined to comment on the matter.

MCI, meanwhile, is continuing to bid on contracts and is trying to convince GSA that it is well on the way to solving its problems, MCI spokeswoman Natasha Haubold said. Any bids MCI submits while its future is in doubt would be valid if GSA relents and chooses not to debar the firm. In recent weeks, Verizon and AT&T have pressed accusations against MCI regarding the improper routing of phone calls, many which came from the federal government.

The company, which is poised to emerge from bankruptcy in the fall, replaced its executives and board members after the admitted accounting fraud revealed last year, and has been working strengthen its internal controls to prevent a recurrence, she said.

GSA focused on issues such as the fact that not all of the company's 55,000 employees have had new ethics training, Haubold said. "We have not been able to do that yet. It takes a bit of time."