DoD bows to critics, denies Kuwaiti firm sole source contract

Introduction

A Kuwaiti company held up to illustrate a major loophole in the accountability of foreign contractors won’t get a lucrative logistics contract for trucking and storage in war zones, at least not without having to compete. The Pentagon bowed to congressional criticism this week that the award should have been subject to competition. KGL Holding Co. and one of its business units has been criticized for its behavior toward the family of an Army officer killed in an accident involving a KGL truck in Iraq, and for allegations of human trafficking.

In January, the Defense Logistics Agency announced its intent to award a sole source contract award to KGL for logistics services throughout the U.S. military’s Central Command area, which includes Iraq, Afghanistan, Kuwait and other countries.

But the agency said this week it was reversing course and opening the contract to full and open competition for companies willing to bid. DLA explained it had found other companies could provide the same services as KGL.

KGL “never sought a sole source award and welcomes any decision by the Defense Logistics Agency that promotes competition in U.S. government contracting,” the company said in a statement.

KGL has been in the spotlight since the 2003 death of Army Lt. Col. Dominic ‘Rocky’ Baragona Jr. when a KGL tractor-trailer crossed two lanes of traffic and struck Baragona’s vehicle. U.S. District Judge William Duffey Jr. in Atlanta last year threw out a wrongful death lawsuit brought by Baragona’s family because such legal action belonged in Kuwait.

But the judge also had harsh words for KGL, saying the company was “callous” and used delaying tactics to drag out the case for nearly four years. “The Court implored KGL to work with Plaintiffs to fashion a just resolution in this case, but this request was ignored,” Duffey wrote.

In response, Sen. Claire McCaskill, D-Mo., has authored legislation that would allow lawsuits in federal courts against contractors working for the U.S. government overseas when U.S. troops, other U.S. government employees, or contractor employees are seriously injured. Baragona’s father testified at a November hearing held by McCaskill’s subcommittee that oversees federal contracting issues.

Several members of Congress criticized the Pentagon’s sole source contract award in January to KGL. Democratic Reps. Tim Ryan and Steve Driehaus, both from Baragona’s home state of Ohio, wrote Defense Secretary Robert Gates in February. They expressed their “dismay and concern over the pending award of a non-competitive contract to a Kuwaiti company with a record of reckless conduct that has led to the death of U.S. service personnel and a dismal human rights record, including its blacklisting from recruiting in India for human trafficking issues.”

An earlier letter by Ryan and Driehaus focused on the allegations that KGL was involved in trafficking. “KGL has been placed on the Indian government’s Prior Approval List (‘PAL’), which functioned as a blacklist for any emigration by Indian nationals overseas based upon employment with KGL,” their letter stated. “This blacklisting was predicated upon KGL’s hiring Indian nationals to work in Iraq upon the ‘pretext of deploying them to Kuwait.’”

“The Army testified before a Congressional committee last November that it had reviewed the Baragonas’ allegations, repeated in the Congressmen’s letter, against KGL and found them to be unsubstantiated,” KGL said in a statement sent to the Center this week.

The efforts of the Baragona family have driven much of the congressional response. “It is concerning how KGL has positioned itself as a foreign contractor in which DoD cannot do without,” wrote Dominic Baragona Sr. in an e-mail.

KGL, which operates ports and transports cargo by road and sea, has been awarded some $144 million in U.S. government contracts since 2000, according to lawmakers.