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US: Company under fire won Katrina contracts

by Kevin McCoyUSA TODAY
November 8th, 2005

A defense contracting firm tangled in the Abu Ghraib prison controversy and an international bribery scheme has been awarded federal government contracts for Hurricane Katrina and other disasters.

Since late September, the Federal Emergency Management Agency has awarded Titan a $450,000 contract for a mobile emergency response vehicle and a $107,058 contract for emergency housing work, according to government records and interviews. (Related: Official questions cost of Katrina contract)

Titan is a defendant in two federal lawsuits that allege the company acted negligently in its hiring and supervision of a translator suspected of abusing Abu Ghraib prisoners.

The firm separately paid fines totaling $28,500 in March to settle criminal and civil charges that it was involved in a bribery scheme to benefit the president of the West African nation of Benin.

Additionally, a federal inspector general report last December concluded that taxpayers overpaid for a $229 million Titan military contract because the firm subcontracted "substantially all of the work."

Citing that corporate track record, some government watchdog organizations questioned FEMA's reliance on Titan for emergency-response contracts.

"I'm really troubled by the emergence of a company that claims to have expertise in providing translation services in Iraq and providing Hurricane Katrina services," said Danielle Brian, executive director of the Project on Government Oversight, a Washington-based non-profit group. "They're really experts in getting government contracts."

FEMA spokeswoman Nicol Andrews said Titan's Hurricane Katrina awards "didn't raise any red flags" because the firm has not been barred from receiving government work.

Evan Goetz, a spokesman for L-3 Communications, which acquired Titan in July, said the firm has a record of successfully completing federal contracts.

Titan, a 24-year-old firm based in San Diego, has roughly $2 billion in annual sales generated largely by federal defense and homeland security contracts. Titan received the new disaster awards as job orders under a 1998 umbrella contract awarded by the General Services Administration (GSA) through competitive bidding, the agency said.

Umbrella contracts, officially known as schedules, enable multiple federal agencies to obtain services more quickly by drawing on a pre-approved award.

Titan has received more than $492 million under the umbrella contract so far, said Edward Rossillo, a GSA spokesman.

Goetz described the vehicle Titan supplied to FEMA as a mobile command center equipped with satellite and other communications equipment. The unit is the most recent of several similar vehicles FEMA bought from Titan. FEMA ordered the new command center before Katrina struck, then used it for Gulf Coast recovery efforts, Andrews said.

Titan's other new disaster contract involved logistics work on temporary housing for disaster crews assigned to the Gulf Coast recovery effort, said FEMA spokesman Butch Kinerney.

Titan's other prior federal assignments include a contract to provide translators for U.S. forces in Iraq.

Adel Nakhla, an interpreter Titan hired under that contract, has been identified as one of the suspects in mistreatment of Iraqi prisoners at the Abu Ghraib jail. Although no charges have been filed against him, Nakhla has been fired.

A federal lawsuit filed last year by the Center for Constitutional Rights, a non-profit legal and educational organization, charges that Nakhla, Titan and a second company were responsible for incidents in which Abu Ghraib prisoners were "tortured and otherwise mistreated." A second lawsuit contains similar charges.

In a quarterly report filed Wednesday with the Securities and Exchange Commission, Titan's corporate parent said it "intends to defend these lawsuits vigorously."

However, Titan acknowledged guilt in the international bribery case. Federal prosecutors and the SEC alleged that the firm funneled about $2 million to the 2001 election campaign of Benin's incumbent president, Mathieu Kerekou. Investigators alleged the payments were aimed at winning Benin government approval of an increase in Titan's management fees on a telecommunications project.

The company pleaded guilty to three felonies in a criminal case filed by federal prosecutors in San Diego under the Foreign Corrupt Practices Act. Without admitting or denying guilt, Titan also reached a civil settlement with the SEC. Beyond the $28,500 in combined criminal and civil fines, Titan paid $61.5 million to settle securities fraud lawsuits filed by investors in response to the bribery cases.

As part of the settlement, Titan and the Navy reached an agreement that would allow the firm to avoid debarment and maintain its eligibility for federal contracts, the company disclosed in Wednesday's quarterly report. But the report also said Titan could face additional fines based on a State Department review of unspecified issues the company voluntarily disclosed during the bribery investigation.

Noting the criminal and civil cases had been settled, Goetz declined additional comment.

In another Titan contract matter, the GSA inspector general last year issued an audit report that raised questions about the company's $229 million contract to provide employee assistance and counseling to military families.

The report concluded that Titan subcontracted nearly all of the work to a subcontractor called Ceridian. Nonetheless, Titan added its own fee to each contract invoice, the report found.

"We believe that Titan's fee could represent largely unnecessary costs to the government," the report concluded.

Defense contracting officials planned to seek a new round of bidding for the military counseling work, the audit said.

Goetz said the inspector general report represented "a critical assessment" of Washington's interagency procurement practices. "Subcontracting arrangements are a commonly accepted business practice, and no government allegations have been made against Titan," he said.





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