One of the top military contractors during the Iraq war allegedly overcharged the Department of State, and now the U.S. government is hoping to reclaim that money in federal court.
The Department of Justice claims DynCorp International Inc. routinely and willingly charged the State Department excessive amounts for services like hotels, translators, security guards and drivers for civilian police trainers in Iraq between 2004 and 2008, according to a lawsuit filed Tuesday in federal court.
The Department of State hired DynCorp International Inc. to train Iraqi police forces in 2004, shortly after the toppling of Saddam Hussein’s government. Under the training program, called CIVPOL, DynCorp sent retired military and civilian police officers to train local police forces around the world.(RELATED: American Military Contractors Surge By Eight Times In Iraq In Only A Year)
The DOJ alleges, DynCorp knew the services provided by Iraqi company, Corporate Bank Financial Services, between 2004 and 2008 were priced too high, but charged the State Department anyway. On top of that, DynCorp “added its own markup to its subcontractor’s excessive charges,” the DOJ said.
“DynCorp knowingly allowed one of its main CIVPOL subcontractors to charge excessive and unsubstantiated rates for hotel lodging, translator, security guard and driving services and overhead expenses, and included these charges in the claims it submitted under the CIVPOL contract to the State Department,” the complaint says.
The lawsuit claims that DynCorp knew Corporate Bank was overcharging for Iraqi hotel rooms and Iraqi. DynCorp executives allegedly told their board of directors in 2006 that hotels in Iraq were “expensive,” and “explained that DynCorp permitted this behavior because it had a special relationship with Corporate Bank,” according to the complaint.
The DOJ’s complaint cites an internal DynCorp email in 2007 that confirmed Corporate Bank was “paying significantly less than they said to their employees.” DynCorp executives knew about the overcharging and did not report it to the State Department, which violated the terms of the contract, the DOJ claims.
DynCorp denies any wrongdoing, and say that the U.S. government that recommended Corporate Bank in the first place. They also that they “stopped doing business with the subcontractor many years ago,” according to a statement from the company.
“The suit is an after-the-fact attempt to re-price certain labor and housing costs charged nearly a decade ago by a subcontractor in Iraq which was recommended to DynCorp International by the US government,” DynCorp’s statement said.
The court documents don’t say by how much the State Department was overcharged. The exact number would be determined during legal proceedings if the suit goes to court. If the court finds DynCorp guilty, the company would have to pay triple the dollar amount that was overcharged, plus a penalty fee.
In total, the State Department paid DynCorp $65 million for hotels that Corporate Bank set up, and $70 million for drivers, translators and other services, also arranged by corporate bank, according to the lawsuit.
The lawsuit was filed a day after a “tolling agreement” expired, which restricted both parties from suing over the contract.
The State Department wouldn’t comment on the contract with DynCorp due to the lawsuit. DynCorp is still a contractor for the Department of Defense, and has contracts with the Air Force and the Navy for services other than police training. DynCorp was tapped to train Afghan police forces from 2012 to 2015 under a $1 billion contract with the Army.
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