WorldCom loses multi-billion dollar FAA contract

Telecommunications company WorldCom on Tuesday lost a Federal Aviation Administration contract to upgrade the country's air traffic control communication system. The contract was worth a potential $3.5 billion.

FAA awarded the massive contract to Harris Corporation of Melbourne, Fla. Harris led a team of brand name telecom firms, including "Baby Bells" Verizon, SBC and BellSouth Corp., as well as Defense contractor Raytheon Technical Services Company. The Baby Bells are the companies formed after the court-mandated breakup of AT&T in 1984.

FAA Administrator Jane Garvey called the upgrade program, known as FTI, "a critical element of our overall plan to modernize the national airspace system." The agency has made technology modernization a top priority.

The blow to WorldCom's extensive federal business comes a month after the company revealed it had improperly accounted for $3.9 billion in expenses this year, and amid a review of all its federal contracts by the General Services Administration.

WorldCom was the incumbent contractor, and telecom industry observers said the company was the clear favorite to win this most recent competition--until the firm fell into a financial tailspin last month. An FAA spokesman said financial information wasn't taken into account in the decision not to award the contract to WorldCom. However, he couldn't say whether contracting officers considered more general information about the company's financial situation that could have been gleaned from media reports in recent weeks.

WorldCom was resolute that the loss doesn't mean the company can't work in the federal market. "Our long-standing relationship of 13 years and numerous awards from the FAA for the quality of our service shows that we have the expertise and technological capabilities to meet the FAA's requirements," a WorldCom spokeswoman said.

Asked whether the company plans to protest the award with the General Accounting Office, which hears contract disputes, the spokeswoman said, "WorldCom is going to explore its options."

WorldCom also could lose a $450 million contract to run a high-speed research network for the Defense Department, and could be debarred from future government work by GSA. According to news reports, the company was fired from a state contract in New Jersey this month, and last week was taken out of the running for a $1.9 billion communications contract in Georgia.

However, Federal Communications Commission Chairman Michael Powell told The Wall Street Journal this week that the federal government should continue its contracts with WorldCom to keep the company stable. Financial experts have said that WorldCom's massive accounting restatement would constitute the biggest fraud in U.S. history.

The FAA-winning Harris team includes Qwest Communications, which is under criminal investigation by the Justice Department. The U.S. attorney's office in Denver hasn't released any details about the scope and nature of its inquiry, and a Qwest spokesman had no comment about the matter Tuesday.

A Harris spokesman said the firm has "no concerns at all" about Qwest's viability on the contract given current events. GSA could ban Qwest from future government work if it finds the company incapable of doing it.

James Payne, who leads Qwest's government division, downplayed that possibility. "I think there's a danger to overstate what the GSA is doing," he said. Payne thinks the review is a cautionary reaction to turbulent developments in the telecom industry in recent months.

But a GSA spokeswoman said the agency's review isn't a simple formality. "It's what GSA feels it's obligated to do, given that the Justice Department has decided to look into [Qwest]…to make sure things are above board," she said.

Sprint, another major federal telecom player, will provide long-distance telephone service for more than 5,000 FAA locations. Sprint government division chief Anthony D'Agata said the 15-year contract is one of the lengthiest agreements the company has won to do business with the government.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.