Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

Oregon Guard soldiers lawsuit again war contractor KBR can go forward

By Julie Sullivan, The Oregonian

April 12, 2010, 5:57PM

An Oregon Army National Guard soldiers’ lawsuit against war contractor Kellogg, Brown & Root over exposure to a cancer-causing chemical will go forward, a federal judge ruled Friday in Portland.

U.S. District Judge Magistrate Paul Papak denied KBR’s motion to dismiss the case, saying the court in Oregon does have jurisdiction.

The ruling is a significant step for 21 Oregon soldiers who claim they were intentionally exposed to the chemical hexavalent chromium after the U.S. invasion of Iraq in 2003. Troops from Oregon and two other states were ordered to guard employees of the Houston-based holding company and its four subsidiaries, which were restoring oil production in southern Iraq.

The soldiers claim that at the Qarmat Ali water plant, KBR ignored and downplayed the health risks of a corrosion-fighter scattered across the facility that contained hexavalent chromium. Soldiers sued alleging lung and other health problems as a result.

In February, a federal judge in Indianapolis dismissed a similar suit saying that the U.S. District Court for the Southern District of Indiana lacked jurisdiction over KBR. The 47 Indiana soldiers refiled their lawsuit in Houston.

In Portland, the attorney for the Oregon soldiers, David Sugerman said, “We are going forward. Oregon National Guard soldiers will have their day in court.”

KBR has denied harming any troops or employees. Calls seeking comment from the contractors’ Portland attorneys were not returned. In February, the attorneys argued that when the contractor called for help in Iraq, that action was not directed at the state of Oregon and the alleged victims were not in Oregon when those calls occurred.

But in his 18-page opinion, Papak ruled that by using Oregon National Guardsmen — people whose health and safety directly impact the state’s treasury, “defendants purposefully injected themselves into this forum.” He also said that Oregon has a clear interest in protecting the health and safety not merely of its citizens, but also of its employees, the Guardsmen.

April 12, 2010 Posted by | Civilian Contractors, Contractor Casualties, KBR, Safety and Security Issues, Toxic | , , | Leave a comment

DynCorp Deal Under Close Scrutiny

Downgrades & investigations – DynCorp aquisition could be a bumpy ride

Thanks to Forseti at Ms Sparky’s for reporting

Rigrodsky & Long, P.A. Announces Investigation of DynCorp International Inc.

WILMINGTON, Del., Apr 12, 2010 (BUSINESS WIRE) — Rigrodsky & Long, P.A. announces that it is investigating potential claims against the board of directors of DynCorp International Inc. (“DynCorp” or the “Company”)  concerning possible breaches of fiduciary duty and other violations of law related to the Company’s entry into a definitive agreement to be acquired by Cerberus Capital Management, L.P. (“Cerberus”) in a transaction valued at approximately $1.5 billion.

Under the proposed agreement, DynCorp shareholders will receive $17.55 per share in cash for each share of DynCorp common stock they own. The investigation concerns whether DynCorp’s board of directors failed to adequately shop the Company and obtain the best price possible for its shareholders. At least one analyst has set a price target of $20.00 per share and as recently as DynCorp’s February 3, 2010 third quarter fiscal year 2010 financial results announcement, the Company announced a 15.5% increase in revenue over the third quarter of fiscal year 2009 and DynCorp’s CEO stated: “with a healthy backlog and pipeline, and two recent acquisitions opening up new channels to market, we are well positioned for continued growth and value creation supporting defense, diplomacy, and development initiatives around the globe.” In addition, affiliates of Veritas Capital Fund Management, L.L.C. have executed a Voting Agreement pursuant to which they have agreed to vote shares owned by them representing, in the aggregate, 34.9% of the outstanding shares of DynCorp in favor of the transaction.   Original Here

Levi & Korsinsky, LLP Investigates Possible Breach of Fiduciary Duty by the Board of DynCorp International, Inc. – DCP

NEW YORK–(BUSINESS WIRE)– Levi & Korsinsky is investigating the Board of Directors of DynCorp International, Inc. (“DynCorp” or the “Company”) (NYSE: DCP) for possible breaches of fiduciary duty and other violations of state law in connection with their attempt to sell the Company to affiliated funds and/or managed accounts of private investment firm Cerberus Capital Management, L.P. (“Cerberus”). Under the terms of the transaction, DynCorp shareholders will receive $17.55 in cash for each DynCorp share of common stock they own for a total transaction value of approximately $1.5 billion.   Original Here

Wells Fargo Downgrades DynCorp (DCP) to Market Perform Following $17.55/Share Cash Offer

DynCorp (DCP) Agrees To $1.5 Billion Private Equity Takeover Wells Fargo has just issued a mid-day downgrade on shares of DynCorp International (NYSE: DCP); the firm now rates the stock a Market Perform, down from Outperform previously. Wells Fargo raised its valuation range from $15-$17 to $17.55.

