GSA stands by WorldCom

The federal government intends to stand by its business deals with bankrupt WorldCom Inc., but it is carefully monitoring the performance of the troubled telecommunications giant with its federal customers, a top official said last week.

"We're taking it one day at a time," said Sandra Bates, commissioner of the General Services Administration's Federal Technology Service. "We're talking about a major ongoing operation that has tentacles everywhere."

WorldCom provides about $1 billion in long-distance services to many agencies through the FTS 2001 contract. The company filed for bankruptcy July 21, and the Justice Department is investigating the company's accounting practices.

Bates, who spoke at a Computer Marketing Associates gathering of telecom executives, said one of the characteristics of the community is that everyone works together and supports one another. "We're in the position to weather the storm with you on behalf of our customers," Bates said.

Nevertheless, WorldCom is likely to have serious problems winning any new government business, experts said.

"There are a bunch of challenges," said Warren Suss, president of Suss Consulting Inc., a federal technology consulting company. "The primary issue is performance. WorldCom is going to have some serious challenges going after new opportunities, and their competitors are hot on the heels of WorldCom."

David Nadler, a telecom lawyer in Washington, D.C., said that the federal government cannot cancel existing contracts with WorldCom because it has filed for bankruptcy, and the contracts are considered assets.

Nevertheless, he said, "There is no obligation for the government to go and give them another contract."