Senator questions contractor compliance with Iran sanctions law
McCaskill calls on GAO to investigate whether contractors have business relationships with prohibited Iranian firms.
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.
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