Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

Afghan Public Protection Force Signs First Contracts

Defpro News   March 8, 2012

KABUL, Afghanistan | The Afghan Public Protection Force signed its first contracts for security service today with three companies, marking an important milestone in the ongoing transition from Private Security Companies to the APPF.

The Minister of Interior, Bismullah Khan Mohammedi, presided over the ceremony and thanked APPF leadership, the NATO International Security Assistance Force, and the U.S. Agency for International Development for their support in executing the transition to APPF-led security services.

“From this day on, the responsibility for security services will transition from private security companies to the APPF, one after the other,” said Minister Mohammedi.

APPF Deputy Minister Jemal Abdul Naser Sidiqi signed three contracts with International Relief and Development (IRD), one with Louis Berger – Black and Veatch, and another with AFGS. IRD and Louis Berger – Black and Veatch are both USAID implementing partners performing development projects around Afghanistan.

“We welcome this security transition as a natural step for Afghanistan,” said Bill Haight, representing the Louis Berger – Black and Veatch joint venture.

In August 2010, President Hamid Karzai ordered private security companies to be disbanded, and the APPF was identified to take over security responsibility from these companies. The APPF is focusing now on taking over security responsibility for development projects, convoys and commercial businesses. By March 2013, all security for ISAF bases and construction sites is scheduled to transition to the APPF

March 8, 2012 Posted by | Afghanistan, Civilian Contractors, Private Security Contractor, Safety and Security Issues, USAID | , , , , , , , , , | Leave a comment

Ex-CEO of Defense Department contractor charged with overbilling

Cliffview Pilot  October 20, 2011

BEHIND THE STORY: The former president and CEO of international engineering consulting firm Louis Berger Group surrendered early today to face a six-count grand jury indictment accusing him of over-billing the government millions of dollars in reconstruction contracts in Iraq and Afghanistan, federal authorities in Newark said.

Derish M. Wolff has a court appearance scheduled this afternoon in U.S. District Court in Newark, they said.

Soon after Wolff — the nephew of company founder Louis Berger — became the firm‘s president in 2002, federal officials awarded a five-year $300 million contract to the Berger group for rebuilding power plants, schools and irrigation systems in Afghanistan.

But the company, among other sleights of hand, shifted overhead costs from private clients to federal and state contracts, hoping they wouldn’t be noticed, federal authorities said.

Two former senior employees with the Morristown-based company pleaded guilty in federal court in Newark last year to their roles in the scheme.

Although he wasn’t identified by name, Wolff is believe to be the mastermind of the plot, which federal authorities said was carried out by the two: Salvatore Pepe, 58, of Tuckahoe, N.Y., LBG’s former Chief Financial Officer, and Precy Pellettieri, 54, of Rahway, the former controller.

Pepe and Pellettieri admitted targeting an overhead rate above 140 – meaning: for every dollar of labor devoted to a USAID contract, LBG would receive an additional $1.40 in overhead expenses and total profits allegedly incurred by LBG

Please read the entire article here

October 20, 2011 Posted by | Afghanistan, Civilian Contractors, Contractor Corruption, Contractor Oversight, Follow the Money, Government Contractor, State Department, USAID | , , , , | Leave a comment

Afghanistan: military quagmire and government money pit

One reason US reconstruction work in Afghanistan is so fruitless is that oversight into where the billions go is wholly inadequate

by Pratap Chatterjee at the Guardian.co.uk

Louis Berger, a major construction company headquartered in New Jersey, has agreed to pay out a record $69.3m in fines (pdf), the largest ever such penalty imposed on a contractor working in the war zones of Afghanistan and Iraq. The company has been awarded billions of dollars in contracts for the construction of roads, schools and electrical plants in Afghanistan.

Harold Salomon, a former senior financial analyst at the company, discovered that company officials were sending bills for items like the cost of the music system in its Washington, DC office to the US Agency for International Development (USAID). Salomon blew the whistle on estimated overcharging of up to $20m and took the company to court with the help of Phillips & Cohen, a trial law firm in Washington, DC.

“Today I can affirm to those who told me the Louis Berger Group can get away with anything that they were wrong,” Salomon said in a press statement, when the settlement was announced on 5 November. “To those who said, ‘If you cannot beat them, you have to join them,’ I say they were wrong, too.”

