Syria-Aiding Russian Contractor Awarded Another DoD Contract

A highly controversial Russian arms broker that was both suspended from federal contracting due to its business dealings with Iran and heavily criticized for its ties to Syria has recently been awarded a $572 million dollar contract with the Department of Defense (DoD). The DoD will purchase 30 Mi-17 helicopters from the Russian firm Rosoboronexport for the Afghan National Security Forces, according to a recent Special Inspector General for Afghanistan Reconstruction (SIGAR) report. Much of the recent report focuses on the fact that the Afghans are unprepared and unqualified to operate and maintain these helicopters; the Project On Government Oversight, however, is also concerned by the DoD’s decision to contract with a company that has questionable ties to both Syria and Iran, which we wrote about last year.

Rosoboronexport does not appear to have a clean record of integrity or business ethics. In 2006, it was sanctioned by the U.S. for aiding Iran’s nuclear program. President Obama, however, curbed these sanctions in 2010 when the U.S. determined Rosoboronexport no longer had ties to the nuclear program. The DoD proceeded to begin contracting with the Russian arms firm again.

But the company has found itself in hot water once more, this time for its business deals with the controversial and dangerous Syrian government. In 2012, then-Secretary of State Hillary Clinton accused Rosoboronexport of sending helicopters to Syria to assist President Bashar Al-Assad. These same helicopters were likely used as part of the Syrian government’s attack on thousands of innocent civilians. POGO strongly believes that the U.S. should not be doing business with a company that supplies such a violently oppressive regime as Syria, particularly when that same company was sanctioned for aiding Iran’s nuclear program. By financing Rosoboronexport, the U.S. is likely indirectly helping to facilitate the Syrian government’s attack on its people.

Furthermore, doing business with Rosoboronexport potentially violates the Federal Acquisition Regulation (FAR): as POGO wrote last year, FAR Subpart 9.1 states that contracts “shall be awarded to…responsible prospective contractors only” and that contractors (both domestic and foreign) must have “satisfactory record[s] of integrity and business ethics.” POGO cannot conclusively determine that Rosoboronexport violated the FAR. However, its current aid to a brutal Syrian government paired with its likely violation of the FAR seems reason enough not to contract with the company, particularly when there are alternative contractors.

POGO and other concerned organizations are encouraged by Congress’s harsh questioning of Rosoboronexport. The company’s ties to Syria and Iran caused Senator John Cornyn (R-Texas) to block the nomination of a DoD head acquisition official in 2012. His protest seemed to encourage Congress (as part of the National Defense Authorization Act of 2013) to cut off future business with Rosoboronexport. It appears, however, that the DoD maneuvered to use FY 2012 funds (rather than FY 2013 funds) to finance Rosoboronexport’s new deal, taking advantage of a loophole in the NDAA. In response to the recent contract, a bipartisan group of Senators sent a letter to DoD Secretary Chuck Hagel urging the Department to halt Rosoboronexport’s current deal because of the company’s troubling ties.

Last year, POGO raised objections not only to Rosoboronexport’s ethical problems, but also to another contracting concern. Rosoboronexport’s past deal was a “sole-source contract,” meaning there was no competition for the huge contract. Because of the uncompetitive nature of the deal, the U.S. was likely overcharged, according to a congressional staffer POGO consulted with last year.

“In light of the controversy that erupted last year, it is disappointing to see the Pentagon resume business relations with Rosoboronexport,” said POGO’s Neil Gordon. “One would think the military could have found a more responsible and cost-effective source for these helicopters. Of course, SIGAR’s finding that the helicopters might ultimately go to waste just adds another level of absurdity to this episode.”

On Tuesday, Representative Mike Coffman (R-Calif.) introduced a bipartisan amendment, cosponsored by Representatives Patrick Murphy (D-Fla.) and John Garamendi (D-Calif.), to the House Defense Appropriations bill (H.R. 2397) that would effectively kill the DoD’s deal with Rosoboronexport. The amendment cuts funding to the Afghan Security Forces Fund by nearly the entire amount of Rosoboronexport’s contract for 30 Mi-17 helicopters. Floor votes on the bill will likely begin later this week, and POGO urges passage of this commonsense amendment. But in order for Members of the House to have an opportunity to vote on the measure, the House Rules Committee has to allow it. We can’t think of any reason it shouldn’t be allowed to go to a vote—unless there is a successful lobbying effort by the Russian company.