The Defense Logistics Agency, which oversees the contract, estimated to be worth about $138 million per year, communicated its decision in a series of letters sent to potential bidders shortly before the holidays. The letters were disclosed in a court filing. An agency representative declined to comment.
The decision is meant as a form of “corrective action” to comply with a September 2019 court decision in a bid protest brought by Anham, a Dubai-based company that handled the lucrative troop supply work before KGL.
The Pentagon’s decision to restart the bidding process is the latest unexpected turn for a long-troubled defense contract to provide food and water for thousands of U.S. troops in Iraq, Syria, Kuwait and Jordan. Anham is one of several previous suppliers that paid to resolve civil and criminal fraud charges, with settlements climbing well over $500 million.
The continued challenges facing the program, called Subsistence Prime Vendor, highlight how the U.S. military still struggles to find suitable partners on the ground after close to two decades at war in the Middle East. And it hints at an increasingly volatile security situation in Iraq, which has been a theater for a long-running and increasingly hostile conflict between the United States and Iran.
In late December, a rocket attack organized by an Iran-backed militia killed a U.S. contractor and several others, while riots threatened the security of the U.S. Embassy. Soon after, the United States killed Iran’s most powerful military commander in a drone strike at an airport in Iraq, an extraordinary step that prompted swift retaliation.
The United States has rejected a resolution from the Iraqi parliament to leave the country and downplayed any suggestion of a troop withdrawal. That means KGL faces the challenge of maintaining food deliveries for thousands of U.S. troops across Iraq despite increasingly unpredictable circumstances.
KGL’s contract with the government is meant to be a temporary solution while the Defense Logistics Agency picks a new supplier. The bidding process is in its earliest phases and could take many months, however.
A court filing unsealed last week alleges U.S. troops experienced a “disruption in service” causing them to have to eat military rations rather than the fresh foods that are delivered under the food contract.
“Anham has repeatedly challenged [the Defense Department’s] refusal to consider that [KGL Food Services] did not have a legal right to occupy its proposed warehouses and the likelihood of eviction from those warehouses,” Anham wrote in the court filing.
A KGL spokesman, Anthony Hogrebe, said the filing contained numerous “incorrect and misleading” charges being advanced by the company’s competitors. The spokesman acknowledged certain delays had taken place but said they were caused by the security situation on the ground and not by any shortcoming on KGL’s part.
“Any delay in question was the result of Iraq changing border policies and procedures, as well as road closures due to riots in Iraq,” Hogrebe said in an email, adding that the company has “gone beyond its contractual requirements” by paying for the airlift services itself.
“KGL Food Services is proud to continue its critical work supplying U.S. troops in the region,” he added.
It is unclear whether KGL still has full access to the warehouses in Kuwait that it needs to carry out the terms of its contract. The company has faced ongoing eviction and blacklisting notices for months, as the Kuwait Port Authority has sought to remove it from the ports, citing embezzlement charges against its former executives.
The partially redacted complaint filed last week by Anham alleges KGL was evicted from its warehouse, with all of the company’s personnel allegedly escorted out of the warehouse Sept. 25.
The KGL spokesman said the company “has not been physically evicted from its warehouse and continues full operations” in support of its temporary contract with the Defense Department.
The Kuwait Port Authority, a government agency that controls the ports there, finalized an eviction order against KGL in late September, according to Kuwaiti press reports. KGL insists it still has access to the warehouse despite the order.
The port authority has cited an embezzlement scandal implicating two former KGL executives, Marsha Lazareva and Saeed Dashti, among its reasons for evicting KGL. U.S. lobbyists and public relations firms paid by a related private equity firm called KGL Investment are pursuing sanctions against several Kuwaiti officials, including the director of the port authority, seeking to relieve pressure on the executives.