GSA Proposes Debarment of MCI WorldCom

GSA # 10034

July 31, 2003
Contact: Mary Alice Johnson, (202) 501-1231
maryalice.Johnson@gsa.gov

WASHINGTON, D.C. - The U.S. General Services Administration (GSA) today announced the proposed debarment of MCI WorldCom from receiving new Federal government contracts.

GSA has been closely monitoring the MCI WorldCom bankruptcy and allegations related to fraudulent conduct. On June 2, 2003, GSA's Office of Inspector General recommended that the agency's suspension and debarment official consider whether the company met the standard required of all government contractors of being "presently responsible," and therefore, eligible to compete for new government contracts. After careful review of the Inspector General's referral and all relevant information available, this official determined that MCI WorldCom lacks the necessary internal controls and business ethics. Accordingly, the proposed debarment has been issued which triggers an immediate suspension of the company's eligibility to compete for new Federal government contracts.

"It is important that all companies and individuals doing business with the Federal government be ethical and responsible," said GSA Administrator Stephen A. Perry. "GSA has rigorously followed the Federal Acquisition Regulations and has acted to protect the interests of the government and taxpayers."

The suspension and debarment official's review included the reports from former U.S. Attorney General Richard Thornburgh (Thornburg Report), the Report of Investigation by the Special Investigative Committee of the Board of Directors of WorldCom, Inc. (McLucas Report), MCI WorldCom correspondence and slides prepared by the company's ethics office, and the June 3, 2003 report by WorldCom's outside auditors, KPMG, LLP. Of particular note are the ten "material weaknesses " in the company's internal controls cited in the KPMG report.

The effect of the proposed debarment is as follows:

MCI WorldCom's name will be entered into the Excluded Parties Listing System; the name will appear on the list tomorrow at http://epls.arnet.gov.
The company is immediately prohibited from competing for new government contracts.
The proposed debarment and immediate suspension apply government-wide. Neither GSA, nor any other Federal agency, may award a new contract while MCI WorldCom is on the excluded parties list.
The company may, within 30 days, challenge the decision.

Previously, GSA suspended former MCI WorldCom Chief Financial Officer, Scott Sullivan, and former Controller, David Myers. Earlier this month, GSA also suspended four former MCI WorldCom employees:

Mr. Bernard Ebbers, Chief Executive Officer of WorldCom;
Mr. Buford Yates, Director of General Accounting;
Ms. Betty Vinson, Director of Management Reporting; and
Mr. Troy Normand, Director of Legal Entity Accounting.

GSA is a centralized Federal procurement and property management agency created by Congress to improve government efficiency and help Federal agencies better serve the public. It acquires, on behalf of Federal agencies, office space, equipment, telecommunications, information technology, supplies and services. GSA, comprised of 14,000 associates, provides services and solutions for the office operations of over 1 million Federal workers located in 8,300 government -owned and leased buildings in 1,600 U.S. communities.