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Where Has All the Money Gone?

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Posted on May 15, 2013
The U.S. Army (CC BY 2.0)

By David Vine, TomDispatch

(Page 4)

Recently, Supreme has faced growing scrutiny over the way it’s won competition-free contracts, with service fees as high as 75% of costs and reportedly for more than three-quarters of a billion dollars in overbilling. Last month, Supreme had the chutzpah to sue the Pentagon for awarding a new $10 billion Afghanistan food contract to a competitor that underbid Supreme’s offer by $1.4 billion.

3. Agility Logistics: Next on the list is Agility Logistics, a Kuwaiti company. It won multi-billion-dollar contracts to transport food to troops in Iraq. When the Pentagon decided against awarding similar contracts in Afghanistan to a single firm, Agility partnered with Supreme in exchange for a 3.5% fee on revenues. In 2009 and 2010, grand juries indicted Agility for massive contracting fraud, and the Pentagon suspended the company and 125 related companies from receiving new contracts. In 2012, a judge issued a default judgment against Agility in a whistleblower suit seeking more than $1 billion for overcharging the government.

The Rest of the Top 10: A Pattern of Misconduct

Things don’t get much better farther down the list. Next come DynCorp International and Fluor Intercontinental, which along with KBR won the latest LOGCAP contracts. Awarding that contract to three companies rather than one was intended to increase competition. In practice, according to the Commission on Wartime Contracting, each corporation has enjoyed a “mini-monopoly over logistics services in Afghanistan and other locations. DynCorp, which has also won large wartime private security contracts, has a history littered with charges of overbilling, shoddy construction, smuggling laborers onto bases, sexual harassment, and sex trafficking.

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Although a Fluor employee pled guilty in 2012 to conspiring to steal and sell military equipment in Iraq, it’s the only defense firm in the world to receive an “A” on Transparency International’s anti-corruption index that rates companies’ efforts to fight corruption. On the other hand, number seven on the list, ITT (now Exelis), received a “C” (along with KBR and DynCorp).

The last three in the top ten are BP (which tops the Project on Government Oversight’s federal contractor misconduct list) and the petroleum companies of Bahrain and the United Arab Emirates. After all, the U.S. military runs on oil.  It consumed five billion gallons in fiscal year 2011 alone, or more than all of Sweden. In total, 10 of the top 25 firms are oil companies, with contracts for delivering oil overseas totaling around $40 billion.

Spreading the Love

Contractors are hardly alone in raking in the dollars from the Pentagon’s baseworld. Pentagon officials, military personnel, members of Congress, and lobbyists, among others, have all benefited—financially, politically, and professionally—from the giant overseas presence. In particular, contractors have spread the love by making millions in campaign contributions to members of Congress. According to the Center for Responsive Politics, military contractors and their employees gave more than $27 million in election donations in 2012 alone, and have donated almost $200 million since 1990.


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