The Hill December 2, 2011
Following the devastating earthquake in Haiti on January 12, 2010, the U.S. launched an unprecedented relief effort, eventually totaling over one billion dollars. But the lead agency in the immediate aftermath was not the U.S. Agency for International Development (USAID), as is typically the case when our nation provides humanitarian assistance, but the military. Just after the earthquake, the U.S. had over 20,000 troops in Haiti. Of the $1.1 billion in humanitarian funding from the U.S. in 2010, nearly half was channeled to the Department of Defense.
As has been the case in Iraq and Afghanistan, relief efforts have relied heavily on contractors, a number of which have a history of waste, fraud and abuse. An analysis of federal contracts has revealed that Kuwait-based Agility Logistics (formerly PWC Logistics) — currently under indictment for overcharging the U.S. military by up to $1 billion — has benefited from over $16 million in funding awarded in the aftermath of the earthquake.
With so much on the line, the U.S government, across the board, must step up its oversight of contractors to ensure taxpayer dollars are not wasted on companies with poor track records.
Agility has been barred from receiving government contracts since November 2009, when a federal grand jury indicted the company for overcharging the U.S. military on $8 billion in contracts to supply food for troops in Iraq, Kuwait and Jordan. Agility was accused of “intentionally failing to purchase less expensive food items, knowingly manipulating and inflating prices, and receiving product rebates and discounts that it did not pass on to the government as required.” The prospect of additional charges still exists.
In November 2009 Agility was added to the U.S.’s Excluded Party List System (EPLS), which prevents them from procuring contracts from any government agency. The EPLS designation has been extended to over 125 related organizations as the investigation has continued; all of them have been indefinitely barred.
Despite the blacklist designation Agility was able to secure government funding for work in Haiti through a joint venture. An analysis of the Federal Procurement Data System shows that Contingency Response Services LLC (CRS) has received over $16 million in government funding from the Department of the Navy since the earthquake. The particularly bland sounding Contingency Response Services consists of three defense contractor giants — Dyncorp, Parsons and Agility Logistics (then PWC logistics).
This week, it was reported that federal prosecutors are investigating potential new criminal charges against Agility, the Kuwaiti logistics company under indictment for overcharging the U.S. military on food supply contracts.
Agility (formerly Public Warehousing Company KSC and PWC Logistics), has been suspended from federal contracting since being indicted in November 2009. (The suspension record can be found on the Excluded Parties List System website.) Agility is also facing a civil False Claims Act lawsuit in the matter. The criminal charges also prompted DynCorp International to fire Agility as its main subcontractor in Afghanistan. This is what happens when you get caught “Playing With Uncle Sam’s Food,” as POGO wrote when we first heard about the case.
According to a court order, prosecutors subpoenaed an Agility executive, retired U.S. Army General Dan Mongeon, to testify before a grand jury in order to explore possible new charges. Agility is accused of overcharging the Department of Defense by inflating food prices and submitting false information on food supply contracts awarded between 2003 and 2005. It is not clear what General Mongeon’s testimony will add to the case, which seemed on the verge of settling last year.
US – KUWAIT – IRAQ – DUBAI – The lawsuit outstanding against Agility, the Kuwait based logistics contractor, seems destined to continue its controversial way toward the Courts after what appears to be yet another piece of disinformation. The shipping of supplies to the US military machine in Iraq, the previous misinformed press coverage and Agility’s replacement by Dubai listed Anham FZCo has already been liberally covered in these pages.
Although Agility have a published a specialist website to cover their legal wrangle with the US Defense Department which dates back to an FBI announcement in November 2009 there is no mention of this latest development. On Friday Reuters apparently published an article stating US prosecutors had filed a civil suit against Agility containing an accusation that fraud had been involved in the execution of the food logistics contract which was worth close to $10 billion.
Agility shares then apparently fell by around 5% despite Agility having argued all along that they wanted to fight the case as a civil, not a criminal matter. The outcome of the case is of critical importance to Agility which is banned from further US Government tenders until the matter is resolved, penalties could reach double the amount proved to be embezzled.