Louis Berger’s work in Afghanistan was first heavily criticised in a 2006 report by Fariba Nawa of CorpWatch titled “Afghanistan, Inc.” (full disclosure: I commissioned this report when I worked at CorpWatch). Nawa described a clinic in Qala Qazi built by Louis Berger, which she had visited, that was falling apart:

“The ceiling had rotted away in patches; the plumbing, when it worked, leaked and shuddered; the chimney, made of flimsy metal, threatened to set the roof on fire; the sinks had no running water; and the place smelled of sewage.”

Louis Berger also advised USAID on a road from Sar-e Paul province and Shiberghan, the capitol of Jawzjan province, which Nawa also visited. The highway did not have shoulders for emergency stops, gravel on the road caused their car punctures and broke windshields, and the runoff from the raised road was flooding local homes. A petition, signed by 1,000 local residents, was delivered to the local governor, but since the road was paid for by Washington, the governor was unable to do anything.

“On a programme of this magnitude, there will be problems; the challenges in Afghanistan make it even more difficult. There will be disagreements and mistakes made by anybody at any given time. However, you overcome those problems and you keep the objectives in mind and move forward,” Fred Chace, deputy operations manager for Berger in Afghanistan, wrote in an email to Nawa when she asked for explanations of these problems in November 2005.

Five years later, the company has admitted that its employees were overcharging the government at about the same time. “When the company identified issues with its allocations to the federal government for projects overseas, it began refunding the government in addition to implementing a companywide internal improvement programme,” asserted company spokesperson Holly Fisher in an official statement last week.

Despite this investgation and settlement, a slew of new reports from the special inspector general for Afghanistan (Sigar) suggests that the US government still does not have a full grasp of what happens to the billions of dollars that are being funnelled into Afghanistan today. Between 2007 and 2009, the Pentagon, the state department and USAID approved nearly $18bn to nearly 7,000 contractors. According to an October 2010 audit by Sigar, they cannot readily account for this expenditure: “If we don’t even know who we’re giving money to, it is nearly impossible to conduct system wide oversight,” said Major General Arnold Fields, director of Sigar.

A second audit issued by Sigar last month showed that “six Afghan National Police (ANP) facilities funded by the US Army Corps of Engineers (USACE) in the strongholds of Kandahar and Helmand are so poorly constructed, they are currently unusable.” And a third audit by Sigar issued at the same time reported that the “US government is unable to determine how much money it has given the Afghan government in salary supplements since 2002, or how many recipients are being paid.”

The litany of financial mismanagement goes on. In a fourth audit issued by Sigar in October, investigators reported that Nangarhar province in eastern Afghanistan was receiving millions of dollars in aid which local government officials were unable to properly oversee. “This haphazard approach to development assistance results in overlapping, or duplicate, projects, and also a lack of much-needed facilities because donors funnelling in millions of dollars do not know what specific projects the various donor countries are responsible for,” Maj Gen Fields reported. “This is a recipe for a disaster, and a recipe for tremendous waste of money and resources.”

Nine years after the invasion of Afghanistan, one has to ask the questions: why is there no proper way to manage money in Nangarhar (where the US has a major military base); why are police stations in Helmand and Kandahar (the two provinces with the largest military operations) unusable; and why is there, apparently, no way to tell whether or not the government salaries are being paid out properly; and what, finally, has happened to the last 18bn of US taxpayers’ dollars spent in the country?

Yet, reconstruction funding is only part of the problem in Afghanistan. An estimated $14bn a year has been spent by the Pentagon and Nato on contractors to build bases and drive fuel trucks. Some of that money is believed to leak out into the hands of insurgent groups like the Taliban, according to an investigation conducted by the US Congress.

The Pentagon has appointed a special group called Task Force 2010 to follow those billions. The answers to where the money has gone aren’t necessarily going to be made public by the Pentagon, in which case American taxpayers may have to hope there will be another Harold Salomon willing to put the information in the public domain via WikiLeaks or trial lawyers like Phillips & Cohen.

