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Food Supplier Screws the Military Yet Continues to Win Contracts Worth Billions

November 17, 2009

The U.S. military’s primary food supplier for troops in Iraq and Kuwait has been charged by the FBI and Justice Department with defrauding the government by massive overbilling on $8.5 billion worth of contracts since 2003, to the tune of at least $68 million. Justice Department officials say their investigation is ongoing and that the total amount of fraudulent charges could increase substantially.

The Kuwaiti firm, Public Warehousing Co. (also known as Agility), has made billions from U.S. military contracts over the past decade, including equipment storage and distribution and general logistics support as well as supplying food and food services. Agility recently boasted of a 15% profit increase in the third quarter of 2009.

The charges against the company were filed in 2005, but only unsealed this week. Despite the 2005 charges, Agility continued to win military contracts through this summer. Just a few recent Agility deals include:

  • July 2009: Agility garnered $643.5 million as a subcontractor named in a DynCorp Army contract for Afghan logistical support, including food services. The deal includes four one-year options and a total value of almost $5.9 billion.
  • May 2009: the firm’s chief executive told Arabian Business that the company hoped to gain profits from the U.S. government’s stimulus spending. Later that month, the company sealed a $1.4 billion extension of its contract to supply food and non-food supplies to the US military in Iraq.
  • August 2008: Agility was awarded a 7-year Marine Corps contract to store, maintain and distribute equipment, worth $140 million. Equipment included gear to protect Marines from chemical and biological weapons.
  • May 2008: Agility renewed a U.S. military contract worth up to $2.8 billion, to supply troops in Iraq and Kuwait.

Seemingly without irony, last July Agility won two awards at an international convention for logistics organizations.

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