Reuters now report that a statement from Agility last night saying the allegations of a new lawsuit were untrue saying:
“The new civil case it spoke about is not a new lawsuit against Agility, but a procedural amendment to the case that was announced in November 2009.”
It is not known at this stage the fate of other US freight contracts obtained by the Agility Defense & Government Services (DGS) which predate the scandal, in some cases by only a week or so, for shipping supplies to numerous countries including Afghanistan. Also questions remain over the employment of senior US military officials, including some from the U.S. Defense Logistics Agency (DLA) and responsible for procurement, who latterly became Agility staff members. Please see the original here
For the second time this year, the Pentagon is trying to give a no-bid contract extension to a logistics company operating a supply warehouse in Kuwait even though the firm has been barred from federal business following an indictment for billing fraud.
The Defense Logistics Agency’s planned extension to Public Warehousing Co., also known as Agility, provides a poignant reminder that the government’s decision to suspend or debar a contractor for alleged misconduct doesn’t always stop the flow of federal funds to that firm, procurement experts told the Center for Public Integrity.
The contract extension may be legal but it “clearly violates the intent” of the government’s earlier decision to suspend Agility, said Dan Goure, vice president of the Lexington Institute, a national security think tank.
Anham FCZO LLC said its logistics contract with the U.S. Department of Defense is final and that it has started to implement it with a view to fully taking over the order by the end of this year.
“It has been final for a while,” Managing Director Mogheith Sukhtian told reporters today in Kuwait City. “We have a signed contract with the U.S. government.”
Dubai-based Anham said April 16 it was awarded a $2.2 billion contract by the U.S. Defense Department to provide logistical support to U.S. troops in Iraq, Kuwait and Jordan.
Kuwait & Gulf Link Transport Co., a cargo shipper, said April 28 that it filed an objection to the awarding of the contract to Anham, which it said failed to meet criteria. The U.S. Defense Logistics Agency decided to take “corrective measures” regarding the objection and will receive amended offers from bidders “to take new decisions for a new settlement,” Kuwait & Gulf Link said in July.
“The protest process is a part of the U.S. government contracting process and it’s conducted in the normal course of U.S government contracts,” Sukhtian said. “So we’re undergoing the process but in the meantime, what we can say, is that the contract is being executed. We anticipate the transition between the incumbent and us to be completed by the end of the year,” Sukhtian added.
The incumbent contractor, Agility Public Warehousing Co., is the Middle East’s largest storage and logistics company and faces charges of overbilling the U.S government on a multibillion dollar contract to supply food for troops in Kuwait and Iraq. Agility had said it was in talks to resolve legal cases with the U.S. Department of Justice and there was no guarantee a settlement would be agreed.
A U.S. magistrate recommended the dismissal of an indictment against Agility’s unit, Agility DGS Holdings Inc., in connection with the company’s contract to feed U.S. troops in Iraq and Kuwait, Agility said Oct. 11. Please see the original story here
DUBAI, United Arab Emirates
A Kuwaiti logistics firm facing U.S. fraud charges over food shipments to American troops said Sunday it is weighing the future of its military contracting business.
The chairman and managing director of Public Warehousing Co., Tarek Sultan, said no decision has been made for the contractor’s defense and government division, but that contingency plans are in place
“If we cannot reach a mutually agreeable settlement, then we would need to assess all strategic options for the (defense and government) business,” Sultan said in an emailed statement. “For now, the situation is fluid.”
He did not elaborate on plans for the division. Spokesman James Gildea declined to comment further.
The company, also known as Agility, has received more than $8.5 billion in food supply contracts from the U.S. military to feed American troops in Kuwait and Iraq.
Federal prosecutors have charged Agility with making false statements, submitting false claims and committing wire fraud.
The indictment made public in November accuses the company of defrauding the U.S. government of at least $68 million. The charges were later expanded to two of the company’s subsidiaries.
Prosecutors say Agility’s contract with the government is still in effect. It is scheduled to expire in December.
Agility has been in talks with American prosecutors aimed at a settlement but has so far been unable to reach a deal. It says the charges are without merit.
The accusations nonetheless remain a drag on the company.
Agility posted a profit of 17.6 million Kuwaiti dinars ($60.8 million) for the first three months of this year. That is less than half of the 37 million dinars it earned in the same period last year.
