A Kuwaiti contractor has agreed to pay $95 million to settle civil fraud claims that it allegedly overcharged the federal government to feed its troops.
Agility Public Warehousing Co., K.S.C., also agreed to forego $249 million in contract claims after a whistleblower lawsuit alleged that it and another Kuwaiti company — The Sultan Center Food Products Company, K.S.C. — overcharged the Department of Defense for locally-sourced fruits and vegetables and failed to apply discounts and rebates agreed upon in their contracts.
Department of Justice officials said that Agility began overcharging the DoD while supplying food to U.S. troops between 2003 and 2010. The company purchased fruits and vegetables through The Sultan Center Food Products Company, charging the government exorbitant prices, and also failed to disclose discounts and rebates it received from U.S.-based contractors, despite being required to in its contracts, according to officials.
The overcharging was brought to light when former Agility vendor Kamal Mustafa Al-Sultan filed a False Claims lawsuit against the company. He will receive $38.85 million as a result of the settlement.
Agility also pleaded guilty to a criminal misdemeanor offense for theft of government funds for concealing consolidation fees that the company should have paid and added additional price markups for products billed to the federal government.
Agility officials said in an email that while the settlement resolves the issue, the company noted that the government — after eight years of legal wrangling — reduced its original six-count indictment to a single misdemeanor based off of an invoice worth $551.
As a result of an indictment on the criminal charge, the Defense Logistics Agency suspended Agility, and its 300 affiliates, from contract competition in 2009. The settlement lifts the suspension, but also requires the company to use an independent monitor and adhere to an ethics and compliance program.
