Orenstein disputes the U.S. overpaid for Supreme’s services. The company said it’s owed an additional $1.8 billion.
“The Pentagon used the word overcharging and it’s not justified,” said Orenstein. “We agreed on preliminary rates. They decided to unilaterally apply new rates based on the costs as they see them, and tried to recoup the difference between the two.”
At the peak of the military campaign in Afghanistan, the U.S. Department of Defense operated about 800 bases that housed and fed as many as 100,000 soldiers a day. According to Michelle McCaskill, a spokeswoman for the Defense Logistics Agency, which awards and manages defense contracts, the Pentagon has spent at least $24 billion on food, fuel and other supplies in support of the war since January 2002. By February 2014, 34,000 American soldiers will be stationed in the country.
Dangerous Work
Supreme started delivering food to the British army in Afghanistan in 2002. Three years later, it was awarded the U.S. military food contract, an agreement that has paid it $9.1 billion to date, according to data compiled by the DLA. A series of fuel contracts, first established in 2007, has paid the company almost $1.4 billion.
Food, fuel and other supplies are delivered to U.S. troops at more than 250 locations in Afghanistan by airplanes, helicopters and trucks, Michael Schuster, a managing director of logistics at Supreme, said in testimony before the House Oversight Subcommittee on National Security in April.
It’s dangerous work. According to Schuster’s testimony, at least 312 civilian contractors were killed through April working for Supreme in Afghanistan, mostly due to attacks by insurgents. That’s the second-highest number of deaths of any private contractor working on behalf of the Pentagon since September 2001, according to data compiled by the U.S. Department of Labor under the Defense Base Act.
“Afghanistan is the most complex country to operate in of all the missions in all the countries that we’ve ever done,” Orenstein said.
Accusations of Supreme overcharging the DLA first surfaced in a March 2011 audit report by then-Pentagon Inspector General Gordon Heddell.
According to the report, the DLA overpaid Supreme $124.3 million for transportation and corrugated-packing boxes. In addition, Pentagon personnel had no assurance that billings for another $103 million in boxes were accurate or “even chargeable to the contract,” the report said.
The company was also paid about $455 million for airlifting fresh fruits and vegetables from storage areas in the U.A.E. to Afghanistan, without the DLA ensuring the prices were “fair and reasonable,” according to the audit.