The Pentagon is pressing one of the largest contractors in Afghanistan, Supreme Foodservice AG, to refund within 30 days overpayments of $756.9 million in unsupported transportation costs, according to a spokeswoman
by Tony Cappacio Bloomberg December 13, 2011
The Pentagon is pressing one of the largest contractors in Afghanistan, Supreme Foodservice AG, to refund within 30 days overpayments of $756.9 million in unsupported transportation costs, according to a spokeswoman.
The Defense Logistics Agency made the decision last week“after extensive negotiations, in which Supreme and the agency were unable to agree on final rates” for a contract first awarded in December 2005, said agency spokeswoman Mimi Schirmacher in a statement.
Supreme Foodservice of Ziegelbrucke, Switzerland, through Sept. 30 has been paid $5.5 billion since 2005 to supply and transport food, water, three-layered corrugated packing boxes and other non-food items to U.S. troops in Afghanistan. It provides fresh fruits and vegetables to as many as 246 sites in Afghanistan under the agency’s “Subsistence Prime Vendor”program.
Schirmacher said the Defense Logistics Agency can’t break down the $756.9 million by category “since it involves proprietary pricing information.”
Company spokeswoman Victoria Frost said in an e-mail that the contested rates have been in negotiations for several years. The company “strongly disputes” the repayment request and will appeal, she said.
‘Just How Bad’
Pentagon Inspector General Gordon Heddell, whose auditors in a March report first highlighted Defense Logistics Agency oversight deficiencies, said at a Dec. 7 hearing that the original Supreme contract was “an example of just how bad it can get.” The contract “wasn’t well-designed” or “well-thought out.”
Only this year has the defense agency assessed final transportation rates for a contract awarded in 2005, Heddell said.
“We are just now determining what should have been the reasonable and fair prices to pay,” Heddell told a House oversight committee.
Supreme’s head of Washington-based operations is Robert Dail, a former Army Lieutenant General who headed the DLA between August 2006 and November 2008. He presented Supreme in January 2007 with the agency’s “New Contractor of the Year Award.” He joined Supreme in March 2009 as president of Supreme Group USA in Reston, Virginia
Editors Note: In 2010 nearly 200 Defense Base Act claims were filed by Supreme Group Employees for Afghanistan, some of these dating back as far as 2006. This scandal involved at least one subcontractor and an Insurance Company TPA. The results of the investigation into this have been kept from the public.
Supreme Group, a king of U.S. military logistics, earned billions supplying food to troops in Afghanistan. Now, in a case reminiscent of Halliburton’s Iraq scandal, the contractor is under investigation for overbilling taxpayers. Aram Roston reports
Aram Ronston The Daily Beast November 28, 2011
At first blush, Michael Jacques Gans doesn’t appear to be your typical defense contractor. An attorney by training, Gans spends his spare time racing a mint-condition, sky-blue Bugatti race car—vintage 1927—on tracks across Europe. He doesn’t reside inside Washington’s Beltway, preferring instead his home in Germany or a multimillion-dollar duplex on New York’s Fifth Avenue, overlooking Central Park.
And Supreme Group, the firm he co-owns with his German-born wife, Nina Von Steuben, and American businessman Stephen Orenstein, is hardly a household name in the U.S. with its main operations in the Netherlands, Switzerland, and Dubai. But inside Afghanistan, Supreme is a king of U.S. military logistics, performing a dizzying amount of wartime business that has earned the firm billions of dollars, easily enough to support a luxury lifestyle for its owners.
For the last six years, Supreme has imported all of the U.S military’s food into Afghanistan, and its contract was extended by the Pentagon in 2010 for two years and $4 billion without the normal competitive bidding. But that’s just part of its business. Supreme also runs military mess halls on Forward Operating Bases, trucks gasoline and diesel into Afghanistan from both Uzbekistan and Pakistan, and operates two warehouses that it boasts are now the largest structures in Afghanistan, dwarfing even the country’s ancient palaces. Since 2005, the company’s various Pentagon contracts in Afghanistan have been worth $8 billion.
Supreme makes no bones about its lucrative opportunities. “There is a modern-day Silk Road, a transportation hub, that is coming together in Afghanistan,” Robert Dail, a retired Army general who now serves as Supreme’s U.S.-based president, boasted to a conference for contractors in Washington this month.