Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

Contractor provided KBR employees with sports tickets and golf outings

U.S. Intervenes in Suit Against KBR and Panalpina Alleging Kickbacks Under the False Claims Act

Allegations of Kickbacks and Overbilling Related to Logistical Support in Iraq

From MS SPARKY

WASHINGTON, May 5 /PRNewswire-USNewswire/ — The Justice Department has intervened in a whistleblower lawsuit against Kellogg Brown & Root (KBR), Panalpina Inc. and others that alleges that employees of two freight forwarders doing business with the companies provided unlawful kickbacks to KBR transportation department employees.  KBR is the prime contractor under the Logistics Civil Augmentation Program (LOGCAP III) contract for logistical support of U.S. military operations in Iraq. The whistleblowers also allege overbilling by a KBR subcontractor in the Balkans, Wesco, under a military contract.

The United States is pursuing allegations that the two freight forwarders, Eagle Global Logistics (which has since merged with TNT Logistics and become CEVA) and Panalpina provided unlawful kickbacks in the form of meals, drinks, tickets to sports events and golf outings to KBR employees.  The government will seek damages and penalties under the False Claims Act and common law, as well as penalties under the Anti-Kickback Act.  The United States has declined to intervene in the remaining allegations of the relators’ suit.

The lawsuit was filed in U.S. District Court for the Eastern District of Texas under the qui tam or whistleblower provisions of the False Claims Act by David Vavra and Jerry Hyatt who have been active in the air cargo business–the industry relevant to the case. Under the qui tam or whistleblower provisions of the False Claims Act, a private citizen, known as a “relator,” can sue on behalf of the United States.  If the suit is successful, the relator may share in the recovery.

“Defense contractors cannot take advantage of the ongoing war effort by accepting unlawful kickbacks,” said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice.  “We are committed to maintaining the integrity of the Department of Defense’s procurement process.”

The United States previously intervened in and settled the relators’ allegations that EGL included non-existent charges for war risk insurance in invoices to KBR for air shipments to Iraq, costs that KBR passed on to the Army.  Two EGL employees pleaded guilty to related criminal charges.   EGL paid the United States $4 million in the civil settlement.

The government also intervened in and settled the relators’ allegations that EGL’s local agent in Kuwait, a company known as Al-Rashed, overcharged it for the rental (or demurrage) of shipping containers.  The United States resolved potential claims arising from that matter against EGL for $300,000.  Finally, EGL paid the government $750,000 to settle the relators’ allegations that the company provided kickbacks to employees in KBR’s transportation department.  Former EGL employee Kevin Smoot and former KBR employee Bob Bennett pleaded guilty to related criminal charges in federal court in Rock Island.

This case is being prosecuted as part of a National Procurement Fraud Initiative.  In October 2006, the Deputy Attorney General announced the formation of a National Procurement Fraud Task Force designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs.  The Procurement Fraud Task Force is chaired by the Assistant Attorney General for the Criminal Division and includes the Civil Division, United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies.  The Defense Criminal Investigative Service and Federal Bureau of Investigation participated in the investigation of this matter.  This case, as well as others brought by members of the task force, demonstrates the Department of Justice’s commitment to ensure the integrity of the government procurement process.

Read the full Post at MSSPARKY

The case is United States of America ex rel. Vavra, et al. v. Kellogg Brown & Root, Inc., et al., C.A. No. 1:04-CV-00042 (E.D. Tex.). (click HERE for the original article)

May 5, 2010 Posted by | Civilian Contractors, Contractor Corruption, KBR | , , | Leave a comment

KBR to Get $568 Million Army Order as US Joins Lawsuit

By Tony Capaccio at Bloomberg

May 5 (Bloomberg) — KBR Inc., the Army’s largest contractor in Iraq, was picked for a no-bid contract worth as much as $568 million through 2011 for military support services in Iraq, according to Army officials.

