The United States government has paid a company based in Switzerland
more than $5 billion to feed the troops in Afghanistan, and thanks to a
succession of no-bid contract extensions, the company, Supreme
Foodservice, overcharged American taxpayers as much as $757 million,
officials say.
The U.S. has appropriated more than $100 billion for Afghan
reconstruction, which includes not only building and development, but
training and arming the Afghan security forces -- and the dispute over
the massive payments to this single company is just one example of how,
more than 12 years into the war, America is struggling to account for
how its money has been spent.
So who's getting rich off the war?
A review conducted by FoxNews.com shows several companies with
questionable track records have been able to snag a sizable piece of the
pie.
While Supreme Foodservice, a foreign firm, has profited immensely,
several American companies have also made out like kings despite delays,
accusations of shoddy construction and prolonged contract disputes over
the last dozen years.
The biggest American benefactors of contracts in Afghanistan in
recent years have been DynCorp International, KBR and Fluor Corporation
-- though Fluor has not faced complaints like the other two.
Critics say no-bid contracts -- which grant companies a monopoly on
huge deals without having to compete for them -- and a lack of oversight
on those contracts once they've been awarded have contributed not only
to the enormous sums spent, but to waste, fraud and abuse, as well.
"This is the byproduct of what has been an explosive growth in
federal contracting over the last decade or so," said Neil Gordon, an
investigator for the Washington, D.C.-based Project on Government
Oversight (POGO) and the manager of the watchdog's
Federal Contractor Misconduct Database.
"Contracting has grown at an incredible pace -- especially after
9/11. The terror attacks really touched it off, especially in national
security, and unfortunately, government oversight of that contracting
hasn't kept pace. That's why we are seeing all of these problems of
fraud and waste and other abuses."
The Center for Public Integrity
has called the billions of dollars poured into the reconstruction of
Afghanistan "windfalls of war" for contractors. Lawmakers have referred
to the myriad reports that point to the billions of dollars in missing
and misappropriated American funds as the failure and shame of a broken
system.
The House Oversight and Government Reform Committee held a hearing
last April in the case of Supreme Foodservice, whose initial 2005
contract, reportedly worth about $725 million, called for supplying food
and water to troops. The Defense Logistics Agency accused the company
of overbilling by $757 million, and later recouped some of the money by
reducing other payments. But lawmakers complained that the agency, which
is in charge of overseeing the contracts, allowed the company to get
no-bid extensions worth billions before it questioned the alleged
overcharges.
Amid the dispute, the U.S. government in 2012 awarded new contracts
worth roughly $8 billion to a competitor, Dubai-based Anham FZCO. But
even as Supreme Foodservice challenged the decision, the Pentagon
reportedly struck a $1.5 billion deal with the Swiss company to continue
its work during the transition.
Supreme Foodservice, for its part, says it is still owed another
billion dollars. Michael Schuster, a managing director at Supreme
Foodservice, testified, "despite operating in the most isolating and
dangerous area of the world, we have achieved consistently outstanding
performance, exceeding contractual requirements."
"This has to be the prime poster child for government contracts spun out of control," Rep. John Mica, R-Fla., said at the
April 17 hearing.
As for DynCorp, KBR and Fluor, all three American companies were
named prime contractors in LOGCAP IV (Logistics Civil Augmentation
Program), the umbrella contract through which all military funding for
Afghan reconstruction (except Afghan security training) flows. According
to the
contract announcement in 2009,
"each of the three contracts has a maximum value of up to $5 billion
per year." Since then, however, KBR has not continued to receive
Afghanistan contracts under the agreement, reportedly because of its
checkered oversight and performance in prior LOGCAP contracts.
Meanwhile, DynCorp and Fluor currently hold multibillion-dollar
contracts in and out of LOGCAP IV, ranging from Afghan security training
to delivering food and services to the troops.
John F. Sopko, the special inspector general for Afghanistan
reconstruction (SIGAR), has spent several years tracking where taxpayer
money is going, whether projects are followed through, and how
contractors and individuals are allegedly trying to cheat the system.
The results aren't pretty, as the now-defunct congressional Commission
on Wartime Contracting learned. It noted
that in 2011, $31 billion had already been lost to "contract waste and fraud" in both Iraq and Afghanistan.
FoxNews.com, in a review of recent SIGAR investigations, found several examples, including:
DynCorp accused of shoddy construction, overbilling for food
DynCorp is a big target, because,
as POGO points out,
it's been around since the war in Bosnia and has left a trail of
criminal complaints and other contract-related charges along the way. In
October 2012 SIGAR filed a report charging that the U.S. Army Corps of
Engineers had paid DynCorp $73 million for building a police garrison in
Afghanistan's Kunduz province that turned out to have "severe settling
and site grading issues," as well as "inadequate construction quality
and noncompliance with contract specifications."
