Marine Lance Cpl. Robert Dearborn guides a truck carrying boxes of food at Patrol Base Alcatraz, Afghanistan on Aug. 26, 2011. Photo: DVIDS
In 2008, the Pentagon began investigating whether the main supplier of food to troops in Afghanistan overcharged taxpayers. Since then, there have been audits, recriminations and the discovery that the supplier may have overbilled the military as much as $756.9 million. Now lawmakers are squeezing both the Pentagon and the contractor in an attempt to find out what happened.
That's according to a statement released today from the two heads of the House Subcommittee on National Security, Homeland Defense and Foreign Operations. The congressmen want documents and information within 10 days from both the Pentagon's Defense Logistics Agency (DLA) and the Switzerland-based company, Supreme Foodservice GmbH. This might be difficult, because the Pentagon has alleged Supreme Foodservice — which has been paid $5.5 billion since 2005 to supply food to more than 250 bases and outposts – did not maintain invoices and truck manifests (.pdf) while transporting food, water and other materiel; nor did the company provide data to investigators on fuel costs, price estimates and even correct flight plans.
"It is outrageous that DLA could ever be in the position of possibly overpaying any vendor by three quarters of a billion dollars — especially at a time when troop levels are being scaled back because funding is tight," said subcommittee chairman Rep. Jason Chaffetz in a statement. "The Subcommittee will work with the Department of Defense to investigate the facts and circumstances surrounding this apparent lack of oversight."
Supreme, meanwhile, maintains the high costs reflect the difficulty of operating in Afghanistan. The contractor also claims it is owed more than $1 billion by the Pentagon beyond the billions already paid, which when combined with the Pentagon's own claims, "raises serious concerns regarding DLA's contracting oversight," according to the congressmen. It also calls into question the Pentagon's consideration of Supreme Foodservice for another contract in December, worth a massive $10 to $30 billion over the next five years.
"The American taxpayers refuse to accept a government contractor that bills more than $750 million in unsubstantiated charges, and they refuse to accept the Pentagon's failure to manage this contract properly," Rep. John Tierney, the ranking member on the committee, said in a statement.
A majority of the unaccounted costs ($455 million) involved airlifting fresh fruits and vegetables from the United Arab Emirates to Afghanistan and onto bases and isolated outposts — without oversight. The Pentagon claims the contractor also billed for nonexistent cargo and overcharged $124.3 million for "transportation and corrugated packing boxes," according to Bloomberg.
Supreme also grew too big, too fast. The original contract between Supreme and the Pentagon applied to only four Afghanistan bases. Within months, Supreme grew to supplying 64 bases. Today, the number of bases and outposts supplied by Supreme exceeds 250. Just getting fuel and food in and out of the country alone is a challenge — let alone supplying the goods to a slew of different military organizations.
"It was hard enough to locate appropriate items when we had to make substitutions in the goods we delivered and cope with other anomalies in the field," Gaurav Kumar, Supreme's information technology director, said in a June 2009 promotional "case study" for Microsoft's Dynamics AX resource planning suite, which Supreme adopted in 2009. "But we also constantly struggled with invoices not matching the goods delivered, containing errors, and inconsistent data."
Kumar added then: "When I looked at our inventory module, I saw that it had no checks built in for handling inventory management and addressing the principles of warehousing, such as systematic stock management and stock traceability, which are especially important with food service," he said. "We tried to program some functionality to that end, but the effort was extremely frustrating and produced inconsistent outcomes."
Supreme's resource software was also designed by a German company — in German. This meant few of Supreme's international workforce, which speaks English as a common language, could understand it. Tracking fuel costs were prone to errors, given the effect of changes in temperature and monetary value to the price of gas. "Tracking changes in volume was difficult, and price management for us was inelegant, time-consuming, and error-prone," he said.
The Microsoft promo suggests Supreme mostly resolved its logistics problem. But this also needs a heaping dose of skepticism. And with an upcoming contract worth tens of billions, and with pressure from Congress, it'd be a wonder if the military renews with the company again.
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