House Oversight committee holds hearing on another aspect of AEY defense contract debacle

A BUZZFLASH NEWS ALERT
by Amy Weiss

The House Committee on Oversight and Government Reform held a hearing Tuesday morning investigating the government's role in the AEY debacle and hoping to answer, as Chairman Rep. Henry Waxman (D-CA) asked: "How did a company run by a 21-year-old president and a 25-year-old former masseur get a sensitive $300 million contract to supply ammunition to Afghan forces?"

The panel testifying before the committee consisted of four men from the agencies (the Department of Defense (DoD), the State Department, and the Army) involved in contracts such as the one issued to AEY for procurement of non-standard ammunition for Afghan forces and police.

A report by Committee staff provides evidence that AEY had received a great deal of negative feedback and had several Defense and State Department contracts terminated prior to be granted the $300 million one in question in January 2007. State Department, DoD, and Army supervisors of AEY contracts complained of poor product quality, late or failed deliveries, and a generally uncooperative company.

The State Department placed AEY and several of its employees, including 22-year-old recently indicted president Efraim Diveroli, under investigation and on a watch list, warning contracting officers to review them closely before granting another contract. Associates of subordinate companies were on the list as well.

The hearing revealed that it is not part of DoD procedure to consult the list, an issue the panel promised to take up when revising procurement procedures, now a priority due to the AEY case.

Committee member Rep. Stephen Lynch (D-MA) said during the hearing that although the AEY contract in question, regarding nonstandard ammunition to Afghanistan, had been terminated, he was not convinced the government had severed ties with AEY altogether.

He described a recent visit to Iraq with fellow committee member Rep. Todd Platts (R-PA) where the two were touring a weapons facility. The commanding officer told them they were still receiving shipments from AEY. Lynch asked Executive Director of the Army Contracting Command Jeffrey Parsons for clarification and was disappointed with the response:

Rep. Lynch: They were all AEY contacts, it looks like they're still performing in this contract, and that doesn't jive with the testimony and documents I have before me. So can you tell me, is AEY still performing on some contracts in Iraq?"

Parsons: "Sir, I am not aware, and I will have to get back to you on whether they are still performing..."

Rep. Lynch: "That's not good enough..."

The committee is also pursuing an investigation of the role of the U.S. Embassy in Albania in assisting the cover-up of the illegal Chinese-made ammunition.

A BUZZFLASH NEWS ALERT

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