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The U.S. government Thursday suspended embattled telecommunications provider MCI from receiving any new federal contracts.
The company, formerly known as WorldCom, entered bankruptcy protection last year after it became involved in a massive accounting scandal.
In a statement, the General Services Administration, a federal agency responsible for procurement decisions, said it was proposing a permanent debarment of MCI because of allegations of fraudulent conduct.
"It is important that all companies and individuals doing business with the federal government be ethical and responsible," GSA administrator Stephen A. Perry says. "GSA has rigorously followed the Federal Acquisition Regulations and has acted to protect the interests of the government and taxpayers."
As an effect of the proposed debarment, MCI is immediately prohibited from competing for new government contracts, and its name will be entered into a federal listing of excluded companies. MCI has 30 days to appeal the decision; if that fails, it could be barred from obtaining new federal contracts for up to three years. The decision won't affect existing contracts.
In a statement, MCI said it accepted the government's decision and is working to rebuild its ethics program and implement new internal controls systems.
GSA has already suspended eight former MCI employees, including CEO Bernard Ebbers, CFO Scott Sullivan, and controller David Myers.
The disbarment proposal comes on the heels of more bad news for MCI. Earlier this week, the Federal Communications Commission said it's investigating accusations that MCI had illegally routed long-distance calls through local and international providers in order to avoid paying fees, then charged consumers for fees that weren't paid.
Those new accusations stem in part from a complaint filed by the country's biggest long-distance carrier, AT&T, to the bankruptcy court overseeing MCI's reorganization. MCI, the No. 2 long distance carrier, hopes to emerge from bankruptcy this fall.