This week brings the news that Agility, the 33rd largest contractor in POGO’s Federal Contractor Misconduct Database with $1.9 billion in federal contracts in fiscal year 2007, is in serious legal trouble. The Kuwaiti logistics company (formerly known as Public Warehousing Company KSC (PWC)) is accused of defrauding the U.S. government out of billions of dollars on contracts to provide food to troops stationed in the Middle East.
On Monday, the United States Attorney’s Office in Atlanta breathlessly announced in a five-page press release that PWC has been indicted by a federal grand jury on multiple charges of conspiracy to defraud the United States on $8.5 billion in contracts to feed American troops in Iraq, Kuwait and Jordan. It is accused of grossly overcharging the government through various schemes, including 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 U.S. Attorney’s Office continues to investigate the matter. (Tipsters are urged to contact the Department of Defense via a toll-free hotline at (800) 424-9098, via e-mail at email@example.com, or on the internet at https://www.dodig.mil/hotline. You can also contact the FBI Atlanta Field Office at 404-679-9000.)
At the same time, the Department of Justice announced it has joined a qui tam lawsuit brought under the civil False Claims Act against PWC, PWC’s chief executive officer, Tarek Abdul Aziz Sultan Al-Essa, and another Kuwaiti food supply company alleging many of the same claims as the criminal indictment. The lawsuit, which was originally filed in 2005, alleges that since 2003, the defendants have violated the False Claims Act by presenting or causing others to present false claims for payment under PWC’s food supply contracts in the Middle East by knowingly overcharging the government for locally available fruits and vegetables and failing to disclose and pass through rebates and discounts.
To top it off, PWC disclosed that the Defense Logistics Agency (DLA) has temporarily suspended it from being awarded any new contracts until the government determines that the company is presently responsible. The company points out that the suspension will not affect any of its current government work. PWC’s statement about its current legal woes is posted here.
POGO is pleased with the way the Departments of Justice and Defense have jointly sprung into action with regard to PWC-Agility. With pending criminal and civil actions and a temporary contracting suspension in place to protect the public’s money, the government seems to have all of its bases covered. This time, unlike a certain episode from two months ago involving an infamous community organization network, the government isn’t just settling for an ACORN in its fight against contractor misconduct.
-- Neil Gordon