DynCorp Has Refunded Money to U.S. for War Work Billings

DynCorp International Inc., the largest contractor in Afghanistan, has refunded a portion of $40.8 million to the U.S. State Department for work in Iraq and Afghanistan, department spokeswoman Susan Pittman said today.

The department also is asking DynCorp, of Falls Church, Virginia, to refund some portion of an additional $37.9 million in billings, she said.

Pittman revised the testimony of Under Secretary for Management Patrick Kennedy, who testified earlier today at a hearing of the Commission on Wartime Contracting that DynCorp refunded the entire $40.8 million and that the government was seeking an additional $37.9 million refund from the company.

Two other companies are included in the transactions, which involve contracts awarded between 2004 and 2006. Pittman said she did not have a specific breakdown of the figures. Kennedy will correct his commission testimony, she said.

The State Department’s Bureau of International Narcotics and Law Enforcement Affairs, which is handling DynCorp’s Iraq police training contract, is conducting a “100 percent reconciliation” of all DynCorp Iraq invoices “going back prior to 2006,” Kennedy said.

Pittman, the INL spokeswoman, said the review will take until next year to conclude.

Company Cooperating

“We have not been able to verify the numbers cited, at this point,” a DynCorp spokeswoman, Ashley Burke, said in an e- mail. DynCorp is a unit of New York-based Cerberus Capital Management LP.

“We respect and support the important role of oversight in government contracting, and are working closely with our customer and outside auditors to answer any questions that have been asked, provide additional documentation, if needed, and ensure that any issues are addressed to the satisfaction of the government,” she said.

The “reconciliation” is necessary because the INL Bureau “has no confidence in the accuracy of over $1 billion in charges” from DynCorp on early police training billings, the Special Inspector General for Iraq Reconstruction, Stuart Bowen, said in a Jan. 25, 2010, audit.

The audit disclosed “long-standing weaknesses” in State Department oversight of the company’s work. Bowen recommended that the State Department conduct invoice reviews and seek reimbursements where appropriate.

‘Initial Stages’

The refunds “tell me they’ve accomplished the initial stages of implementing our recommendations to recover questioned costs,” he said today in a telephone interview.

“It’s crucial for State to take our recommendations seriously and follow up, particularly in regard to questioned costs,” he said. “We have audited the police training contract a number of times, and each audit has uncovered serious problems.”

He said that “this particular audit found enormous weaknesses in controls of what was in excess of $1 billion to support police training. We asked years ago that they provide a better accounting for the use of that money and where documentation was weak they go back to the contractor and recover funds.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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