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Navy Secretary Expands Review of Supply Contracts Navy Secretary Expands Review of Supply Contracts
(about 4 hours later)
Secretary of the Navy Ray Mabus has expanded an internal review of the Navy’s ship-supply contracts, in a new sign that overbilling practices discovered in the Pacific could be occurring worldwide.Secretary of the Navy Ray Mabus has expanded an internal review of the Navy’s ship-supply contracts, in a new sign that overbilling practices discovered in the Pacific could be occurring worldwide.
In a memorandum released Monday, the secretary ordered a high-ranking Navy official to examine how the service awards hundreds of millions of dollars worth of the contracts around the globe. Mr. Mabus also asked auditors to look at how the Navy could better police contractors providing food, tugboats and port security for its vessels. In a memorandum released Monday, the secretary ordered a high-ranking Navy official to examine how the service awards hundreds of millions of dollars worth of business around the globe. Mr. Mabus also asked auditors to look at how the Navy could better police contractors providing food, tugboats and port security for its vessels.
Mr. Mabus’s action comes after the service suspended two of its biggest supply contractors. Both are under investigation by the Justice Department for inflating their billings by millions of dollars through various schemes, and the Navy has had to scramble to find replacements in some regions.Mr. Mabus’s action comes after the service suspended two of its biggest supply contractors. Both are under investigation by the Justice Department for inflating their billings by millions of dollars through various schemes, and the Navy has had to scramble to find replacements in some regions.
The owner of its main ship supplier in the Pacific, Leonard Glenn Francis, was arrested in September on charges of conspiring to bribe three Navy officials with cash, trips and prostitutes. In exchange for those bribes, investigators say, those officials, who have also been charged with crimes, helped divert ships to certain ports where Mr. Francis’s company, Glenn Defense Marine Asia, submitted vastly inflated bills.The owner of its main ship supplier in the Pacific, Leonard Glenn Francis, was arrested in September on charges of conspiring to bribe three Navy officials with cash, trips and prostitutes. In exchange for those bribes, investigators say, those officials, who have also been charged with crimes, helped divert ships to certain ports where Mr. Francis’s company, Glenn Defense Marine Asia, submitted vastly inflated bills.
The Navy canceled more than $200 million of contracts with Glenn Defense Marine in October. Naval investigators estimate that its fraudulent billings totaled at least $20 million.The Navy canceled more than $200 million of contracts with Glenn Defense Marine in October. Naval investigators estimate that its fraudulent billings totaled at least $20 million.
On Nov. 26, the Navy also suspended Inchcape Shipping Services from receiving new federal work. The firm has contracts potentially worth $243 million in the Middle East, the Mediterranean and Africa. Court records show that the Justice Department is conducting a civil-fraud investigation into allegations that Inchcape, with the help of subcontractors, also overcharged the Navy through various schemes. On Nov. 26, the Navy also suspended Inchcape Shipping Services from receiving new federal work. The firm has contracts potentially worth $243 million in the Middle East, the Mediterranean and Africa. Court records show that the Justice Department is conducting a civil fraud investigation into allegations that Inchcape, with the help of subcontractors, also overcharged the Navy through various schemes.
The Navy review will “ensure we have the proper procedures and policies in place to ensure we live up to our responsibility to the American taxpayer,” Mr. Mabus said. “This is a responsibility I take seriously, and we will take the necessary steps to ensure we do not violate their trust.”The Navy review will “ensure we have the proper procedures and policies in place to ensure we live up to our responsibility to the American taxpayer,” Mr. Mabus said. “This is a responsibility I take seriously, and we will take the necessary steps to ensure we do not violate their trust.”
But even as Mr. Mabus expanded his plans for the audits, which were first announced after Mr. Francis’s arrest, the Navy has let one of two admirals suspended over ties to Mr. Francis return to work on a limited basis while investigators continue to examine those links.But even as Mr. Mabus expanded his plans for the audits, which were first announced after Mr. Francis’s arrest, the Navy has let one of two admirals suspended over ties to Mr. Francis return to work on a limited basis while investigators continue to examine those links.
The admiral, Vice Adm. Ted Branch, the director of naval intelligence, had been on paid leave but returned to some of his duties on Nov. 18, said Rear Adm. John F. Kirby, the Navy’s top spokesman. Admiral Branch is restricted from viewing any classified information, but he is helping to manage other issues. The officer, Vice Adm. Ted Branch, the director of naval intelligence, had been on paid leave but returned to some of his duties on Nov. 18, said Rear Adm. John F. Kirby, the Navy’s top spokesman. Admiral Branch is restricted from viewing any classified information, but he is helping to manage other issues.
