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DynCorp Accused of Being a Deadbeat

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Large federal contractor DynCorp International was recently hit with a breach of contract lawsuit, filed by a Turkish construction firm that worked for DynCorp in Afghanistan on U.S. Army Corps of Engineers (USACE) construction contracts.

Nasa Construction and Trade, Inc., alleges in the lawsuit that DynCorp wrongly withheld more than $1.6 million in subcontract payments in 2009 and 2010. Nasa claims DynCorp’s actions prevented Nasa from completing the required work, and seeks the unpaid subcontract balance plus an additional $4.2 million in damages from increased labor and equipment costs and overhead expenses.

Two of the contracts at issue in the lawsuit involve the infamous Afghan National Army garrison project at Camp Pamir in Kunduz Province. Readers of this blog might remember that this $71 million construction project was the subject of a Special Inspector General for Afghanistan Reconstruction (SIGAR) inspection report last year that found numerous defects for which DynCorp was ultimately not held accountable. In December 2011, USACE allowed DynCorp to walk off the job, paying the company nearly all it was owed and releasing it from all repair obligations. USACE also retroactively extended contract deadlines and upgraded DynCorp’s unsatisfactory performance ratings.

According to Nasa’s lawsuit, DynCorp’s misadministration of the subcontracts resulted in numerous changes and disruptions that hindered Nasa’s performance. Nasa claims the subcontracts were based on incomplete design drawings and were awarded when DynCorp was already significantly behind schedule. Nasa claims DynCorp repeatedly failed to deliver the necessary construction materials and did not give Nasa enough time to conduct an assessment of soil conditions. (The aforementioned SIGAR report found the facilities at Camp Pamir at serious risk of structural failure due to poor site grading and soil stability problems.)

It looks like DynCorp’s sweet deal with USACE will play a big role in this case. According to the complaint:

Upon information and belief, in December 2011, DynCorp entered into a settlement agreement with USACE whereby USACE released DynCorp from all contractual liabilities and warranty obligations….Despite having been relieved of its obligation to pay delay liquidated damages to USACE and being paid its own contract balance by USACE, DynCorp continues to withhold $1.3 million of Nasa’s Subcontract balances as liquidated damages for delay. DynCorp has likewise withheld payment of certain of Nasa’s properly presented invoices in the amount of $301,465 also on the basis of liquidated damages, which DynCorp never paid to USACE.

As we blogged two months ago, USACE stands by its ridiculously lenient treatment of DynCorp with regard to the Camp Pamir fiasco. SIGAR is also conducting its own investigation to determine whether there were any “questionable actions” by personnel involved in the DynCorp settlement negotiations. Meanwhile, according to USACE, taxpayers will have to pay $3.8 million to complete the Afghan Army garrison at Camp Pamir—on top of the $71 million we already paid DynCorp.

By: Neil Gordon
Investigator, POGO

Neil Gordon, Investigator Neil Gordon is an investigator for the Project On Government Oversight. Neil investigates and maintains POGO's Federal Contractor Misconduct Database.

Topics: Contract Oversight

Related Content: Contractor Accountability, Inspector General Oversight, Iraq & Afghanistan Reconstruction Contracts

Authors: Neil Gordon

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