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WorldCom loses US government aviation contract

The US Federal Aviation Administration has dealt WorldCom an untimely financial blow by rejecting it for a multibillion-dollar...

The US Federal Aviation Administration has dealt WorldCom an untimely financial blow by rejecting it for a multibillion-dollar contract to modernise and operate its telecommunications infrastructure.

The five-year deal, which can be extended up to 15 years, is worth at least $1.7bn and could grow to $3.5bn.

WorldCom had held the FAA contract since 1993. FAA spokesman Fraser Jones said Harris won "totally on the merits".

Many federal contracts are administered by the US General Services Administration (GSA), which in March suspended Enron and Arthur Andersen from new government business because of misconduct.

The GSA is reviewing its WorldCom contracts but has not taken similar action against the company.

Federal agencies can do business with bankrupt firms, but WorldCom's financial problems were likely to have influenced FAA's decision, said Ray Bjorklund, a federal contracting expert.

However, Natasha Haubold, a WorldCom spokeswoman, said the FAA's decision "is no way a reflection on our ability to provide solutions to our customers", adding that the company will continue to bid on federal contracts.

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