DOD Awards No-Bid Contract to Co. That “Overbilled” It $757 Mil

What happens to a company that fleeces American taxpayers out of $757 million? Rather than blacklist it, the U.S. government rewards it with a monstrous, not-bid contract extension worth more than $4 billion.

This may seem inconceivable, but it’s not uncommon among many government agencies. In this case, the Department of Defense (DOD), the Pentagon, is the offender. A private firm hired to provide food and water to U.S. troops in Afghanistan “overbilled” taxpayers by $757 million and, rather than severing ties, the agency rewarded it with more business.

The deal, one of the largest U.S. military contracts in Afghanistan, involves a company named Supreme Foodservice GmbH that also provided the same services for British troops in the region. The original U.S. contract with Supreme exceeds $3 billion and dates back to 2005. This month a congressional hearing exposed how the company tried to cheat taxpayers by, among other things, improperly billing for a $58 million warehouse and by charging $12 million to deliver food just across the street from that facility!

At the hearing, before the House Oversight and Governmental Reform Subcommittee on National Security, the DOD Inspector General provided alarming figures that show agency officials failed to provide “sufficient oversight” of the monstrous contract. As a result, the Pentagon overpaid more than $750 million, including $98.4 million in transportation costs and $454.9 million to airlift fresh fruits and vegetables, according to the watchdog.  

A Florida congressman, John Mica, who sits on the oversight committee, offered this assessment during the hearing. “This has to be one of the prime poster childs for a government contract spun out of control.” The Pentagon’s watchdog made these recommendations, which seem like common sense though they’re obviously not being applied; obtain and maintain adequate documentation to support “price reasonableness,” take additional actions to obtain critical information from contractors and develop strategies to recover overpayments.

This is hardly the first time that the DOD has been under fire for wasting large sums of money. Just last fall a senate report blasted the Pentagon for spending around $70 billion on dubious projects unrelated to its mission. They include billions on research that has little or nothing to do with national defense or medical needs related to military service, including $5.2 billion study fish that overcome political polarization and $1.4 million to create beef jerky treats.

Who could forget the billions wasted in Iraq reconstruction efforts? Audit after audit has exposed how the DOD projects are rife with waste, fraud and abuse and that the spending is so out of control the government has lost track of a large portion of the money.  At last count at least $6 to $8 billion earmarked to rebuild Iraq by training local police, building schools, hospitals and transportation systems could not be accounted for.  

On the heels of that unbelievable revelation Americans learned that the Pentagon had somehow lost $475 million worth of oil destined for the Afghan National Army. It’s unlikely we will ever know how the oil vanished because the DOD improperly shredded records that could solve the mystery, according to federal auditors.