Sultan said financial fallout from the dispute, along with the U.S. troop drawdown in Iraq and lingering effects of the global economic downturn would continue to eat into profits over the coming year.
Ongoing legal problems with the U.S. government have hurt Agility’s chances to win new contracts, which has had a “deep impact” on its defense arm, Sultan said.
The company estimates U.S. government contracts have accounted for up to 35 percent of total revenues.
Besides the military contracting business, Agility runs a commercial logistics arm it says operates in 120 countries.
at the Washington Post
A new contractor has been selected to supply billions of dollars worth of food and beverages to U.S. and other coalition troops in Iraq, Kuwait and Jordan in coming years, replacing a Kuwait-based firm that was indicted in November on charges of overbilling the government for those services.
Agility, a multibillion-dollar, worldwide government contractor, has been fighting the charges in federal district court in Atlanta. Agility and all its subsidiaries are barred from bidding on U.S. government contracts while the legal case is unresolved.
Anham, a six-year-old Dubai-based firm, was chosen over three other bidders for the new contract, which could be worth between $2 billion and $6 billion in the next six years, said Dennis J. Gauci, a spokesman for the Defense Logistics Agency. Anham is a collaboration of three multi-national firms.
Anham’s chairman and chief operating officer is Abul Huda Farouki, a Northern Virginia resident and well-known social figure in Washington. His HII-Finance Corp., based in Fairfax County, joined with two giant Middle East conglomerates to form Anham. One is Saudi-based Arab Supply and Trading, and the other is the Munir Sukhtian Group of Companies, a Jordanian investment and operating entity. Since 2004, Anham has “continually grown and expanded its business operations to over 20 countries,” according to its Web site.
Another Farouki enterprise, Nour USA, is listed on the Anham Web site as an affiliate. Nour USA is a service company “that provides Anham with a strong interface connection with the U.S. Government, and American non-governmental and business organizations,” according to the site. “Nour has proven itself to have the experience and knowledge required to help clients acquire, manage, and execute contracts and projects; especially entities with an international focus.”
There will be a roughly six-month transition from Agility to Anham “to allow the new prime vendor sufficient time to take over the contract and the current contractor to diminish current stocks in the supply chain,” Gauci said Thursday.
US Defence Logistics Agency Change Shipping Contractors
KUWAIT – US – IRAQ – Agility, the Kuwait based company threatened with a major penalty for alleged impropriety over shipping supplies to the US military, report they have been replaced as the chosen logistics supplier by the US Defence Logistics Agency. The company report that they will continue to supply the Government forces for a further six months to ensure a smooth transition.
Agility, referred to in indictments as PWC or Public Warehousing Company, the name under which they formerly traded, stated on Monday that two sister companies, Agility DGS Holdings and Agility DGS Logistics, had been added to the prosecutions case file. The group stand accused of overcharging the US military by millions of dollars for their services and making false statements to disguise their activities.
The Agility Group stated in Monday’s release:
“PWC’s work on the food contract has been timely, reliable and cost effective. Its performance, under the most dangerous and demanding conditions, has been unparalleled. The prices it charges have been negotiated with, agreed to, and continually approved by the U.S. government, which has found PWC’s prices to be fair and reasonable.
“PWC has a strong, compelling legal case. The Company intends to defend itself vigorously if this matter properly goes to court. PWC and the Department of Justice continue to hold discussions aimed at a resolution.
“The decision by the U.S. Attorney’s office in Atlanta is regrettable. The indictment contains no new allegations, and simply adds two PWC affiliates as defendants. 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.”
Requests to the US military by the Handy Shipping Guide for the identity of any new supplier remain unanswered but on Tuesday a Springfield, Virginia based group, Versar Incorporated, announced that they had been awarded two task order contract extensions totalling $7.5 million by the Gulf Region District of the U.S. Army Corps of Engineers. This is for their support works, including logistics, for their personal services contract to regenerate and reconstruct areas of Iraq. These works should be completed by October this year, just as Agility complete their foreshortened contract. Versar had already received a further $37 million worth of US military contract renewals in the preceding two weeks.
By Bill Rankin
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.”