US: DynCorp Billed U.S. $50 Million Beyond Costs in Defense Contract

A Defense Department auditor testified Tuesday that DynCorp
International billed the government $50 million more than the amount
specified in a contract to provide dining facilities and living
quarters for military personnel in Kuwait.

April G. Stephenson, director of the Defense Contract Audit Agency,
described a variety of problems in DynCorp contracts associated with
the wars in Afghanistan and Iraq. She appeared before the Commission on
Wartime Contracting in Iraq and Afghanistan, which Congress established
to investigate overspending by military contractors and issue
recommendations for improvement.

Stephenson said the Falls Church-based company exceeded the costs
outlined in its contract with the government for the Kuwait project by
51 percent. She said the government was overbilled $13.3 million -- all
of which was repaid -- for generators, rifle scopes, body armor and
other equipment that was not delivered. And she noted that, in a recent
audit, the government rejected 15 of 29 billings, or $8.7 million out
of $20.6 million in expenses.

DynCorp is working under several contracts with the government and
provides other services, such as recruiting and deploying civilian
peacekeepers and destroying land mines.

Stephenson, who also testified about similar problems with contractors KBR and Fluor Corp.,
blamed DynCorp's situation in part on frequent changes in its
organization structure and on new business systems that were applied
inconsistently throughout the company.

Members of the commission, though, expressed frustration after hearing Stephenson's testimony.

"There is a tremendous amount of waste and abuse and some fraud --
billions and billions of dollars are wasted," former congressman
Christopher Shays (R-Conn.), co-chairman of the panel, said in an
interview. "We're looking to change policy, regulations, law -- and in
some cases culture."

William L. Ballhaus, president and chief executive of DynCorp, said
the billing problems with the Kuwait contract were largely the result
of the government's decision to expand the scope of the project and
shorten the time frame for it, which required the company to use more
expensive workers from the West rather than locals.

"The transition time got compressed. It caused us to adjust our labor
and staffing profile," Ballhaus said. As a result, he added, 50 percent
of the labor the company is using is from the West, compared with 10
percent called for in its proposal.

Ballhaus told the commission that the company is upgrading its
information technology system to better track expenses and is
implementing new measures to better assess compensation and benefits
costs. "We will see cost reductions over time," he said. "If we're not
competitive [in costs], it's possible for the government to replace

But Stephenson, in a written statement, said the company submitted a
"corrective action" plan in 2007 but has not implemented it.

AMP Section Name:War & Disaster Profiteering
  • 18 CSC/ DynCorp
  • 23 Private Security
  • 106 Money & Politics
  • 185 Corruption
  • 187 Privatization
  • 208 Regulation
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