DynCorp Settlement With Army Corps Faces Added Inquiry

The inspector general for Afghanistan is investigating a contract settlement between the U.S. Army Corps of Engineers and DynCorp International Inc., citing “questionable actions” by personnel involved in the negotiations.

John Sopko, the special inspector general for Afghanistan reconstruction, informed Lieutenant General Thomas Bostick, the Army Corps’ commander, of his inquiry in a letter today. Sopko didn’t specify whether the actions he questioned involved government personnel, company officials or both. The office is an independent agency created by Congress to oversee U.S. spending in Afghanistan.

Sopko said in an October report that the Army Corps freed DynCorp, one of the largest U.S. contractors in Afghanistan, of responsibility for construction at an Afghan Army garrison while long-standing deficiencies remained.

The Corps was asked to justify a settlement Sopko’s office said involved a $73 million payment to DynCorp, which is owned by affiliates of New York-based Cerberus Capital Management LP.

DynCorp oversaw the construction at Camp Pamir in Afghanistan’s Kunduz province. The project was part of a U.S. effort to train and house the Afghan Army, which is growing this year to 195,000 personnel.

Corps official James Balocki said in a Dec. 4 memo to Sopko’s office that the agency has begun its own review of the settlement.

Site Conditions

“We acknowledge the nature of the settlement raises a number of concerns which involve highly technical factors pertaining to site conditions and related geotechnical issues,” as well as contract requirements, he said. “Our findings to date are incomplete, however, we continue to examine the facts.”

At this time the Corps “does not have sufficient information to determine whether the settlement was fair and reasonable,” he said.

Corps spokesman Eugene Pawlik didn’t immediately return a phone call or e-mail seeking comment.

Ashley Burke, a spokeswoman for Falls Church, Virginia- based DynCorp, said in an e-mailed statement that the company experienced a $26 million loss on the project after receiving $70 million for its work.

“We have not seen the letter and therefore cannot comment on it, but it is interesting to note that SIGAR’s report was finalized and reached conclusions about the settlement before any investigation was initiated,” Burke wrote, referring to the special inspector general for Afghanistan reconstruction.

“Despite SIGAR’s suggestion in the report that the settlement ‘appears to be on unfavorable terms to the U.S. government,’ on the contrary, DynCorp International received only a partial payment for its work,” Burke wrote.

DynCorp turned over responsibility for the site in 2011, and the current occupants have been accountable for maintenance and care of the facilities since then, Burke said in October in response to the original report.

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

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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