The downgrade follows news this morning that DynCorp will be acquired by PE firm Cerberus Capital for $17.55/share. Shares of DynCorp. have surged more than 48% today.  Original Here

Read this post with the comments at Ms Sparky’s

April 12, 2010 Posted by | Uncategorized | Leave a comment

New defendants in Kuwaiti military contractor indictment

By Bill Rankin

The Atlanta Journal-Constitution

Federal prosecutors have obtained a new indictment charging a Kuwaiti firm and two of its affiliates of defrauding the U.S. military on billion-dollar supply contracts.

The indictment, which remains under seal, was disclosed during a hearing Monday in U.S. District Court in Atlanta. Public Warehousing Co., now known as Agility, had previously been indicted on charges it gouged the Defense Department by overcharging food supplies being delivered to U.S. troops in Iraq, Kuwait and Jordan. The new indictment also names Agility DGS Logistics Services Co. KSCC and Agility DGS Holdings Inc.

Lawyers for the companies asked U.S. Magistrate Alan Baverman to keep the new indictment sealed for seven days, saying it might help settlement negotiations. Assistant U.S. Attorney Barbara Nelan disagreed, saying that unsealing the new charges “may be helpful” to the parties’ attempts to reach a settlement.

The Atlanta Journal-Constitution previously reported that parties in the case had been negotiating a possible settlement that could reach $750 million. Since the indictment, the Defense Logistics Agency, which provides supplies to U.S. armed forces worldwide, has barred Agility and 100 of its affiliates from receiving new contracts from the government pending the outcome of the Atlanta case.

Agility has long maintained federal prosecutors did not properly serve the company with the indictment. At Monday’s hearing, only a lawyer for Agility DGS Holdings entered a not guilty plea. Lawyers for Agility and Agility DGS Logistics Services declined, so Baverman entered not guilty pleas for them.

“The decision by the U.S. Attorney’s office in Atlanta is regrettable,” the company said in a statement issued after Monday’s hearing. “This move serves only to taint PWC subsidiaries that have a strong record of on-the-job performance and compliance with U.S. law and federal acquisition regulations.”

April 12, 2010 Posted by | Contractor Corruption, Wartime Contracting | , , , , , , , , | Leave a comment

Cerberus Capital Management expected to buy defense contractor DynCorp International of Falls Church

Washington Post

Cerberus Capital Management, a New York-based private investment firm, is expected to buy DynCorp International of Falls Church in a deal worth roughly $1.5 billion.

DynCorp, a publicly traded defense contractor, said in a news release Monday that its board of directors will recommend that stockholders approve the transaction. Under the deal, stockholders will receive $17.55 in cash for each share of DynCorp common stock. Cerberus is financing the deal with equity and debt from Bank of America Merrill Lynch, Citigroup Global Markets, Barclays Bank PLC and Deutsche Bank Securities.

“I believe that under this partnership with Cerberus, DynCorp International will be able to build on our extensive heritage and successful performance to continue to achieve our growth objectives,” said William L. Ballhaus, president and chief executive of DynCorp. “This transaction is a major milestone for DynCorp International’s continued leadership in serving our customers and supporting U.S. national security and foreign policy objectives.”

Timothy F. Price, managing director at Cerberus, said in a statement that the deal “underscores our successful track record in the government services sector and furthers our goal of continuing to grow our portfolio in this area.”

DynCorp specializes in police training, security and logistics work overseas, including in Iraq and Afghanistan. It has roughly 30,000 employees worldwide.

April 12, 2010 Posted by | Civilian Contractors, Civilian Police, DynCorp | , , , , | Leave a comment

Cerberus to take defense contractor DynCorp private in $1 billion deal

From The Associated Press, April 12, 2010 – 10:43 AM

FALLS CHURCH, Va. (AP) – DynCorp International, which has helped train the national police in Afghanistan, said Monday that it is being bought out by private equity firm Cerberus Capital Management for $1 billion.

A recent decision to shift control of the training program from the State Department to the military may end a contract that DynCorp has held since 2003.

The company is challenging the decision.

DynCorp shareholders will receive $17.55 in cash for each share, a premium of 49 percent from Friday’s closing price of $11.75. The deal also includes debt that pushes its total value to $1.5 billion.

Under the terms of the deal announced Monday, DynCorp has 28 days to solicit proposals from other companies.

Shares of DynCorp International Inc. soared $5.72, or 49 percent, to $17.47.

DynCorp provides services such as aviation support in Iraq to helping flood victims in the U.S. It has contracts in Kuwait and Afghanistan.

Two possible drug-related deaths in Afghanistan by two contractors has raised concerns about how well the company selects and manages employees assigned to a police training contract that is considered key as the U.S. looks to hand over more of the security burden to the Afghans.

April 12, 2010 Posted by | Civilian Contractors, Civilian Police, DynCorp, Private Security Contractor, State Department, Wartime Contracting | , , , , , , | Leave a comment

Iraq rebuilding fund thefts investigated

By Joe Gould – Staff writer Army Times April 12

A special task force is analyzing every transaction and person connected to Iraq reconstruction funding in order to hold people accountable for “hundreds of millions of dollars” lost to fraud, bribery and theft.

