The Pentagon Needs To Make Contracting Reform a Priority

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Peter Roff Contributor
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It’s a stretch to call Agility, a firm with considerable ties to officials in the Kuwaiti government, the poster child for all that’s wrong with the outsourcing programs run by the U.S. Department of Defense.

At the same time, the government’s experience dealing with it is illustrative of a larger problem that points to ways in which contracting activities should be improved.

From 2003 to 2010, the U.S. Defense Department contracted with Agility (known then as the Public Warehousing Company) to “supply food and other items to the U.S. military in the Middle East,” as CNN described it. For that contract, it was paid more than $8.5 billion.

So far, so good, but thanks to a whistleblower who said he been cut out of the profits for refusing to go along with an overcharging scheme, folks tumbled to the idea that something was amiss.

An investigation was launched. More than 200,000 separate invoices were reviewed, and in 2009, the U.S. Department of Justice brought an indictment charging the company with “committing major fraud against the United States, making false statements, submitting false claims, and wire fraud.”

That should have been enough to end the government’s business relationship with the company. Federal law prohibits companies involved in a lawsuit with or against the U.S. government from being able to bid on commercial contracts. Yet in 2015, two years before the case brought by DOJ was settled, Agility was awarded a no-bid DOD contract. This contract is up for renewal this August.

The idea that companies prohibited from bidding on contracts can still win any that are “no-bid” should cause considerable head shaking. Is there really a difference? It’s something Congress should investigate if the Pentagon won’t since taxpayers end up the hook.

The criminal case was settled after 8 years, with Agility agreeing to plead guilty to a single misdemeanor arising out of problems with a single invoice. They paid $551 in restitution to the U.S. government. That might be enough to persuade anyone who’s casually curious that the whistleblower had an ax to grind, and that his accusations were basically baseless.

Except, as the criminal case was being settled, a companion civil case reached its conclusion, which involved a cash settlement of $95 million, which AirCargoWorld.com said was for “overcharging for supply shipments made during the wars the United States waged in Iraq and Afghanistan.”

Before considering the larger contracting issue, it’s not too much of a leap to suggest the U.S. government should refuse to renew Agility’s current contract — the one awarded no-bid — and probably should not award any more for some time to come, even if they are now once again allowed to bid on work the U.S. needs to have done in the Middle East.

But that’s only one straw on the camel’s back.

As a cost-saving measure, the U.S. military has for some time relied on outside contractors to fulfill functions it once carried out itself.

Pentagon contracts are lucrative, and with hundreds of millions of dollars at stake, it’s no surprise that lots of people are trying to get their fingers into the pie. That should be an argument for better vetting of vendors and greater caution in awarding contracts, but that doesn’t seem to be the case.

Multiply this one instance out over just 10 percent of what must be tens of thousands of contracts let by the DOD every year to foreign vendors supplying and servicing U.S. military encampments overseas, and you get an idea of how big the potential problem of fraud just might be.

Congress, Defense Secretary Jim Mattis and the entire wing of the Pentagon that does nothing but procure and contract for these services really need to take a deep dive into this issue.

It’s not just that the taxpayers might be getting ripped off; our men and women in uniform around the world might not be getting what George Patton once observed was the finest food and best equipment of any military force anywhere in the world. They deserve the best — let’s make sure they get it.

Peter Roff is a senior fellow at Frontiers of Freedom and a former senior writer for United Press International and commentator who appears regularly on the One America News network. Email at RoffColumns@gmail.com and follow him on Twitter.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.