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Invoices Detail Fairfax Firm's Billing for Iraq Work
The Pentagon investigated bills submitted by Custer Battles for contract work in Iraq.
(By Eddie Mccrossan -- U.s. Air Force)
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"If they went out there and bought paper clips for a dollar, and ran it through a subsidiary for $100, at the end of the day it wouldn't matter in terms of what Custer Battles was able to charge the CPA," Sauber said.
In the memo awarding the currency-conversion contract to Custer Battles, however, Air Force Maj. Darwin Kirby writes, "The contract type that is most appropriate is time and materials," a reference to a type of contract under which firms are reimbursed for their expenses and given a percentage fee on top of that.
A CPA contracting officer wrote an expert reviewing the case for the government that she had erred by indicating in contract modifications that the costs were fixed. The expert responded that Custer Battles's invoices were submitted under a time-and-materials contract.
Sauber said there was confusion over the type of contract because of disorganization at the CPA, which ran Iraq for a year after the U.S. invasion.
While maintaining the company's innocence on the allegations of fraud, Sauber acknowledged that in its attempts to respond to shifting demands from the CPA, the company may have created documents after the fact. "Did these guys do things based on their inexperience that were stupid? No question," he said.
A Defense Criminal Investigative Service memo reports that an address given for Custer Battles subsidiary Mid East Leasing Inc. turned out to be an abandoned building in Baghdad. Articles of incorporation for a third company that shows up frequently on Custer Battles invoices to the government, CBL, show that the acronym stood for Custer Battles Levant and that Battles was the chairman of the board.
Custer Battles lawyers have argued that the case does not belong in federal court because the firm is alleged to have defrauded the CPA, not the U.S. government, and because Iraqi, not U.S., money was at stake. The Justice Department said in two briefs this spring that U.S. anti-fraud law applies nonetheless.
U.S. District Judge Thomas Selby Ellis III has set a hearing on the matter for tomorrow.
