DynCorp’s Afghan Settlement With Army Called a ‘Mugging’

DynCorp International Inc.’s agreement with the Army Corps of Engineers over disputed work in Afghanistan “wasn’t a settlement, it was a mugging,” according to the U.S. watchdog of wartime spending there.

John Sopko, the special inspector general for Afghanistan reconstruction, commented in response to findings by the Corps of Engineers that a $73 million payment to the contractor for overseeing work on a garrison at Camp Pamir in Kunduz province “was proper and reasonable although it was not favorable to” the U.S. government.

Sopko said in an October report that the government freed DynCorp, which is owned by affiliates of New York-based Cerberus Capital Management LP, from responsibility while long-standing deficiencies remained. He asked the Corps of Engineers to justify the settlement.

Even though “the process followed was inconsistent with Corps policy, there was sufficient information” to “believe that the final negotiated modification was the best course of action,” Colonel John Hurley, deputy commander of the Corps’ Transatlantic Division, said in material attached to a March 25 memo.

Sopko, who heads an independent agency created by Congress to oversee U.S. spending in Afghanistan, rejected that conclusion in an e-mailed statement.

“The Corps’ own internal review says they didn’t make DynCorp pay to fix their shoddy construction, they didn’t collect the liquidated damages that DynCorp owed them, and they violated their own settlement policies,” he said.

“But they still think the settlement was ’proper and reasonable.’” Sopko said. “That wasn’t a settlement, it was a mugging.”

“We want to make sure that someone is held accountable and taxpayers are made whole,” Sopko said.

Afghan Army

The garrison construction supervised by Falls Church, Virginia-based DynCorp was part of the U.S. effort to train and house the Afghan Army, which is growing to 195,000 personnel.

Army Corps spokesman Michael Beeman said in an e-mailed response the agency took Sopko’s “concerns regarding the final modification to the DynCorp contracts very seriously.”

An independent team of technical experts “identified a number of management and contract administration weaknesses as well as technical conditions that affected the project and the final settlement,” Beeman said. The Corps is putting in place “a number of management controls to continue to improve our execution of the Afghanistan Reconstruction program,” he said.

DynCorp Response

DynCorp spokeswoman Ashley Burke said in an e-mailed statement that “it’s important to note that the company incurred a significant loss of more than $26 million while grappling with the challenges of this project.”

The Corps’ independent review confirmed that soil conditions at the site delayed and complicated construction, Burke said. It also found that the site and buildings were damaged by the current Afghan occupants, “who have been responsible for the maintenance and care of the facilities since mid-2010,” Burke said.

“Clearly we would have preferred a different outcome on the project but the company did everything possible –- including providing work at no cost to the government –- to deliver in challenging and usual circumstances.”

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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