Admiral Branch and Rear Adm. Bruce Loveless, the Navy’s director of intelligence operations, were placed on leave on Nov. 8 over allegations of “inappropriate conduct” in connection with the Glenn Defense Marine investigation, Admiral Kirby said then.Admiral Branch and Rear Adm. Bruce Loveless, the Navy’s director of intelligence operations, were placed on leave on Nov. 8 over allegations of “inappropriate conduct” in connection with the Glenn Defense Marine investigation, Admiral Kirby said then.
Admiral Loveless remains on leave, and two Navy captains have been removed from their jobs — one as the commanding officer of a ship — while investigators examine their ties to Mr. Francis. None of the admirals or the captains has been charged with any wrongdoing or has made any comment on the investigation.Admiral Loveless remains on leave, and two Navy captains have been removed from their jobs — one as the commanding officer of a ship — while investigators examine their ties to Mr. Francis. None of the admirals or the captains has been charged with any wrongdoing or has made any comment on the investigation.
Mr. Mabus’s memo ordered an assistant Navy secretary, Sean J. Stackley, to examine the service’s strategy for awarding husbanding contracts worldwide. He also instructed the Navy’s auditor general to review the Navy’s controls for these contracts and recommend improvements. Mr. Mabus’s memo ordered an assistant Navy secretary, Sean J. Stackley, to examine the service’s strategy for awarding such business, known as husbanding contracts, worldwide. He also instructed the Navy’s auditor general to review the Navy’s controls for these contracts and recommend improvements.
Mr. Mabus, who signed the memo last Thursday, asked the assistant secretary for an initial report by Dec. 19 and a final one by Jan. 31. The Naval Audit Service has to submit an audit plan by Dec. 19 and finish its final audit by June 2. Mr. Mabus, who signed the memo on Thursday, asked the assistant secretary for an initial report by Dec. 19 and a final one by Jan. 31. The Naval Audit Service has to submit an audit plan by Dec. 19 and finish its final audit by June 2.
In an attempt to save money, the Navy in 2011 reorganized its ship-supply contracts into three large regions for the Pacific and one for the Indian Ocean. Even though Mr. Francis had earned a reputation among Navy officials and competitors for offering unreasonably low bids to get contracts and then charging “gold plated” fees for fuel and other services, he won awards for all of the Pacific regions.In an attempt to save money, the Navy in 2011 reorganized its ship-supply contracts into three large regions for the Pacific and one for the Indian Ocean. Even though Mr. Francis had earned a reputation among Navy officials and competitors for offering unreasonably low bids to get contracts and then charging “gold plated” fees for fuel and other services, he won awards for all of the Pacific regions.
After Mr. Francis’s suspension, the Navy hired three companies to take over his large regional contracts: DaeKee Global Company, of South Korea; Toll Remote Logistics, of Australia; and Multinational Logistic Services, based in Malta. After Mr. Francis’s suspension, the Navy hired three companies to take over his large regional contracts: the DaeKee Global Company of South Korea, Toll Remote Logistics of Australia and Multinational Logistic Services, based in Malta.
The Navy suspended Inchcape because of “evidence of conduct indicating questionable business integrity.” The Department of Justice had been investigating the company since 2010, after a former employee filed a whistle-blower suit accusing it of fraud.The Navy suspended Inchcape because of “evidence of conduct indicating questionable business integrity.” The Department of Justice had been investigating the company since 2010, after a former employee filed a whistle-blower suit accusing it of fraud.
A federal subpoena issued in March 2011 demanded the company turn over records involving Navy ships and any discounts or rebates from subcontractors since 2002. A Justice Department lawyer later sent the company an email, spelling out concerns about its deals in supplying aircraft carriers and ships from 2005 through 2009, and about charges in Peru, Bahrain, Dubai and South Africa.A federal subpoena issued in March 2011 demanded the company turn over records involving Navy ships and any discounts or rebates from subcontractors since 2002. A Justice Department lawyer later sent the company an email, spelling out concerns about its deals in supplying aircraft carriers and ships from 2005 through 2009, and about charges in Peru, Bahrain, Dubai and South Africa.
Still, records show that the Navy extended Inchcape’s largest contract seven times since 2010, and awarded the firm at least eight other contracts, estimated at more than $41 million, including three this year.Still, records show that the Navy extended Inchcape’s largest contract seven times since 2010, and awarded the firm at least eight other contracts, estimated at more than $41 million, including three this year.