PHILADELPHIA (Reuters) - Shares of high-speed communications network services company Global Crossing Ltd. hit a record low Friday after the status of a $400 million contract it won last month from the Department of Defence (DoD) came into question.

Bermuda-based Global Crossing said the contract may have to be "re-bid to address procedural issues in the procurement process that were identified by the DoD after the contract was challenged by unsuccessful bidders." The company said it is confident it would win any potential rebid.

Even though Global Crossing contended the DoD had not taken any offficial action, the Defence Information Systems Agency said Friday it had decided Tuesday, August 14, to cancel the contract "for the convenience of the government."

The agency said it would "take corrective action to ensure that the procurement of the DREN (Defence Research and Engineering Network) complies with the applicable acquisitions regulations," but declined to elaborate.

Shares of Global Crossing hit a record low of $4.34, but rebounded to $4.98, down 28 cents, or 5.32 percent, in afternoon New York Stock Exchange trade. The stock has fallen about 75 percent over the past year, under performing the Standard and Poor's 500 Index by 70 percent.

The stock sold off sharply in the morning amid reports that the contract had been cancelled, but recovered somewhat after Global Crossing said the contract would merely be rebid due to procedural issues. It was unclear when the contract would be re-bid and which companies would participate.

Global Crossing said the procedural issues have nothing to do with its bid, "which was determined by the DoD to be superior to all other bidders on both technical and value criteria." The company said it believes it would retain the contract after any potential rebid because "the unsuccessful bidders are unable to provide DREN with the cost-effective capabilities provided by Global Crossing."

Under the contract, Global Crossing was to link more than 6,000 scientists and engineers at defence laboratories, test centres, universities and industry sites through a single, contiguous fibre-optic network.

The company was to design, develop and manage the secure, virtual private network to allow users to communicate and collaborate in real time throughout the United States, Puerto Rico, Guam and other US territories.

The deal was worth $137 million over three years and had the potential to exceed $400 million over seven years.

Although the value of the contract reflected only one percent of Global Crossing's annual revenues, the uncertainty about the contract renewed investors' concerns about the company's revenue stream and its ability to succeed in its effort to win more high-profile government contracts, analysts said.