Please see the original here

November 12, 2010 Posted by | Afghanistan, Civilian Contractors, Contractor Corruption, Contractor Oversight, Whistleblower | , , , , , | Leave a comment

Whistleblower Exposed Fraud By The Louis Berger Group; $69.3 Million Settlement Sets Record for Afghanistan and Iraq Contractor Fraud Case

BALTIMORE, Nov. 5, 2010 /PRNewswire/ — A whistleblower lawsuit was the basis for the federal government’s fraud case against the Louis Berger Group that settled today for $69.3 million — the largest recovery in a case involving war-zone contractors in Afghanistan and Iraq.

The “qui tam” (whistleblower) lawsuit against Louis Berger was filed in 2006 “under seal” as the False Claims Act requires in qui tam cases, so it wasn’t publicly known until today when the court lifted the seal and the record settlement was announced. Louis Berger has agreed to pay $46.5 million to settle the whistleblower case, $4.1 to settle other contractual disputes and $18.7 million for a criminal fine.

The whistleblower, Harold Salomon, was a senior financial analyst/auditor for Louis Berger in New Jersey. His lawsuit exposed Louis Berger’s practice of billing the government for indirect and overhead costs that were unrelated to its government contracts. Louis Berger has some of the biggest U.S. contracts for rebuilding projects in Afghanistan.

“Today I can affirm to those who told me the Louis Berger Group can get away with anything that they were wrong,” said Salomon. “To those who said, ‘If you cannot beat them, you have to join them,’ I say they were wrong, too.”

Fraud, waste and abuse by war-zone contractors is estimated to cost U.S. taxpayers billions of dollars. But fraud cases can be difficult to pursue because of the chaos of war, the lack of a paper trail and other factors. A Department of Justice official estimated earlier this week that the U.S. has recovered only $80 million from cases involving U.S. contractors in Iraq and Afghanistan (excluding the Louis Berger settlement).

“Louis Berger manipulated its accounting system and overhead rate to steal millions from the federal government – money that was supposed to be used to rebuild Afghanistan,” said Peter W Chatfield, a Washington, DC, attorney with Phillips & Cohen, which represented the whistleblower. “The government never would have uncovered this sophisticated scheme without an insider such as our client, Harold Salomon, who had the knowledge and the integrity to stop the fraud.”

Louis Berger’s fraud hurt the U.S. war effort, said Tim McCormack, another Washington, DC, attorney with Phillips & Cohen.

“Fraud undermines U.S. efforts in Afghanistan and Iraq,” said McCormack. “Money that should have been used to build roads, clinics and schools in Afghanistan to win support of the Afghan people was used instead to build Louis Berger’s profits.”

Chatfield and McCormack commended the government attorneys and investigators who worked on the case, particularly Michael DiPietro and Tarra Deshields from the U.S. Attorney’s Office in Baltimore, Russell Kinner from the Department of Justice and the investigative teams from the U.S. Agency for International Development and the Defense Contract Audit Agency.

“This was a true team effort,” Chatfield said. “The government attorneys and investigators invested an incredible amount of time and effort into this case. They worked diligently with Mr. Salomon to unwind this sophisticated, fraudulent scheme.”

The False Claims Act allows whistleblowers to sue companies that are defrauding the government and receive a reward if the government recovers any funds as a result. Salomon plans to donate a portion of his reward to the American-Haitian Association for Medical Economic & Educational Support (www.ahames.org), a non-profit group he founded that provides health care and funds various economic development projects in Haiti.

“It is a blessing to have the opportunity to contribute a little to society and at the same time reach out to those in need thru AHAMES,” Salomon said.

Phillips & Cohen represents whistleblowers nationwide in False Claims Act cases and in claims involving tax law and securities law violations made under the Internal Revenue Service’s and the Securities and Exchange Commission’s whistleblower reward programs. It is the nation’s most successful law firm representing whistleblowers. The firm’s whistleblower cases have recovered more than $6.89 billion in civil settlements and related criminal fines and have earned its clients more than $730 million in rewards. For more information, see www.phillipsandcohen.com.

See Harold Salomon’s full statement at http://www.phillipsandcohen.com/CM/NewsSettlements/NewsSettlements618.asp.

