Global Crossing Ltd.'s bankruptcy has delayed a $450 million contract to provide the US Department of Defense with fast internet services according to a report in yesterday's New York Times.

The prestigious contract is to fast internet services connecting laboratories and other research locations around the country.

The Defense Information Systems Agency, a part of the Defense Department, was expected to announce the winner of the contract at the end of last month. But the decision has been delayed by the recent bankruptcy filing by Bermuda-based Global Crossing, which was in the running for the deal according to people close to the bidding.

The New York Times reported that Global Crossing originally won the contract last July but protests from competing bidders, including AT&T, Qwest Communications International, Sprint and WorldCom, prompted Defense Department officials to delay the award as they looked into criticisms that Global Crossing did not have the necessary technical capabilities and should have been ruled ineligible because it is based in Bermuda.

Concern has also grown over the frailty of Global Crossing's finances and questions over the accuracy of its accounting methods as well as how the proposal by Hutchison Whampoa Ltd. of Hong Kong and a unit of Singapore Technologies to buy Global Crossing would affect the company.

A spokeswoman for Global Crossing told the New York Times that the company believes it is still "in the running" to be awarded the contract.

However, people close to the bidding process told the New York Times that the contract would involve the transmission of large amounts of confidential military information, which could make it difficult for the government to award the contract to a company that may come under the control of foreign concerns.

The Defense Department has told bidding companies that it expects to choose a winner by the first week of March. The original contract, known as the Defense Research and Engineering Network agreement, is a three-year deal, with the potential to be extended to ten years, for a total value of $450 million.

Global Crossing already counts several government agencies, including the Pentagon, the Army Corps of Engineers and the State Department, among its clients.

Global Crossing, which has tried to forge close ties with military organisations, appointed William S. Cohen, a Secretary of Defense in the Clinton administration, to its board last year.

The New York Times reported that Thomas J. Casey, who was chief executive of Global Crossing when the Defense Department withdrew its award of the contract, said in a statement at the time, "These procedural issues have nothing to do with Global Crossing's bid, which was determined by the Department of Defense to be superior to all other bidders on both technical and value criteria." He also said the loss of the contract would not have a material effect on the company's financial results.

Mr. Casey, who remained the company's vice chairman, was replaced by John J. Legere, who was promoted to chief executive in October, at the same time Global Crossing warned investors its revenue would fall substantially short of expectations.

Despite Mr. Legere's assurances at the time that bankruptcy was not a possibility, Global Crossing's finances rapidly deteriorated and the company filed for bankruptcy protection on January 28.

Global Crossing has come under scrutiny in recent days over the way it accounted for swaps of network capacity with other carriers after Roy Olofson, a former vice president for finance, disclosed concern about the company's accounting practices. The Securities and Exchange Commission and the Federal Bureau of Investigation are now investigating the company.

Accounting practices at bankrupt telecommunications company Global Crossing are drawing attention from congressional investigators even as probes of Enron Corp.'s collapse continue, lawmakers' aides said last night.

"We have begun the early stages of gathering the facts on the Global Crossing bankruptcy," said Ken Johnson, spokesman for House Energy and Commerce Committee Chairman Billy Tauzin, a Louisiana Republican.

"It's inevitable we're going to do something. It's just too early to tell what."

Separately, the investigative arm of Congress, the General Accounting Office, was asked to include Enron and Global Crossing in an upcoming report on accounting and auditing issues.

The GAO request came from Michigan Rep. John Dingell, the ranking Democrat on Tauzin's panel, and Senate Banking Committee Chairman Paul Sarbanes, a Maryland Democrat. Hamilton Bermuda-based Global Crossing filed last month for bankruptcy protection from creditors, the fourth largest corporate insolvency in US history. A former employee has alleged that Global used improper accounting methods to artificially inflate revenues. The FBI and the US Securities and Exchange Commission are investigating. Enron made the biggest US bankruptcy filing ever on December 2, after investors lost confidence amid a slew of questions about partnerships that an internal company investigation has since said were used to hide debts and inflate profits. Ten congressional panels plus the SEC and US Justice Department are probing Enron's demise.