Senators McCaskill & Collins demand answers on $70 million settlement with contractor

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See news release from the senators below and post your thoughts…

Senators Collins, McCaskill Demand Answers on $70 Million Settlement with Contractor

Senators see ‘harm to taxpayers’ in government’s decision to pay contractor for inadequate and incomplete work on construction contracts in Afghanistan

 

WASHINGTON – In a bipartisan effort to protect taxpayer dollars, U.S. Senators Susan Collins (R-Maine) and Claire McCaskill (D-Mo.) today sought answers from the United States Army Corps of Engineers (USACE) concerning its decision to approve a $70.8 million dollar settlement with the contractor DynCorp International for faulty construction of an Afghan Army garrison.  According to a report by the Special IG for Afghanistan Reconstruction (SIGAR) that questioned the settlement, some of the structures built by the contractor had completely “failed” and were either “unsafe, uninhabitable, or unusable.”

 

In a letter to Lieutenant General Thomas Bostick, Commanding General and Chief of Engineers for the Army Corps, Collins and McCaskill address multiple reports of waste and mismanagement associated with the contract, asking General Bostick to provide them with information that would justify the $70.8 million settlement.

 

“Many questions are raised by the U.S. Army Corps of Engineers decision to let Dyncorp off the hook for poor performance in a settlement agreement made in connection with contracts to construct a garrison for the Afghan National Army,” said Senator Collins, the ranking Republican on the Senate Homeland Security Committee. “The Corps of Engineers has been unable to provide a justification, despite repeated requests from Congress and the Special IG for Afghanistan Reconstruction. The IG audit on the construction of this garrison documented a number of failures. Such failures undermine our national security objective in Afghanistan to train and support the Afghan National Army. This settlement agreement appears to be yet another inexcusable failure of oversight that undermines the overall mission in Afghanistan and wastes taxpayer dollars.”

 

“It looks like we paid $70 million for a contract that delivered next to nothing-any reasonable person is going to ask why,” said Senator McCaskill, who chairs the Senate Subcommittee on Contracting Oversight. “Every taxpayer dollar spent in Afghanistan is a dollar that wasn’t spent to build a school or repair a road right here at home, and I think it’s critical that we really scrutinize what we’re getting for the money we’re spending on projects halfway around the world.”

 

In 2008, the USACE awarded DynCorp two contracts worth $72.8 million to build a garrison for the Afghan National Army. When SIGAR issued a report last month, much of the facility was found to be improperly built, with some structures severely damaged or collapsed. Despite this, in December of 2011, USACE released DynCorp from all contractual obligations, including any obligation to fix or repair existing facilities. The payments to DynCorp totaled $70.8 million, nearly 97% of the contract’s value.

 

In an attempt to get to the bottom of how and why the settlement was given, Senators Collins and McCaskill asked the USACE to provide information including:

 

            Any evaluations or audits of the contractor’s performance;

 

            The justification for entering into the settlement agreement with DynCorp, including a copy of the settlement agreement; and

 

            The names and titles of all officials responsible for reviewing and approving the settlement agreement.

 

The full text of the letter to General Bostick is available below:

 

 

Lieutenant General Thomas P. Bostick

Commanding General and Chief of Engineers

United States Army Corps of Engineers

441 G Street

Washington, DC 20314

 

Dear General Bostick:

 

The oversight jurisdiction of the Senate Homeland Security and Governmental Affairs Committee includes “the duty of studying the efficiency, economy, and effectiveness of all agencies and departments.”  For that purpose, we are writing to request information regarding the recent decision by the U.S. Army Corps of Engineers (USACE) to pay the contractor DynCorp International LLC (DynCorp) more than $70 million, under contracts worth $72.8 million, despite severe defects with the contractor’s work.

In 2008, USACE awarded DynCorp two contracts to construct a garrison for the Afghan National Army in Kunduz province.  The contracts, with a combined value of $72.8 million, were intended to strengthen Afghanistan’s capacity to train, support, and equip the Afghan National Security Force.[1]

On October 25, 2012, the Special Inspector General for Afghanistan Reconstruction (SIGAR) issued a report finding that the construction of the garrison was so poor that several buildings at the garrison were unsafe, uninhabitable, or unusable.  According to SIGAR, large areas throughout the construction site had collapsed due to DynCorp’s failure to provide proper grading and drainage of the site.  SIGAR also found “virtually non-existent” quality management by USACE during the first nine months of construction.  In addition, SIGAR  found that the construction of the project was delayed by more than two years.[2]

Despite these failings, in December 2011, USACE reportedly released DynCorp from all contractual obligations, including any obligations to fix or repair existing and latent defects.  Under the settlement, USACE paid DynCorp $70.8 million, more than 97% of the contracts’ total value.  In addition, USACE retroactively extended the contract’s duration by 948 days, effectively absolving DynCorp from any liability for the schedule delays.  According to SIGAR, USACE agreed to this settlement despite having previously issued the contractor partial termination notices for default under the contracts and unsatisfactory performance evaluations.[3]

SIGAR also questioned whether the actions by USACE violated federal regulations, which require settlements over $100,000 to be submitted to an audit agency for review prior to agreement.  According to SIGAR, USACE  initially claimed that its settlement was a “negotiated contract modification” which did not trigger the audit requirement.  SIGAR found that the substance of the agreement clearly demonstrated settlement terms and conditions and internal USACE documents refer to the agreement as a settlement.  USACE has since agreed to submit its actions for review by the Defense Contract Audit Agency.[4]

The terms of this settlement appear materially unfavorable to the government.  In light of the harm to taxpayers and the damage to the nation’s objectives in Afghanistan that may have resulted from the Corps’ actions, we request that you provide us with the following information and documents: 

1.         The number, type, value, and obligations to date of USACE’s contracts with DynCorp International LLC;

2.         Evaluations or audits of the contractor’s performance;

3.         The number, qualifications, and locations of the contracting officers’ representatives, quality assurance representatives, and other personnel responsible for conducting oversight of DynCorp International LLC contract(s) in Afghanistan;

4.         USACE’s policy and procedures for entering into settlement agreements, “negotiated modifications” of contracts, recovery of liquidated damages, and enforcement of construction defects on construction contracts;

5.         The justification for the decision to enter into the settlement agreement with DynCorp, including a copy of the settlement agreement;

6.         The names and titles of all officials responsible for reviewing and approving the settlement agreement with DynCorp; and

7.         Additional actions being taken by USACE following SIGAR’s report, including whether additional steps will be necessary to recover costs associated with any additional actions necessary to correct performance failures on contracts performed by DynCorp or to complete the contracts.

We request that you provide the information and documents on or before December 3, 2012.  We also request that you provide a briefing for Subcommittee staff on or before December 7, 2012.

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