GSA considers Sprint debarment

The U.S. General Services Administration is considering barring Sprint from bidding on future government contracts due to allegations that the carrier overcharged the U.S. Department of Justice by $2.6 million.

In a statement issued yesterday, Sprint called the recommendation from the GSA Inspector General to initiate debarment proceedings against the carrier “unprecedented and totally without merit.”

Sprint admitted in June to an “unintentional billing error” and agreed to compensate the DOJ with a $5.2 million payment. The error occurred when a system-wide billing change caused the carrier to bill FTS2001 contract customers based on a market rate, rather than on criteria specified in the contract. Sprint said the DOJ notified it of the error about a year ago, and that it subsequently suspended further billings.

Howard Janzen, Sprint Global Markets Group president, said in a statement that the carrier resents “even the suggestion” that it should be debarred. “We cannot comprehend how an inadvertent billing error would lead to a comparison of Sprint with companies that are facing allegations of massive fraud.”

Last week, the GSA debarred MCI due to the accounting scandal that resulted in the misstatement of $11 billion in revenue dating to 1999 when the carrier was doing business as WorldCom. Previously, the GSA had debarred Enron and Arthur Anderson under similar circumstances.