The Army announced the new work order only hours after the Justice Department said it will pursue a lawsuit accusing the Houston-based company of taking kickbacks from two subcontractors on Iraq-related work. The Army also awarded the work to KBR over objections from members of Congress, who have pushed the Pentagon to seek bids for further logistics contracts.

The Justice Department said the government will join a lawsuit filed by whistleblowers alleging that two freight- forwarding firms gave KBR transportation department employees kickbacks in the form of meals, drinks, sports tickets and golf outings.

“Defense contractors cannot take advantage of the ongoing war effort by accepting unlawful kickbacks,” said Assistant Attorney General Tony West, in a statement.

KBR will review the litigation when it is received and “will continue to cooperate with the government,” company spokeswoman Heather Browne said in an e-mail. “Gifts of dinners, baseball tickets and similar items would violate KBR policies and KBR was not aware of these violations.”

KBR will continue to provide services such as housing, meals, laundry, showers, water purification and bathroom cleaning under the new order, which was placed under a military contract KBR won in late 2001, shortly after the U.S. invaded Afghanistan.

‘Appropriate Safeguards’

The Army has “reviewed the government’s notice to intervene” in the whistleblower lawsuit, Army spokesman Dan Carlson said. “We feel we have appropriate safeguards in place” to protect the government’s interests.

The no-bid work order is unusual because the Army, at the insistence of Congress, has since April 2008 put all logistics orders to bid, pitting KBR against Falls Church, Virginia-based DynCorp International Inc. and Irving, Texas-based Fluor Corp.

The Army didn’t put the work out for bids because U.S. commanders in Iraq advised against it, saying that enlisting a new company would be too disruptive, Army program director Lee Thompson said in an interview before the Justice Department action was announced. The U.S. force in Iraq is scheduled to shrink from 94,000 troops today to 50,000 by August, with a complete withdrawal by December 2011.

Transition Costs

The Army, in a statement, said putting to bid an order for 18 months’ work, and making the transition to a new contractor, would cost at least $77 million. The KBR work order will be awarded by Aug. 31, said Mike Hutchison, deputy director of Army logistics contracting.

The lawsuit is the second government action this year against KBR. The U.S. sued the company on April 1, alleging that it used private armed security guards in Iraq between 2003 and 2006 in violation of its Army contract and then improperly billed for their services.

Before today’s Justice Department announcement, the Army had said in an e-mailed statement that it was aware of the April lawsuit and would use “additional oversight measures to ensure only reasonable, allowable costs are paid” under the new work order.

The new lawsuit, filed in a Texas federal court, was based on information from two whistleblowers who work in the air cargo industry, the Justice Department statement said. The whistleblowers can get a portion of any money the Justice Department obtains in the case.

Senate Objections

KBR’s no-bid work order drew criticism from Congress even before it was announced.

Senator Claire McCaskill, the Missouri Democrat who heads a subcommittee that oversees military contracting, and the panel’s ranking Republican, Susan Collins of Maine, wrote to Defense Secretary Robert Gates on April 30 urging the Army against “continued reliance” on KBR in light of the Justice Department’s April lawsuit.

Under the new competitive-bid approach, KBR on March 2 won a one-year, $571 million contract with four option years that, if exercised, could be worth as much as $2.77 billion.

That contract calls for KBR to provide services including transportation and postal operations. DynCorp initially protested the award and then dropped its objections.  Original Here

May 5, 2010 Posted by | Contractor Corruption, Contracts Awarded, KBR | , , , , , | Leave a comment

DOJ Intervenes in Lawsuit Against KBR On Kickbacks

By Brent Kendall
Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The Justice Department said Wednesday that it is joining a lawsuit alleging that employees of KBR Inc. (KBR), the prime contractor for logistical support of U.S. military operations in Iraq, took kickbacks from two freight-forwarding companies.

The department alleged that KBR employees accepted meals, drinks and tickets to sports events and golf outings from freight-forwarding companies Eagle Global Logistics and Panalpina Inc., a unit of Panalpina WeltTransport Ltd (PWTN.EB).

