GAO dismisses DREN protests

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The General Accounting Office this week dismissed a pair of protests contesting the award of the Defense Information Systems Agency's $450 million Defense Research Engineering Network (DREN) contract to WorldCom Inc.

The report, submitted by GAO general counsel Anthony Gamboa, acknowledged that DISA "relied on grossly inaccurate financial information in making a determination that WorldCom was a responsible contractor." But the protests and request for reconsideration from Sprint and Global Crossing Ltd. were dismissed because government officials did not act in "bad faith."

DISA officials had no knowledge of the inaccuracies in WorldCom's financial statements until after the award; therefore "the protests became a matter of contract administration, [which is] beyond our bid protest authority, rather than a protest of the agency's award decision," Gamboa wrote.

The GAO report recognizes that WorldCom's "material misrepresentation could provide a basis for disqualification of a proposal and cancellation of the contract award based upon the proposal." However, the report notes that the allegations of material misrepresentation in this case does not come from WorldCom's proposal, "but rather arise from information submitted by WorldCom during the pre-award survey."

DREN, which officials envision will deliver high-speed networking services to the Defense Department's scientific and research communities, has been maligned ever since the original award was made to Global Crossing last year.

Global Crossing won the contract before DOD withdrew that award because of protests, and the company was about to be tapped again when its officials notified DOD that the company was about to file for bankruptcy protection, which again delayed the award.

DISA then removed Global Crossing from the competition. WorldCom was then awarded the contract this year and then filed for bankruptcy July 21. That bankruptcy filing limited the actions that DOD could take.

"The DREN contract is considered an asset under federal bankruptcy laws," DISA spokeswoman Betsy Flood told Federal Computer Week at the time that WorldCom was filing for bankruptcy. Therefore, any legal action, such as terminating the contract, would have to go through the bankruptcy court because of rules that prevent "adverse contractual actions" without the court's approval.

Natasha Haubold, a spokeswoman for WorldCom, would not comment directly on GAO reports about "grossly inaccurate financial information," but she said that the company was pleased that the protests were dismissed.

"The main focus is on performance and capabilities," Haubold said. "WorldCom has met or exceeded the requirements in both categories and plans to do so in the future."

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