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WorldCom Gets Veterans Affairs Deal

November 7, 2002

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JACKSON, Miss. (AP) _ WorldCom Inc., a recent target of labor and consumer groups seeking to bar it from government work, has won a contract to provide long-distance services for the Department of Veterans Affairs.

WorldCom declined Wednesday to reveal terms of the three-year deal, but it is the first government contract the company has announced since April.

WorldCom, which filed for bankruptcy protection in July, remains the largest provider of telecommunications services to the federal government, with more than $500 million in new contracts last year.

Since WorldCom became the target of federal investigations for its admissions of billions of dollars in financial mistatements, it has become less successful in winning government contracts.

``This new contract is a surprising award because most government agencies are too risk averse to give them major awards when there is a lot more uncertainty than there was before about WorldCom’s future,″ said Warren Suss, president of Suss Consulting Inc., a telecom consulting firm in Jenkintown, Pa.

WorldCom on Tuesday said the size of its accounting misstatements had grown to more than $9 billion as the Securities and Exchange Commission broadened its charges against the telecom giant.

WorldCom spokeswoman Natasha Haubold said the company continues to actively pursue government contracts.

Under its newest government contract, WorldCom will be the preferred service provider for more than 175 Veterans Affairs medical centers and outpatient clinics in the U.S. and Puerto Rico.

The contract is with the Veteran Affairs canteen service unit, and includes providing postpaid calling cards, operator services and collect-calling services for patients and for pay phones.

Last week, nine groups, including the 700,000-member Communications Workers of America, urged the General Services Administration to bar WorldCom from bidding on government contracts.

The GSA has been reviewing WorldCom’s federal contracts for several months. WorldCom declined to comment on the progress of that review. The agency conducted similar reviews of Enron Corp. and Arthur Andersen and subsequently suspended both from obtaining new government contracts.

GSA spokeswoman Mary Alice Johnson said WorldCom has assured her agency that its bankruptcy filing will not hinder its ability to service its government contracts. But she added that the GSA ``will continue to monitor developments″ with the company.

WorldCom won a $450 million contract in April to operate a high-speed classified research network for the Defense Department. Both Sprint and Global Crossing Ltd. filed protests with the General Accounting Office over that contract, but the GAO later dismissed the complaints.

In July, WorldCom lost out to a group that included some of the Baby Bells in its bid to win a deal with the Federal Aviation Administration, potentially worth $3.5 billion.

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