GLOBAL CROSSING, SPRINT PROTEST AT GAO OVER DOD CONTRACT

Global Crossing and Sprint filed separate protests at General Accounting Office (GAO) over recent decision by Defense Information Systems Agency (DISA) to award $450 million IP network contract to WorldCom. Contract for Defense Research & Engineering Network (DREN), which is designed to connect Defense Dept. supercomputer users via virtual private network, has been touchstone of controversy since DISA made original award to Global Crossing last summer. DISA rescinded that award after rival bidders AT&T, Qwest, Sprint and WorldCom protested and DISA conducted 2nd round of bidding with what some sources have said were revised criteria in certain areas. Global Crossing said it filed GAO protest after DISA notified company, which filed for Ch. 11 protection in Jan., that it was “ineligible for award” as result of its “current financial situation.” On Fri., Sprint filed separate protest based on what spokesman said were “inconsistencies in the evaluation criteria and errors in the RFP assessment” that DISA used.

“We were originally awarded the contract based on the merits of our technologically superior solution, cost- effectiveness and our experience offering similar services to other large customers,” Global Crossing CEO John Legere said. “It is our contention that we met all of the stated criteria for demonstrating financial responsibility and we therefore should have been considered for the contract.” Global Crossing shares fell 13% last Aug. on news that it had lost original award, which DISA had rescinded without public explanation. Circumstances surrounding original award to Global Crossing were among issues raised in House Commerce Committee letter last month that opened formal investigation into Global Crossing. Panel sought information on solicitation and bidding process and any Executive Branch contracts Global Crossing had on issue.

After reversing earlier decision, DISA last year held another round of bids on contract, which would have been largest govt. award yet received by Global Crossing. Global Crossing said at time that DISA’s decision to rebid contract didn’t have to do with company’s own bid package but with flaws DoD found in procurement process after challenges by rival bidders. Telecom companies had expected govt. decision around Jan. 25, but that announcement apparently was delayed by Global Crossing’s Jan. 26 filing for Ch. 11 protection in 4th largest bankruptcy case in U.S. At that time, several sources said requirements in 2nd round of bidding were lowered in areas such as classification and security, changes that could have made it easier for Global Crossing to win work. Before filing for Chapter 11, Global Crossing had been widely expected to win DREN contract, but its subsequent bankruptcy proceeding made that decision less clear. Several reports earlier this year questioned whether $2.8 million that Global Crossing had contributed to 2000 federal election races and political parties affected govt.’s review of DREN bids, charge that govt. officials denied.

Sprint spokesman said company, which had competed for both rounds of DREN bids, filed protest at GAO Fri., saying: “We feel that we were the most advantageous provider for the federal government and its needs and we are seeking greater recognition of that.”

WorldCom said earlier this month that contract had minimum guarantee of $6 million and $450 million ceiling over 10 years. Company said it would deliver private, high- performance network solution for DREN to provide applications such as high-speed data transfer, IP multicasting and next- generation Internet protocol. WorldCom plans to deploy wide area network (WAN) services to allow researchers and engineers to collaborate on DoD initiatives. AT&T spokesman said company still was evaluating its options on contract challenge Mon. and had made no final decisions. Qwest spokeswoman said that company also hadn’t decided on protest.

GAO has 100 calendar days to rule on contract challenges under Competition in Contracting Act, although typically agency doesn’t take full period, said Daniel Gordon, asst. gen. counsel for GAO and head of agency’s bid protest unit. Of protests on which GAO rules, typically 22% are upheld, he told us.

In written reply to questions, DISA spokeswoman said contracting officer in such contract cases was “required to determine if an offeror is a responsible firm for each acquisition.”

Contracting officer has certain amount of discretion in ascertaining financial standing of bidder in such cases, so Ch. 11 filing wouldn’t necessarily put company out of running for federal contract, said consultant Paul Goulding, former acting GSA administrator. Compared with Ch. 13 filing, which liquidates company’s assets, Ch. 11 simply means there’s reorganization, so such a firm would be bidding on contract with assets intact, he said. “It would seem to be that they could, at least in theory, compete,” Goulding said: “It could be protested, obviously.”