Settlement agreement is posted at http://www.phillipsandcohen.com/CM/NewsSettlements/Louis%20Berger%20civil%20settlement%20agreement.pdf.

SOURCE Phillips & Cohen LLP

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November 5, 2010 Posted by | Afghanistan, Civilian Contractors, Contractor Corruption, Whistleblower | , , , | 1 Comment

Contractor Louis Berger settles in Afghan overbilling probe


McClatchy Newspapers at Kansas City com

One of the government’s highest profile American contractors in Afghanistan has agreed to pay tens of millions of dollars to settle allegations that it overbilled the U.S. government.

In return, the Justice Department will end its investigation into allegations that Louis Berger was intentionally overcharging American taxpayers, individuals close to the investigation told McClatchy Newspapers on Thursday. The settlement, which could be as high as $65 million, would include civil and criminal penalties.

Holly Fisher, a company spokeswoman, declined to comment on the settlement. A spokeswoman with the U.S. attorney’s office in New Jersey, which is overseeing the case, also declined to comment.

The settlement is part of a deferred prosecution agreement, which means that the government retains its right to reopen the investigation if the company engages in future wrongdoing.

Louis Berger’s alleged overbilling, a practice that dates to at least the mid-1990s, swelled to tens of millions in lost tax dollars, McClatchy Newspapers first reported earlier this year.

In 2006, a former Louis Berger employee handed the government evidence against the company, two months before the U.S. Agency for International Development tapped Louis Berger to jointly oversee $1.4 billion in reconstruction contracts in Afghanistan.

It’s unclear whether the settlement would impact the company’s current operations in Afghanistan.

U.S. government officials, who asked to remain anonymous because of the sensitivity of the matter, said that the company continues to be the subject of separate ongoing investigations with regard to its work in Afghanistan.

Louis Berger spokeswoman Fisher issued this statement: “The Louis Berger Group/Black & Veatch Joint Venture is not withdrawing from Afghanistan. We are committed to successfully completing our work on behalf of USAID for the Afghan people, while ensuring the safety of all people working on these important projects.”

Court documents, however, revealed that the Justice Department has been negotiating a deal that would “aid in preserving the company’s continuing eligibility to participate” in federal contracting in Afghanistan and elsewhere.

The whistleblower case, known as a qui tam lawsuit, is sealed in federal court because of the ongoing criminal investigation.

McClatchy Newspapers previously was able to piece together more details about the case by reviewing government documents and speaking to officials who insisted on anonymity because the case is under seal.

That review found that Louis Berger is accused of manipulating overhead cost data and overhead rate proposals submitted to the U.S. government and several states including Massachusetts, Nevada and Virginia.

In some instances the company is accused of shifting overhead costs from private clients to federal and state contracts, where they were less likely to be noticed.

In August 2007, federal agents raided Louis Berger’s home office in New Jersey. Two former senior officials were targeted in the investigation.

Founded in 1953, Louis Berger Group does engineering and construction-related work domestically and in about 80 countries worldwide, according to the company’s website. It has more than 5,000 employees and is headquartered in Morristown, N.J. Please see the original story here

November 4, 2010 Posted by | Afghanistan, Civilian Contractors, Contractor Corruption, Contractor Oversight | , , , , | Leave a comment

Prosecutors investigate US contractor handling Afghanistan, Iraq contracts for overcharging


Last update: August 14, 2010 – 12:18 PM

WASHINGTON – Federal prosecutors are investigating whether a U.S. contractor managing more than $1 billion in reconstruction contracts in Afghanistan overcharged the government.

Prosecutors acknowledged in a court filing last week that their criminal and civil investigations focus on allegations that the Louis Berger Group submitted inflated invoices to the U.S. Agency for International Development, which oversees international development projects.

The revelation came in court filings related to a Louis Berger executive’s federal lawsuit attempting to block efforts to keep his stock holdings in escrow while the investigations continue. Louis Berger, based in Morristown, N.J., is a major player in U.S.-funded reconstruction projects in Iraq and Afghanistan.

August 14, 2010 Posted by | Afghanistan, Contractor Corruption, Contractor Oversight, Iraq, State Department, USAID | , , , , | Leave a comment