WorldCom’s Chapter 11 filing has added yet another wrinkle to emb...
WorldCom’s Chapter 11 filing has added yet another wrinkle to embattled $450 million Defense Research & Engineering Network (DREN) contract that Defense Information Systems Agency (DISA) awarded to carrier before it filed for bankruptcy. After WorldCom revealed $3.8 billion…
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in accounting errors related to access charges and other areas, DISA said it was conducting legal analysis of DREN contract (CD July 2 p). At about same time, General Services Administration had said it was conducting review of WorldCom’s ability to sign future federal govt. contracts. This month, Global Crossing and Sprint launched new challenges at General Accounting Office to DREN contract that they lost to WorldCom. Protests cite new facts that have emerged on WorldCom’s finances since DISA decision in April. Latest complication is that contract now becomes asset tied up in bankruptcy court proceedings, limiting agencies’ ability to revoke or otherwise alter its terms. “With WorldCom’s decision to file for Chapter 11 bankruptcy protection, the DREN contract is now considered an asset under federal bankruptcy laws,” DISA said in written response to question. “Any legal action (terminations) must go through the Bankruptcy Court because of the ‘automatic stay’ that prevents adverse contractual actions against petitioners absent court approval.”