Senator questions contractor compliance with Iran sanctions law

An influential Senate lawmaker wants the Government Accountability Office to investigate whether federal contractors are complying with a law requiring them to certify that they are not involved in sanctioned activity with companies or the government of the militantly anti-U.S. nation of Iran.

In a letter last week to Comptroller General Gene Dodaro, Sen. Claire McCaskill, D-Mo., chairwoman of the Senate Homeland Security and Governmental Affair's Ad Hoc Contracting Oversight Subcommittee, requested a governmentwide review of prime and subcontractor compliance with the 2010 Iran Sanctions Act and the Comprehensive Iran Sanctions, Accountability and Divestment Act.

The latter bill requires prospective contractors before receiving an award to certify that neither they nor any affiliates are working with a prohibited business in Iran, including any deals to transfer refined petroleum to that Islamic nation. If a company submits a false certification, agencies can terminate the contract and propose the company for suspension or debarment.

McCaskill wants the watchdog to determine how many reports of false certification by agencies have been investigated, the outcome of those investigations and whether companies have been penalized for failing to comply with the law. The letter also asks GAO to determine how many waivers of certification have been requested by agencies and granted by the White House. The president can waive the certification requirement in the interest of national security.

Separately, McCaskill is asking the Defense Department to explain a recent multimillion-dollar contract to Kuwait and Gulf Link Transport, a company she claims has ties to the Iranian government.

The company, whose website says it provides supply chain management services in the Middle East, was awarded a four-year, $157 million Defense Logistics Agency contract in February to provide storage and distribution services for U.S. troops. The contract previously had been held by Agility, a Kuwaiti-based company. But Agility was suspended from government contracts after it was indicted for overcharging the Army on contracts to feed soldiers in Iraq, Kuwait and Jordan.

Kuwait and Gulf Link Transport also have a controversial track record. In 2003, Army Lt. Col. Dominic "Rocky" Baragona was killed in Iraq after his Humvee was struck by a supply truck driven by a KGL employee. Since that time, Baragona's family has attempted to sue the contractor for wrongful death, but KGL has successfully argued U.S. courts lack jurisdiction over the matter.

In 2009, McCaskill introduced legislation that would require foreign companies that agree to work on government contracts to consent to "personal jurisdiction" in U.S. federal courts. The bill did not come up for a vote last year, but McCaskill reintroduced it this year.

"Given KGL's unsatisfactory record of integrity on previous government contracts and the importance of the recent contract award to U.S. military efforts, I have serious concerns regarding KGL's current compliance with United States laws, regulations, and policies related to Iran," McCaskill wrote in a letter last week to Defense Secretary Robert Gates.

McCaskill also wants the Defense Department to determine whether KGL, or any other Pentagon contractor, has current dealings with Iranian businesses that have been designated by the Treasury Department as involved in activities related to the proliferation of weapons of mass destruction.

Last July, Rep. Brad Sherman, D-Calif., and then- Rep. Ron Klein, D-Fla., wrote to Gates highlighting a joint venture between KGL and a al Fajr Valfajr, a business controlled by the Islamic Republic of Iran Shipping Lines that had been placed on Treasury's Specially Designated Nationals and Blocked Persons list for allegedly engaging in weapons proliferation.

KGL responded by telling the Army Legal Service Agency's Procurement Fraud Branch that it was in the process of divesting itself of any business interests related to the Iranian shipping line. The company argued it was not engaged in any activities for which sanctions could be imposed by the Iran Sanctions Act or the Comprehensive Iran Sanctions, Accountability and Divestment Act.

McCaskill, however, remains unconvinced. She told Gates that KGL "may have business" in another Iranian government company, Hafiz Darya Shipping Co., which also has landed on Treasury's blocked person's list. The Defense Department inspector general is investigating the relationship between the two companies, she said.

The senator wants Gates to provide information by May 4 on the steps Defense has taken to determine whether KGL has complied with Iran sanctions laws and divested itself of business interests owned or controlled by the Islamic Republic of Iran Shipping Lines.

A Defense spokeswoman said a response to McCaskill's inquiry is under way.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.