Spare Us Already: Investigators Find More Instances of Gross Overbilling on Defense Contracts

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August 1, 2011

A new report by the Special Inspector General for Iraq Reconstruction (SIGIR) found that Dubai-based federal contractor Anham LLC overcharged the Department of Defense by at least $4.4 million for spare parts and equipment. The SIGIR audit found "egregious examples of overbilling" by Anham, including:

• $4,500 for a circuit breaker valued at $183.30 (which would represent a 2,355 percent markup)
• $3,000 for a circuit breaker valued at $94.47 (a 3,076 percent markup)
• $75 for a piece of plumbing equipment valued at $1.41 (a 5,219 percent markup)
• $80 for a small segment of drain pipe valued at $1.41 (a 5,574 percent markup)

And, last but certainly not least:

• $900 for a control switch valued at $7.05 (a 12,666 percent markup)

This should sound depressingly familiar. After all, it was just a few short weeks ago that POGO made public a DoD Inspector General audit detailing how Boeing overcharged the Army up to 177,000 percent on helicopter spare parts.

Anham promptly fired back in a press release, insisting it had actually saved U.S. taxpayers hundreds of millions of dollars, and that if anyone was to blame for overcharges it was the Pentagon, claiming “not a single screw or nail was purchased without prior, advance approval by the U.S. government.”

Unfortunately, there is evidence that Anham is not just engaging in petty mudslinging. SIGIR found that Anham’s U.S. government contracts in Iraq and Afghanistan, which total about $3.9 billion, are hampered by “weak oversight in multiple areas that [leave] the government vulnerable to improper overcharges.” SIGIR recommended an in-depth review of all Anham contracts, citing poor government oversight, questionable competition practices, and undisclosed conflicts of interests among Anham and its subcontractors.

Anham first landed on POGO’s radar last year when it was announced that it had been chosen to take over a contract to supply food to U.S. troops in the Middle East. The previous prime contractor, Kuwaiti logistics firm Agility, had been indicted several months earlier for, you guessed it, overcharging the government.

Topics: Contract Oversight

Related Content: Defense, Waste

Authors: Neil Gordon

Project On Government Oversight (POGO)

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