Rep. John Sweeney, R-N.Y., intends to offer an amendment to the bill that would effectively prevent implementation of pending contracts between federal agencies and the firm, formerly known as WorldCom, for a year.
An administration official said the White House opposes the amendment, since it could cost $180 million to rebid the contracts and cause disruptions of important telecommunications functions at agencies such as the CIA.
The official and other sources said MCI competitors such as Verizon and AT&T, as well as the Communications Workers of America, were lobbying for the amendment.
A spokesman for Sweeney said he would offer the amendment because of MCI's "corporate wrongdoing." Last year it was revealed that the firm had failed to disclose $4 billion in expenses on accounting reports. An Appropriations aide said Sweeney probably would not have the votes to win the rider's passage.
One lobbyist who opposed the possible amendment said, "Basically, people who are disgruntled they didn't get the contracts in the first place" were pushing the amendment, which could hinder the company's attempt to emerge from bankruptcy.
Sources said no similar amendment has been floated on the Senate side. There, the administration official said, Transportation-Treasury Appropriations Subcommittee Chairman Richard Shelby, R-Ala., a former Intelligence Committee chairman, understands the issue from a "national security perspective."
However, scrutiny of MCI contracts has stepped up on the Senate side in recent weeks. Governmental Affairs Committee Chairwoman Susan Collins, R-Maine, has launched an investigation, and Sen. Edward Kennedy, D-Mass., called on federal agencies to stop doing business with the company.
Conservative activists, such as Americans for Tax Reform, oppose such efforts. They call MCI a "qualified company" and argue that the amendment "would undermine the long-term health of the competitive bidding process."