Stop That Check -- Sprint has challenged the legality

[David Farber <farber () central cis upenn edu>]

CyberWire Dispatch//Copyright (c) 1994


Jacking in from the Blank Check Port:


Washington, DC -- A drive to put in place the next segment of the nation's
premier research and development data superhighway has stalled pulling out
of the drive way.


Sprint has challenged the legality of the National Science Foundation'
recent announcement to provide MCI with $50 million over 5 years to build
a 155 Mbps computer network that will serve as a high speed backbone
linking 5 federal supercomputer centers, according to documents obtained by
Dispatch.


Sprint says that the NSF is actually giving MCI taxpayer money that will
underwrite the company's effort to develop and deploy ATM technology, an
area in which it seriously lags behind its competitors.  ATM is widely seen
as the engine that will drive the so-called information superhighway.  As
things now stand, at the end of 5 years, MCI will have a high speed
*commercial* computer network bought and paid for by you and me.


I hope MCI's shareholders send us all "thank you" cards.


Sprint, which was a losing bidder against MCI, has filed an official
protest with the NSF, asking that the Government Accounting Office
investigate the process by which the NSF reached its decision to give MCI
the prestigious award.


According to the legal papers filed by Sprint, the NSF screwed up the
process from word go by deciding to funnel its $50 million through a grant
animal called a "Cooperative Agreement."  Sprint contends the NSF should
have given that money out under a formal contract.


The difference between a contract and cooperative is substantial: A
contract has teeth;  a cooperative agreement eats strained beets. Failure
to deliver on the requirements of a government contract can land you in
jail, at worst, or leave you waiting for a check in the mail until you
cough up the goods or services originally promised.  A cooperative
agreement on the other hand has no such force of law.  Indeed, a company
providing services under a cooperative agreement can ask for and receive an
increase in its award, despite the fact that it never delivers as promised.


The NSF ran into just this situation with its current cooperative agreement
under which it buys high speed computer network services.  The NSF more
than doubled the money it originally awarded Merit to oversee the current
NSFnet project, despite the fact that Merit's subcontractor, Advanced
Network and Services (ANS), never delivered on its promise to provide a 45
Mbps network.  ANS, by the way, was started with $10 million start up
funding from MCI and IBM.


Surprise, Surprise
==================


The NSF award to MCI has already begun to stir controversy within the user
community.  All the while, MCI, which is a partner in the current NSFnet
contract, has ducked its head, saying nothing, hiding safely behind the
fact that, unlike government contracts, a cooperative agreement can't be
protested by a losing bidder.


Surprise, MCI.  Think again.


The GAO can investigate a cooperative agreement award if it can be proved
that a government agency "is using the cooperative agreement award process
to avoid the competitive requirements of procurement laws, or that a
conflict of interest exists," according to the Sprint documents.


The GAO says that if a government agency acquires "property or services for
the direct benefit or use of the United States," then a procurement
contract should be written up, not a cooperative agreement, like the one
the NSF has awarded MCI. There's no doubt that the NSF is, indeed, buying
services for the direct benefit of the U.S.   In fact, the NSF's own
solicitation for computer network services says it's "seeking to obtain
backbone network services... to support the development of a national high
performance computing environment."


Sprint also hammers on the NSF award claiming there's a blatant conflict of
interest because a member of the National Science Board, which must approve
all grants awarded by the NSF, is also a member of the board of directors
of ANS, which as we now know, was partially funded by MCI.


Back Channel Talks
==================


Sprint documents say NSF was "holding discussions with MCI during the
evaluation process" of the award, yet Sprint wasn't given the same
opportunity.  Sprint claims those discussions allowed MCI to pencil whip
its proposal, modifying it to align exactly with NSF requirements not
relayed to other bidders.  In other words, NSF rigged the bidding process
by allowing MCI to taylor its proposal, locking out all other bidders.


Although MCI hasn't yet publicly discussed the exact details of its
proposal, its widely known that it has proposed to use ATM switching
technology as the centerpiece for its proposed network. Small problem:  MCI
has *no* ATM technology.


Other bidders, AT&T and Sprint, do have ATM technology.  Of those, only
Sprint has a full, nationwide ATM network up and running with revenue
generating customers.


This begs the question:  How the hell could MCI have been judged
technically superior to Sprint or AT&T if it doesn't even have ATM
technology?  Add to this the fact that MCI was judged by the Dept. of
Energy to be technically *inferior* when it bid ATM technology for that
agency's  $50 million *contract* to run a similar high speed network.  (For
those keeping score, Sprint won the DoE contract, but failed bidders MCI
and AT&T have held that up in legal protests for more than 2 years.)


What's the explanation for the technical evaluation differences between the
DoE and NSF?  Try this for size:  The NSF award to MCI is, in reality, a
scheme to use federal funds to underwrite MCI's commercial development of
its ATM network.


This is the conclusion reached by Sprint in its protest:  "The NSF's award
to MCI based upon its offering of a nonexistent ATM network... constitutes
a use of appropriated funds to underwrite the development of MCI's
commercial service."


ATM is the hot technology in the high speed data industry. Hell, its the
whole damn engine for the "information superhighway." And MCI is dead dog
last in the race to deploy it.  Not exactly the type of thing being touted
by the MCI brat on its highly publicized NetworkMCI commercials, is it?


So, now MCI gets $50 million of your money and mine to help it develop that
technology at no risk.  It can fuck up the process, it can slip deadlines,
it can deploy technology that burps and chokes, because, under the
cooperative agreement, that's all allowed in the name of "research and
development."


Meeks out...