Sen. Collins Seeks Explanation of Why Contracting Waivers Have Been Granted to MCI

WASHINGTON, D.C.—Senate Governmental Affairs Committee Chairman Susan Collins (R-ME) has written to five federal agencies seeking an explanation into why the U.S. government continues to grant additional business to MCI, despite the telecommunication company’s proposed debarment and suspension from federal contracting.

“Despite MCI’s proposed debarment, the company appears to be continuing to receive substantial work from the federal government. It is important that Congress and the American public understand why this is taking place,” Senator Collins wrote in letters to the General Services Administration (GSA), Defense Department, Social Security Administration, Justice Department, and Armed Forces Retirement Home.

Senator Collins, whose committee has jurisdiction over the federal contracting process, asked the agencies for details regarding any contracts they initiated or extended with MCI since its suspension; a statement of compelling reasons for contracting with MCI; and all records relating to those contracts.

On July 31, 2003, the GSA proposed the debarment of MCI from federal contracting. As a result, MCI was listed as a contractor with whom federal agencies must reject bids for new contracts and options to renew or extend existing contracts. Individual agencies, however, may issue waivers to federal contractors that GSA has suspended or debarred if those agencies provide in writing a “compelling reason” for considering the contract. Since MCI’s suspension, several waivers have been issued.

“The intent of the law is that, when a company is suspended, it is no longer ‘business as usual’ with federal agencies,” said Senator Collins. “These waivers raise serious questions about the effectiveness of the suspension. I intend to find out whether these agencies had truly compelling reasons to continue business with MCI, and whether they adequately considered alternatives to contracting with MCI.”

The letter to GSA appears below.

October 23, 2003

The Honorable Stephen A. Perry
General Services Administration
1800 F Street, N.W.
Washington, D.C. 20405

Dear Administrator Perry:

It has come to my attention that a number of federal agencies have initiated or extended contracts with MCI despite the fact that MCI has been proposed for debarment. Under the Federal Acquisition Regulations (FAR), agencies may conduct business with suspended parties if a department head determines that there are “compelling reasons” to do so. FAR § 9.405. I understand that several agencies, including the Department of Defense, the Department of Justice, the Social Security Administration, and the Armed Forces Retirement Home, have made findings of compelling reasons allowing them to initiate or extend contracts with MCI, or to allow MCI to compete for contracts. As Chairman of the Committee on Governmental Affairs, which oversees federal procurement, I write to seek further information about the reasons which led these agencies to allow MCI to receive government work.

I have long been concerned about the federal government’s approach to contracting with MCI. Over a year ago, it was publicly disclosed that MCI had engaged in the largest accounting fraud in history, yet for over a year, the federal government did not suspend or debar MCI. Finally, on July 31, 2003, GSA proposed MCI for debarment based on shortcomings in MCI’s accounting system and its ethics program. Yet, despite the pendency of MCI’s proposed debarment, the company appears to be continuing to receive substantial work from the federal government. It is important that Congress and the American public understand why this is taking place. Therefore, please provide the Committee with the following information and records:

1. A listing of all contracts between the federal government and MCI initiated or extended between July 31, 2003, and the present, including the value of such contracts.

2. Each statement of compelling reasons for entering into the contracts listed in response to Request 1.

3. All records, including internal communications and drafts of records, relating to the initiation or extension of contracts with MCI, or the decision to allow MCI to compete for contracts, from July 31, 2003, to the present, including all records relating to the finding of compelling reasons to enter into such contracts, and all records relating to consideration of alternatives to initiating or extending the contracts in question.

Please provide the requested information by November 7, 2003. If you have any questions about this matter, please have your staff contact David Kass of the Committee staff at 202-224-4751. Thank you for your cooperation.

Susan M. Collins