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Up to $1B to International Oil Trading Co. for Fuel to U.S. Troops in Iraq

Jul 15, 2009 19:46 EDT
Related Stories: Bases & Infrastructure, Contracts - Awards, Fuel & Power, Issues - Political, Legal, Middle East - Other, Other Corporation, Scandals & Investigations
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International Oil Trading Co. (IOTC) in Boca Raton, FL won a maximum $1 billion fixed-price with economic price adjustment, requirements type contract to provide JP8 jet fuel, diesel fuel, and gasoline to U.S. troops in Iraq. The locations being supplied are Al Asad Air Base 180 km west of Baghdad and just south of Haditha, Victory Base Camp around Baghdad International Airport, Trebil on the Jordanian border, and Camp Korean Village near Ar-Rutbah, along the highway that connects the Jordanian border to Baghdad.

The original proposal was Web solicited with 6 responses received by the Defense Energy Support Center, Fort Belvoir, VA (SP0600-09-D-0515). The date of performance completion is Dec 31/11.

This same firm is involved in a controversy generated last year by a Jordanian lawsuit, and congressional investigation of its contracts…

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IOTC became embroiled in controversy last year when NBC News ran a story about a lawsuit filed by Mohammad Al-Saleh, husband of the half sister of King Abdullah of Jordan, in a Florida court. In the lawsuit, Al-Saleh charged that his former partners in IOTC – Harry Sargeant III and Mustafa Abu-Naba’a – defrauded him of one-third of IOTC’s profits. He said that he had arranged for IOTC to receive a letter of authorization from the Jordanian government to permit transportation of fuel across Jordan, a letter that was essential for the company to bid on the U.S. defense fuel contracts.

The lawsuit and NBC News story sparked a congressional investigation by U.S. Rep. Henry Waxman [D-CA], who was then chairman of the House Oversight and Government Reform Committee. After a 4-month committee investigation, Waxman sent a letter to U.S. Defense Secretary Robert Gates in which he charged that IOTC had been “overcharging the U.S. government under contracts to deliver fuel through Jordan to Iraq.”

Citing internal DoD documents obtained by the committee, Waxman said that IOTC made $210 million in profit on fuel contracts worth $1.4 billion and charged that IOTC prices were not “fair and and reasonable.”

Waxman said that IOTC was the highest bidder, out of 6 bids received, on a June 2004 DoD fuel contract, but received the contract anyway because it was the only company that had the letter of authorization from the Jordanian government. The June 2004 contract was rebid in March 2005 and December 2006, and IOTC won both times, not because it was the lowest bidder, but because of the letter of authorization, Waxman said. He said that had the fuel contracts been awarded to the lowest bidder, the U.S. taxpayers “could have saved over $180 million.”

DID contacted IOTC about Waxman’s charges, but the company did not respond before our publication deadline. Commenting on the allegations at the time, a lawyer for Sargeant called them “deeply disappointing” and asserted that they were not supported by the facts.

DID also contracted the Defense Energy Support Center, which awards the DoD fuel contracts. In a statement, DESC said that the current contract to IOTC was awarded as the result of “full and open competition.”

Concerning the Waxman allegations about the earlier contracts, the DESC said:

“Regarding the letter to Secretary Gates from the Committee on Oversight and Government Reform, the Department of Defense Inspector General (DOD IG) is currently conducting an audit of the previous contracts. DESC is working with the DOD IG in support of the audit. Since the audit is ongoing, we are not able to provide additional information at this time.”

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