DoD CANCELS $450 MILLION CONTRACT AWARD TO GLOBAL CROSSING

Defense Information Systems Agency (DISA) confirmed Thurs. it had rescinded Global Crossing $450 million network contract, for which 4 rivals had mounted challenges at General Accounting Office (GAO) in recent weeks. Defense Dept. agency provided no details of why Defense Research & Engineering Network (DREN) contract was being revoked just one month after DISA had made award. Contract is largest from federal govt. that Global Crossing had received and company had said it would create “world’s largest, single contiguous fiber optic network” to link defense labs, test centers, universities and other sites. DISA action comes at time when Global Crossing has been beefing up its govt. contract operations. DISA wouldn’t elaborate on next steps, but one option appeared to be that it could accept new bids for network agreement, several sources said. Network is designed to securely connect DoD supercomputer users via virtual private network.

Defense Information Technology Contracting Organization at Scott Air Base in Ill. sent letter Tues. to GAO indicating that DISA had decided it “will cancel and terminate for the convenience of the government” award that had been made to Global Crossing, DISA said: “No further information is available. The agency will take corrective action to ensure that the procurement of the DREN complies with the applicable acquisition regulations.” GAO spokeswoman confirmed that agency had received letter, but declined comment. In recent weeks, AT&T, Qwest, Sprint and WorldCom, all of which also had submitted DREN bids, submitted separate challenges to GAO. Because protests are under protective order at GAO, details of challenges aren’t available. Global Crossing spokeswoman said challenges hadn’t been resolved.

Global Crossing said July 9 that its govt. markets unit was selected by DoD to provide advanced wide area network services for DREN to link 6,000 scientists and engineers. Three-year contract had 7 one-year options and was valued at $137 million with potential to top $450 million, DoD said. DREN is Pentagon’s long- haul communications service provider for High Performance Computing Modernization Program. Global Crossing said that it planned to use its Internet backbone to design, develop and manage secure, virtual private network for DREN. DREN has been described by DoD as “cornerstone” of effort to invest in high-performance computing to provide military with technological edge for war- fighting requirements. Global Crossing had planned to support High Performance Computing Modernization Program in Asia-Pacific Region through its affiliate Asia Global Crossing. Carrier also planned to provide IP service, asynchronous transfer mode offerings and video, audio, imaging and digital data.

“Global Crossing is still supportive of DREN and the program -- they are confident that they will re-secure the contract,” company spokeswoman said. As of late Thurs., she said, company hadn’t received official notification of cancellation from DoD. In recent months, Global Crossing has been increasing its profile in U.S. govt. contracting sector, although it has existing govt. customers in U.S. and elsewhere, including U.K. Foreign Commonwealth office. Its ties to defense community include former Defense Secy. William Cohen, who was elected to its board in April and also sits on board of Asia Global Crossing.

Several industry observers expressed surprise at speed with which DISA moved to revoke contract, particularly because challenges were filed so recently at GAO. Also unusual, sources said, is extent to which 4 losing competitors had challenged award. While each challenge is separate, typically awards don’t provoke such unilateral opposition, they said. Challenge is one in series of recent appeals that have been filed with federal officials over govt. telecom contracts. In April, GAO directed Social Security Administration (SSA) to open for new bids telecom contract that had been awarded to WorldCom (CD April 25 p6). In that case, GAO had upheld protest by Rockwell Electronic Commerce. Alacrity with which DISA cancelled Global Crossing award is “acknowledgment that there has been a mistake,” source said. Expectation is that original bidders will be asked to re-submit proposals, several sources said. Challenges appeared to involve issues such as ability of Global Crossing to meet technical requirements of contract.