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Feds Accuse DynCorp of |Iraq Contract Overbilling

(CN) — DynCorp, a major military contractor, inflated its contract for training Iraqi police forces through a subcontractor's fraudulent billings for hotel and labor costs to the Department of State, the government claims.

Based in McLean, Va., DynCorp is celebrating its 70th anniversary since its founding in 1946, and it continues to contract with the Pentagon in the wake of new allegations filed against it on Tuesday by the U.S. Department of Justice.

The department's civil division does not disclose how much DynCorp allegedly overbilled taxpayers, but it says the company ultimately received $135 million from the State Department for an April 2004 contract.

DynCorp tapped a subcontractor named Corporate Bank to help secure lodging, accommodations and local security guards, drivers, and translators.

In a 32-page lawsuit, the Justice Department alleges that DynCorp knew Corporate Bank padded its ledger with false and fraudulent claims, but the contractor never told the State Department about the overcharges.

"One DynCorp executive observed in an April 2007 email that Corporate Bank had received millions of dollars in 'fraudulent billings' at taxpayer expense and that DynCorp was 'just letting it happen,'" the complaint states. "DynCorp ultimately received from the State Department more than $65 million for hotel accommodations provided by Corporate Bank, in addition to over $70 million for guards, drivers, translators, and other Iraqi local national employees provided by Corporate Bank."

The Justice Department says other top DynCorp executives questioned the charges, too.

In an internal email, Spence Wickham, DynCorp's senior vice president, warned that the company's CEO Steve Cannon needs to be "brought to the reality of the markup on our current hotels," worrying that the company would not be able to "win the CIVPOL Iraq business back if we allow these outrageous rates to continue," according to the complaint.

DynCorp's spokeswoman Mary Lawrence said the company is "disappointed" with the filing of the lawsuit.

"The suit is an after-the-fact attempt to re-price certain labor and housing costs charged nearly a decade ago by a subcontractor in Iraq which was recommended to DynCorp International by the U.S. government," she said in an email.

Lawrence added that DynCorp stopped doing business with the subcontractor "many years ago."

In 2011, DynCorp paid $7.7 million to settle another Justice Department lawsuit involving inflated claims for Iraqi construction by a different contractor, The Sandi Group.

That case stemmed partly from an investigation from the Special Inspector General for Iraq Reconstruction, who found that DynCorp billed for millions of dollars of unauthorized work and started other jobs that were never requested, the New York Times reported.


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