Stuart Bowen Jr., special inspector general for Iraq reconstruction, is part of a multi-agency task force that is using automated data mining to sift through the $50 billion spent on reconstruction by various military and civilian agencies.

SIGIR is working with federal law enforcement agencies and the U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN.

“It’s a coordinated, concerted interagency forensic review that has been ongoing for over a year and is now yielding significant fruit,” Bowen told Army Times. “We will continue to implement the program until we have reviewed all of the money used for Iraq reconstruction and all of the personnel that had access to it.”

The task force is required to report its findings to Congress.

As of its January report, SIGIR has examined 73,000 records that represent $28 billion and identified $340 million in suspicious transactions involving 800 vendors. These include duplicate payments, and payments to possibly fictitious contractors or vendors listed simply as “vendor” or “cash.”

SIGIR has launched 500 investigations since it opened shop in Iraq in 2004, resulting in 27 convictions and the court-ordered forfeiture of $69.5 million. Bowen said cases tend to involve contracting officers in Iraq and Camp Arifjan in Kuwait who funneled contracts to specific contractors in return for kickbacks and bribes, or the simple pilfering of cash, mainly from the Commander’s Emergency Response Program, or CERP.

The guilty have been found to have smuggled cash home in their boots and mailed it home in boxes; they sold truckloads of stolen fuel in downtown Baghdad and took payola in the form of watches, cars and airplane tickets.

“Kickbacks and contractor collusion characterize most of these criminal investigations,” Bowen said. “It’s contracting officers and paymasters and individuals who had control over large sums of money or access to it.”

Many of the cases stem from activity in 2003 to 2006. In the early days of the war, reconstruction funding oversight was granted to only a few people with limited power with the Coalition Provisional Authority, which Bowen said was “not a deterrent.”

Meanwhile, billions of dollars in American cash meant to fuel the interim Iraqi government received little scrutiny, said Bowen.

“When you have uncontrolled money in an unstable environment, inevitably you’re going to see crimes committed,” he said.

The criminal convictions contain “an unfortunately high percentage of Army officers” because of the service’s greater role in the war and reconstruction, Bowen said.

He said the ongoing probe has uncovered 52 new cases in the last year.

What’s more, he said, the bulk of the agency’s criminal investigations are still to come.

‘A lot of work to do’

Alongside the ongoing financial forensic investigative review, SIGIR has detailed three prosecuting attorneys to the fraud section of the criminal division at the Justice Department to handle SIGIR-generated cases full time, Bowen said.

“We know that we can only catch a fraction of the wrongdoing that occurred because of the difficulty of operating in a conflict zone,” he said. “We’ve done as well as we could under the circumstances, and we’re by no means finished. An almost doubling of our caseload reveals we have a lot of work to do.”

The single largest case of corruption SIGIR has previously encountered may be the Bloom-Stein conspiracy, a bid-rigging scheme involving $8.6 million in contracts, which has resulted in at least seven convictions.

The scheme is named for contractor Philip H. Bloom and Robert Stein, a former contracting official with the Coalition Provisional Authority – South Central region who led other Army officials in the Hillah, Iraq, office as they illegally steered contracts toward Bloom.

Stein admitted that he and his co-conspirators smuggled $2 million out of Iraq on commercial airlines and took part in an illegal bid-rigging scheme.

Another significant case concerns CERP, a program that provides Army unit leaders with cash to fund reconstruction and security projects. Bowen said the program has improved, but suffered from “weak controls” in its early days.

Capt. Michael Nguyen, a West Point graduate and civil affairs officer for the headquarters company of the 2nd Battalion, 23rd Infantry Regiment, funneled $690,000 in CERP funds from his battalion safe and sent it home to himself. He pleaded guilty in the case after investigators spotted a pattern of large bank deposits and exorbitant purchases, such as a 2009 Hummer H3T and a 2008 BMW M3.

“It was all cash, and it wasn’t well-controlled, so therefore it was very easy for him to steal from that safe and put in the mail back to his house in the states,” Bowen said.

Although abuses persist, Bowen said that SIGIR’s presence has created a deterrent resulting in less wrongdoing and improved controls. He said the Defense Department has improved record-keeping practices, reduced cash concentrations in forward areas, improved coordination between civilian agencies on project selection, and now requires senior-level approval for projects greater than $1 million.

Bowen also credited the Army’s Money as a Weapon System manual and institutionalized training for Brigade Combat Team officers who oversee CERP projects.

Nevertheless, SIGIR’s audits still show “weakness” in CERP. For example, hand-off and coordination between commander’s tours “continues to be a challenge,” the system needs tighter controls on cash and CERP projects are not coordinated well-enough between the Defense and State departments to address needs in Iraq, audits state.

As SIGIR conducts its analyses, it is also soliciting tips from soldiers about wartime fraud, said Bowen, noting that the statute of limitations for such crimes does not expire for at least five years.

“Soldiers have an obligation to promote the integrity of the U.S. effort in Iraq, and that integrity is strengthened when violators are brought to justice,” Bowen said.

April 12, 2010 Posted by | Civilian Contractors, Contractor Corruption, Pentagon, State Department | , , , , , , , , , , , , | 1 Comment