Advocacy groups want firm banned from new federal contracts, broken up.
The communications industrys labor union teamed up with consumer and small-business advocates last week to ask the government to ban WorldCom Inc. from future work with federal agencies. Leaders with the advocacy groups also said that all parties, including corporate customers, would be better served if the scandal-ridden companys MCI and UUNet divisions were sold to healthier companies.
"Its high time for [the U.S. General Services Administration] to look at WorldCom as not being a corporate citizen worthy of procurement to the federal government," said Harry Alford, president of the National Black Chamber of Commerce, in Washington. "We cannot trust WorldCom to provide needed service to our nation."
The advocacy groups asked the GSA to suspend WorldCom, of Clinton, Miss., from pursuing new federal contracts, in the same way it suspended Enron Corp. and Arthur Andersen LLP earlier this year. They called on Washington to use its weighty buying power as a means of deterring other companies from engaging in accounting fraud.
WorldCom enjoys contracts with federal agencies worth hundreds of millions of dollars annually. Critics are quick to say that they do not want to see its networks shut down but instead operated by other carriers. Morton Bahr, president of the Communications Workers of America, also in Washington, said AT&T Corp. or Verizon Communications Inc. might be suitable operators.
"WorldComs corporate practices have caused enormous harm on a scale thats really hard to calculate," Bahr said upon announcing the campaign last week. "Its massive fraud has contributed greatly to the current telecommunications meltdown."
The CWA tried to organize WorldComs employees but failed because of resistance from corporate executives, Bahr said. Calling former WorldCom CEO Bernie Ebbers "viciously anti-union," Bahr said he gave up trying to bring the companys workers into the union because the organizing effort jeopardized their jobs.
The advocacy groups joined the bankrupt carriers competitors, including Sprint Corp., Verizon and SBC Communications Inc., in a campaign to break up the company rather than see it emerge from bankruptcy whole. Several carriers have asked the Federal Communications Commission to use its authority to prevent WorldCom from remaining whole through the bankruptcy transition.
The consumer and small-business advocates spoke favorably of MCI and blamed the merger with WorldCom for MCIs diminished status and relationship with workers and customers. They would not speculate on the impact that dissolution would have on massive federal projects such as the Navy/Marine Corps Intranet, but they said projects involving MCI and UUNet would not be subject to suspension if those divisions were purchased by other firms.
Prior to the merger with WorldCom, MCI had developed good relationships with other subcontractors on federal projects, Alford said. In addition, MCI worked with historically black universities and colleges to promote career and entrepreneurship opportunities, but those activities stopped following the WorldCom merger, he said.
The CWA represents employees of WorldComs competitors, including AT&T, Sprint and the Regional Bell Operating Companies.
Responding to the groups campaign, WorldCom said it appeared "to be the latest in a series of attacks orchestrated by the Bell operating companies as WorldCom moves through the financial restructuring process." In a prepared statement, Michael Salsbury, WorldCom general counsel, chastised the labor representatives for "attacking the jobs of 63,000 WorldCom employees in an effort to shield its members from competition."