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WorldCom’s Iraq contract has plenty of detractors

The Associated Press

NEW YORK — The Pentagon made an interesting choice when it hired a U.S. company to build a small wireless phone network in Iraq: MCI, aka WorldCom Inc., perpetrator of the biggest accounting fraud in American business and not exactly a big name in cellular service.

The Iraq contract incensed WorldCom rivals and government watchdogs who say Washington has been too kind to the company since WorldCom revealed its $11 billion accounting fraud and plunged into bankruptcy last year.

The contract in Iraq is part of a short-term communications plan costing the Defense Department about $45 million, said Lt. Col. Ken McClellan.

The Pentagon also plans to have Motorola Corp. establish radio communications for security forces in Baghdad, a deal worth $10 million to $25 million depending on the options exercised, said McClellan, a Pentagon spokesman.

The contract with WorldCom — which plans to adopt the name of its MCI long-distance unit when it emerges from bankruptcy — has prompted grumbling in the telecommunications industry from people who say it was not put up for bids.

McClellan said he had no details on the process that led to the deal, which he said was signed early this month. WorldCom spokeswoman Natasha Haubold declined to comment on details of the contract.

The company is to build a small wireless network with 19 cell towers that can serve 5,000 to 10,000 mobile phones used by reconstruction officials and aid workers in the Baghdad area.

The network, using the GSM wireless standard dominant in Europe and the Middle East, is expected to be running by July.

“This is an interim, quick government solution — this is not the basis for some national long-term solution for Iraq,” McClellan said. “That will probably have to be undertaken by the Iraqis.”

WorldCom is not a commercial wireless carrier. It once resold other wireless carriers’ service in the United States but dropped that approach recently.