Firm gets new federal contract despite overbilling probe

McClatchy NewspapersSeptember 20, 2010 

WASHINGTON — Ignoring calls to scrutinize troubled contractors, the U.S. military has awarded a portion of a $490 million contract to an American corporation that's under investigation for possible fraud.

The Army Corps of Engineers awarded the contract to Louis Berger Group, a New Jersey-based company that federal prosecutors have acknowledged is being investigated for allegedly overbilling the U.S. government.

The contract will be shared with Cummins Power Generation and is for providing generators, building power plants and installing high-voltage transmission systems in "conflict and disaster response locations worldwide," according to a news release posted last week on Louis Berger's website.

The decision to continue doing business with Louis Berger has fueled criticism that the Obama administration is willing to overlook criminal allegations in its zeal to rebuild Afghanistan and Iraq. Louis Berger is handling some of the most important U.S. projects in Afghanistan, and it and Cummins also have a seven-year contract with the Army to provide emergency power operations and maintenance in Iraq.

Cummins isn't under scrutiny in the investigation of Louis Berger.

The overbilling allegations arise from a 2006 whistleblower lawsuit that accused Louis Berger of manipulating overhead cost data and overhead rate proposals submitted to the U.S. government and several states, including Massachusetts, Nevada and Virginia, McClatchy reported Sunday.

Two months after the government learned of the employee's allegations, the U.S. Agency for International Development tapped Louis Berger to oversee another $1.4 billion in reconstruction contracts in Afghanistan.

Court documents reveal that the Justice Department is negotiating a deal that could "aid in preserving the company's continuing eligibility to participate" in federal contracting in Afghanistan and elsewhere.

Louis Berger officials have declined to respond to questions about the investigation, but they say it shouldn't taint their work for the government.

A power plant project in Kabul overseen by Louis Berger and another U.S. firm, Black & Veatch, is $40 million over budget and a year behind schedule because of missteps by the American contractors and the U.S. government, according to an audit by the Office of the Special Inspector General for Afghanistan Reconstruction.

The special inspector general's office questioned the wisdom of building a diesel and heavy fuel plant that the Afghan government may not have the capacity to sustain.

Officials with the Army confirmed the award of the latest contract but didn't immediately respond to questions about the investigation or the rationale for granting the contract to Louis Berger.

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Check out McClatchy's national security blog, Nukes & Spooks.

McClatchy Newspapers 2010

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