The result was a safety nightmare, with parts of the building already cracking and falling into sinkholes.
According to SIGAR,
DynCorp was not held accountable for the problems or for the repairs
that needed to be made. It got the money, and the contract was closed
out.
Meanwhile,
SIGAR calculated
that DynCorp might have overcharged the government nearly $1 million
for food at just one base between 2010 and 2011. And the company's
longtime security training of Afghan police was called into question
after a
scathing 2010 military report
found a gross lack of oversight in the State Department-directed
program, citing unaccounted-for funds, potential overcharging and
missing weapons inventories.
While the report did not criticize DynCorp directly, Pratap
Chatterjee, an investigator for the research group CorpWatch, noted at
the time that DynCorp was the primary police trainer in Afghanistan
since the early days of the war. In fact, DynCorp won another contract
with the military after police training shifted from the State
Department to the Pentagon.
"If the measures that are used to track the capabilities of the
Afghan police are any guide, the contract has not been a resounding
success," Chatterjee wrote.
DynCorp has continued to get police and military training contracts worth millions.
When contacted for comment, DynCorp spokeswoman Ashley Burke said the
company billed the government for food "consistent with its proposal"
and the IG report on the matter was not "factual." She also disputed the
Kunduz garrison charges, saying the report was based on conditions at
the facility after the contractor had turned it over to the Afghans who
were responsible for its maintenance.
"The Company did everything possible -- including providing work at
no cost to the government -- to deliver in challenging and unusual
circumstances," she said in an email.
Meanwhile, KBR continues to hold contracts with the U.S. government
for projects in Iraq and elsewhere. But spokesman Mark Lowes noted that
the Army's review of its work gave the company far better ratings than
did inspector general reports.
"So I think there's a little bit of disconnect between the Army in
the field and civilians reviewers a decade later," he said. Lowes added:
"If you were able to talk to people on the round (in Iraq) and ask them
about the quality of what we did I believe you will get nothing but
stellar reviews."
Unsafe hospitals and schools
Many of SIGAR's
recent audits
involve international contractors. The stories are generally the same
-- millions in taxpayer money is appropriated and all it seems to buy is
shoddy, unfinished, unsanitary and unsafe construction. Record-keeping
is horrendous and oversight is scarce. Many of the projects are expected
to rot where they stand if there isn't money for adequate repairs or
the ability to maintain them.
This includes four border police stations that were found to have serious structural and
utility flaws
and remain essentially unoccupied after four years, according to a
SIGAR report issued in July 2012. The U.S. Army Corps of Engineers
awarded a $19 million contract to Afghan-based Road & Roof
Construction Company in 2008, and according to the inspection report, a
lack of quality control has led to construction deficiencies at the four
bases. One is said to be close to "uninhabitable."
Meanwhile, the Shafi Hakimi Construction Company, an Afghan outfit,
was paid $600,000 to build a 20-bed hospital in Parwan province. When it
was finished,
SIGAR said,
it had so many utility and structural issues that it was a health
hazard to patients, including newborn babies who were being washed with
dirty water.
Similarly, a multi-building education center in Balkh commissioned by the USAID office is
still unfinished after five years, and is plagued with health and safety problems.
According to an inspector general review, Mercury Development, an
Iraq-based company, was awarded $2.9 million to build centers in three
cities. The company was cited for numerous problems and was eventually
dropped from the project. Afghan contractors were brought in to finish
the job, but the structural deficiencies persisted.
Despite that, some classes are being taught at Balkh, leading Sopko
to say ominously in his report last month, "USAID lacks adequate
assurance that these structures will not collapse at some point in
time."
Taxpayers bought multimillion-dollar 'scrap'
In 2009, the U.S. military gave $5.4 million to Denver-based
International Home Finance & Development, LCC, to build and operate two massive trash incinerators on one of its forward operating bases in Afghanistan.
But the machines remained inoperable after nearly three years because
of construction and safety deficiencies and poor contractor
performance, according to a
report two months ago.
After Camp Sharana was closed last year due to the impending U.S. troop
withdrawal, no one really knows what happened to the incinerators,
though one official guessed in a recent report, "they have already been
deconstructed by the Afghans, presumably for scrap."
More than taxpayer money was at stake here. The incinerators were
supposed to replace the massive open-air burn pits that many returning
troops have blamed for chronic health problems. In his sharply worded
report Sopko said that because the incinerators never ran, "base
personnel faced continued exposure to potentially hazardous emissions,
and $5.4 million of U.S. taxpayer dollars could have been put to better
use."
International Home Finance & Development, LCC, was paid in full.
When asked for comment, Rafaat Ludin, the company's president and CEO,
disputed that the incinerators were never in working order and claimed
the delays were not his company's fault.
"At the time of [the] hand over, the incinerators were working very
well and there were no additional issues," Ludin said in a statement.
"What happened to the incinerators after we left is outside our
control."
