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Harris Gets FAA Telecom Contract

July 16, 2002|From Dow Jones/Associated Press

WASHINGTON — The Federal Aviation Administration on Monday rejected WorldCom Inc.'s bid to build a $3.5-billion next-generation telecommunications network, dealing the troubled company a blow that could dash its hopes of recovery.

Instead, it chose Harris Corp. of Melbourne, Fla., for a contract that could last as long as 15 years. The initial term of the contract is for five years at $1.5 billion.

The FAA's rejection of WorldCom came despite pleas by Federal Communications Commission Chairman Michael K. Powell for federal agencies not to cut their ties to WorldCom, which is reeling in the face of a $3.9-billion accounting scandal.

As customers flee the company, the federal government has become an even more critical customer.

WorldCom did $462 million in business with the federal government last year, which included telecommunications services for the FAA. But given WorldCom's problems, those agencies will be reviewing the contracts when it comes time for renewal.

The new FAA contract would have been anything but routine. The FAA is trying to redesign its telecommunications system from the ground up, integrating disparate systems into a unified, highly secure network.

WorldCom's loss is a gain for the nation's other major telecommunications players. Harris' team included Raytheon Co., Sprint Corp. and the four Baby Bell telephone companies, BellSouth Corp., Verizon Communications Inc., SBC Communications Inc. and Qwest Communications International Inc.

But the FAA also rejected a bid by Lockheed Martin Corp., which planned to use AT&T Corp. as its subcontractor.

Under the so-called FAA Telecommunications Infrastructure, or FTI, contract, Harris will modernize and operate a wide range of voice, data and video telecommunications services in the air-traffic control system used by air-traffic controllers to communicate with one another and with pilots. Harris will phase out older systems and replace them with a unified system.

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