Sprint could lose goverment business

David Ho

Tuesday, Aug. 5, 2003 | 11:05 a.m.

WASHINGTON -- The government is considering suspending business with Sprint because the telecommunications company overcharged the Justice Department more than $2 million.

The General Services Administration informed Sprint in the last week that the agency's inspector general urged GSA officials to consider barring the company from new contracts, Sprint spokesman James Fisher said Tuesday. Sprint's government contracts are worth more than $600 million each year.

GSA spokeswoman Mary Alice Johnson declined to comment.

Suspending Sprint would remove a second major telecommunications contractor from federal business. GSA last week barred MCI, formerly known as WorldCom, from new federal contracts.

Sprint agreed in June to pay $5.5 million to settle allegations it knowingly defrauded the government by overcharging the Justice Department for telecommunications services between 2000 and 2002.

The company said there was no intent to defraud. It blamed a billing error that caused Sprint to charge the agency at a market rate instead of the lower rate called for in the contract.

Fisher said the company stopped the incorrect billing immediately after the government alerted the company to the problem last spring. He said the matter was settled and further GSA action is "without any merit."

A GSA suspension, which does not affect existing government contracts, usually lasts less than a year. During the suspension, GSA decides whether to impose a more serious penalty called debarment, which could exclude the company from government business for a period typically not longer than three years.

Last week, GSA suspended new contracts with MCI, saying the company "lacks the necessary internal controls and business ethics."

After WorldCom was driven into bankruptcy by an $11 billion accounting scandal, it proposed adopting the name of its MCI long-distance division in a bid to clean up its image.