The lawsuit was brought under the federal False Claims Act, which provides financial rewards to litigants who report fraud against the government.  Original here

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com

May 5, 2010 Posted by | Contractor Corruption, KBR | , , , , , , , | Leave a comment

AIG, CNA, ACE Denials Add to Overburdened VA System

Thousands of Injured Contractors  are being treated by the VA because AIG,  CNA , ACE, refuse to accept their responsibility to provide medical benefits earned by  injured contractors.   Yes, you earned those benefits, they were paid for.

Despite these huge numbers there are those who want to advocate the use of the VA by all injured war zone contractors .   We say AIG and CNA have been paid to provide these services and need to do so or get out of the business.  Congress and the Department of Labor need stop putting this off and deal with it.  The VA  has enough to do without subsidizing greedy insurance companies and taking away from military war casualties.

Towards Excellence for Veterans

In 2003, Bush administration officials estimated that about 50,000 U.S. troops fighting in Afghanistan and Iraq eventually would file disability claims with the Department of Veterans Affairs.

In this, as with so many things about the wars, the administration woefully underestimated, this time by a factor of 10. Already some 500,000 Iraq and Afghanistan veterans have filed for disability — about one in every three who served.

With nearly 200,000 troops still deployed in the two nations, that number surely will rise. And the Iraq and Afghanistan veterans are the smallest part of the VA’s current disability workload.

The Chicago Tribune reported last month that 84 percent of the increase in VA disability claims over the past seven years came from veterans of the Vietnam and Persian Gulf Wars. In all, the VA paid out $34.4 billion in disability to more than 3 million veterans. The biggest single category for Vietnam, Persian Gulf and “war on terror” veterans: $8 billion for post-traumatic stress disorder and other psychological disabilities.

Funding isn’t the problem — Congress and the Obama administration have approved major boosts in VA spending in the last two budget years. The problem is the sheer size of the workload.   And it’s about to get bigger.   Read this in it’s entirety here

May 5, 2010 Posted by | AIG and CNA, Civilian Contractors, Defense Base Act, Private Military Contractors | , , , , , , , , , , | Leave a comment

Suicide blast outside foreign base in Afghanistan

Reuters
Monday, May 3, 2010;

KHOST, Afghanistan (Reuters) – A suicide bomber struck outside a foreign base in the southeastern Afghan town of Khost on Monday, killing one civilian and wounding two privately employed guards, the Afghan Interior Ministry said.

The attack happened outside a base where in December a Jordanian infiltrator killed seven CIA staff and contractors and a Jordanian intelligence officer in a suicide blast.

A helicopter was seen hovering above the site of Monday’s attack which was cordoned off by foreign and Afghan forces.

May 5, 2010 Posted by | Afghanistan, Civilian Contractors, Private Security Contractor | , , , , | Leave a comment

Harris Corp. deal with Asian ally fuels more combat-radio work

Only days after its previous military-radio deal, Harris Corp. has secured more business for its tactical communications work – this one an $11 million foreign military sale related to the war in Afghanistan.

The Melbourne-based defense contractor and high-tech conglomerate said it received the order from an unidentified U.S. ally in Central Asia – a member of the so-called Partnership for Peace coalition involved in NATO‘s operations in the Afghan war.

Harris said the sizable order will lead to one of the largest deployments to date of its Falcon combat radios in Afghanistan. Various versions of the portable advanced radios are used by infantry soldiers and commanders in combat operations.

On Monday, Harris announced a $13 million order from the Defense Department for the Falcon handheld and vehicle-based combat radios used in the Mine Resistant Ambush Protected All-Terrain Vehicle fleet (M-ATVs).

Harris Corp.’s RF Communications Division in Rochester, N.Y., is the lead contractor on the Falcon program.

Harris is the largest high-tech company headquartered in Central Florida. It employs 15,000 worldwide, including 6,500 in Melbourne and Palm Bay.  Original Story here

Richard Burnett can be reached at rburnett@orlandosentinel.com or 407-420-5256.

May 5, 2010 Posted by | Contracts Awarded, Wartime Contracting | , , , | Leave a comment