New report alleges Army overpaid millions to two contractors

January 15

The Army mismanaged three contracts, including one with a local contractor worth more than $8 million, according to an investigation spurred by a whistleblower claim.

The investigation focused on three contracts awarded by Fort Belvoir-based Army Intelligence and Security Command. The report was undertaken by the Army after an anonymous whistleblower contacted the Office of Special Counsel, an independent federal investigative agency.

The Army said in its report, which was reviewed by the special counsel, that Intelligence and Security Command in 2010 agreed to an $8.2 million annual contract with Woodbridge-based Silverback7 to provide dozens of employees.

But six months after the contract began, Silverback7 had filled only a fraction of the positions, the whistleblower alleged. In its review, the Army claimed it too found that the contractor did not fill all the open positions but the company was still paid its full fee.

According to the special counsel’s report to the White House, which was filed Wednesday, the Army requested the company repay it $3.5 million but later reduced that figure to $1.8 million and then to $1.1 million, which Silverback7 has repaid.

Silverback7 said in a statement provided by its attorney that it “fully satisfied the contract’s requirements and obligations, and received exceptional performance ratings for its work.”

The Army said in its report that the command also paid Tacoma, Wash.-based Avue Technologies for two projects, providing $588,000 for an automated time and attendance system and $473,000 for a salary management tool.

The Army report found that neither contract allegedly produced a fully usable product. Though the Army had planned to try to recoup $472,000 from Avue, Intelligence and Security Command recommended dropping the negotiations, because the cost would exceed the benefits, according to the special counsel’s report to the White House.

Avue said in a statement that it stands behind its work and business practices.

“As the U.S. Office of Special Counsel notes, the Army’s ‘gross mismanagement’ of the contract with Avue is to blame for its troubles,” Avue added.

The special counsel, which reviewed the Army’s investigation, was critical of the Army’s report, expressing concern that the service quickly agreed to a reduced repayment from Silverback7.

Though the Army said in its report that it is taking steps to avoid similar future problems, the Office of Special Counsel said it still has concerns about the agency’s investigation and recommended to the White House “that further action be taken to ensure that contracting within INSCOM receives proper attention and oversight.”

Comments
Show Comments
Most Read Business