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U.S. to extend Kyrgyz air base fuel contract despite questions about operations

By Walter Pincus
Washington Post Staff Writer
Sunday, May 23, 2010; A05

The Obama administration is planning to temporarily extend a multimillion-dollar jet fuel contract with a company that supplies a U.S. facility key to the war effort in Afghanistan, despite ongoing investigations into its operations, senior officials said Friday.

The contract will be re-bid this summer, the officials said, adding that until then, Mina Corp. will continue to supply Manas air base in Kyrgyzstan. The last two Kyrgyz presidents were overthrown amid corruption charges, some of which were associated with the fuel program.

The first of two option years on Mina's Manas contract starts Aug. 1, and officials acknowledged that an extension is needed to keep fuel flowing to the base while the re-bidding process for other potential suppliers is put together. Charles "Chuck" Squires, director of operations for Mina and for Red Star Enterprises, which supplies Bagram Airfield in Afghanistan, said Friday he has told Pentagon officials that he is at a point where he has to begin ordering fuel to be delivered to Kyrgyzstan in August.

"We are running against a deadline, and they are aware of it," Squires said in an interview, adding that the Pentagon is "going to have to extend, even if it is just in the short term," because no new contractor could assemble in a short time the complicated infrastructure needed to deliver as much as 12 million gallons of fuel to Manas each month.

Squires, a former U.S. military attache in Kyrgyzstan, said the principal owners of Mina and Red Star, which have received more than $1 billion for the fuel sales over the past six years, are longtime commodities traders who do not want their names released publicly because they fear becoming targets of people opposed to the Afghanistan war.

The current Manas contract, which was renewed in late June 2009, was for one year, with two one-year options, and was awarded without competitive bidding. Dennis J. Gauci of the Defense Logistics Agency Strategic Communications office cited national security considerations as the reason for that. At the time, then-Kyrgyz President Kurmanbek Bakiyev had just reversed his threat to close down the Manas base, after the United States offered to increase its rent payments.

Geoff Morrell, the Pentagon press secretary, said last week that the decision on whether to extend the Manas contract would be announced soon. A senior administration official said Friday that the original contracts were worked out under the George W. Bush administration and added, "We are looking at the next time to be more competitive, since there are more than these companies out there that can supply the fuel."

Complicating the Pentagon's decision are the allegations, denied by Squires, that Mina's fuel contracts were involved in the corruption that led to the overthrow of two Kyrgyz presidents, Askar Akayev in 2005 and Bakiyev in April. The Russian news service Itar-Tass reported last month that Mina had contracts with Kyrgyz fuel service companies controlled by Maksim Bakiyev, son of the then-president, a situation similar to one that existed when Akayev was president.

Squires said Mina used "practically every significant fuel service company in the country's north." When contracts were put together, Squires said, "to our knowledge, Maksim Bakiyev did not hold any interest in any of the companies," but ownership could have changed later.

Despite Squires's statements, Kyrgyzstan's interim government has begun a criminal investigation of local fuel service companies -- allegedly controlled by Maksim Bakiyev -- for not paying taxes in that country. On Capitol Hill, a House government reform subcommittee is looking into whether the U.S. government tolerated corruption by Kyrgyz presidents in connection with the contract to continue to have access to Manas air base, which has become a key element in the surge in Afghan fighting.

Roza Otunbayeva, head of the Kyrgyz provisional government, has announced that the Manas lease will "automatically" be renewed for another year. To demonstrate its commitment to transparency in future dealings with Kyrgyzstan, the Obama administration plans to set up a Web site listing all U.S. expenditures there, particularly in connection with Manas, a senior official said.

"That's a radical way that we hope eliminates speculation about what goes on there," he said.

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