Contractor in Iraq disputes inspector general’s allegations of overbilling

The United Arab Emirates-based Anham LLC has issued a statement denying charges made Saturday by the Special Inspector General for Iraq Reconstruction that the contractor had marked up the cost of parts by as much as 12,000 percent.

"These conclusions are false," the company said through a publicity agent. "In fact, the company saved the U.S. government and the U.S. taxpayers nearly $153 million dollars through its performance of the contract."

SIGIR, in its quarterly report, summarized an audit that found that, due to weak oversight, the Defense Department was billed $900 for a control switch valued at $7.05 (a 12,666 percent increase) and $80 for a small segment of drainpipe valued at $1.41 (a 5,574 percent increase), among other items.

In rebuttal, the company said: "Every purchase by every subcontractor was the result of a competitive bidding process where the lowest price subcontractor was selected, and not a single screw or nail was purchased without prior, advance approval by the U.S. government after their review of the competitive bidding process amongst potential subcontractors. Full disclosure of the nature of every potential subcontractor was fully disclosed to the U.S. government."

Anham added that it "takes enormous exception to the SIGIR implications. Its suggestions -- based on innuendo rather than hard facts -- are not the result of a meaningful 'audit.' Anham is continually audited by the Defense Contract Audit Agency and welcomes such true audits."

Stuart W. Bowen Jr., the IG for Iraq reconstruction, told Government Executive that SIGIR stands by the report. He said neither DCAA nor the Defense Contract Management Agency has performed audits on costs incurred by Anham. "DCAA is years behind in audits," he said. "But for our audit, these excessive billings would not have been uncovered, possibly for years." He added that DCAA and DCMA concurred with his conclusions and have agreed to review the company's contract, which goes back to 2007.

"The one true point Anham makes," Bowen said, "is that the government didn't complain about the charges. There was a breakdown in the process of cost review, which wasn't as strong as it should have been, but that doesn't render the billings valid."