Wednesday, 1 June 2011
CASE 298 - DynCorp
DynCorp International is a United States-based private military company (PMC) and aircraft maintenance company. DynCorp receives more than 96% of its $2 billion in annual revenues from the US federal government.
The corporate headquarters are in Falls Church, Virginia. However, substantially all of the company's contracts are managed out of its office at Alliance Airport in Fort Worth, Texas.
The company has provided services for the U.S. military in several theaters, including Bolivia, Bosnia, Somalia, Angola, Haiti, Colombia, Kosovo and Kuwait. DynCorp International also provided much of the security for Afghan interim president Hamid Karzai's presidential guard and trains much of Afghanistan's and Iraq's fledgling police force. DynCorp was also hired to assist recovery in Louisiana and neighboring areas after Hurricane Katrina. DynCorp and the Department of State have been criticized for not properly accounting for $1.2 billion in contract task orders authorized by the State Department to be used to train Iraqi police. DynCorp has held one contract on every round of competition since receiving the first Contract Field Teams contract in 1951. DynCorp won the LOGCAP II contract and is one of three contract holders on the current LOGCAP IV contract.
DynCorp traces its origins from two companies formed in 1946: California Eastern Airways (an air freight business) and Land-Air Inc. (an aircraft maintenance company).
Two years after being organized, California Eastern Airways — despite emerging as the second largest independent air carrier—- filed for bankruptcy in May 1948. Meanwhile, Land-Air, Inc. reached a major milestone in 1951, when it was awarded the first Contract Field Teams (CFT) contract by the Air Force Logistics Command (AFLC). (DynCorp International and its predecessors have provided services under the CFT program continuously since being awarded that first contract, having been awarded one CFT contract in every round of recompetition including the most recent round which began in October 2008.)
Land-Air purchased the remnants of California Eastern Airways and assumed the purchased company's new name. Thereafter the company went through a series of name changes (first to California Eastern Aviation, Inc., then in 1962 to Dynalectron Corporation) before settling on DynCorp in 1987. During this time DynCorp became an employee owned company.
In December 2000, DynCorp formed DynCorp International LLC, and transferred to it all of its international business to this entity while DynCorp Technical Services LLC continued to perform DynCorp’s domestic contracts.
In March 2003, DynCorp and its subsidiaries were acquired by Computer Sciences Corporation (CSC) for approximately US$914 million.
Less than two years later, CSC announced the sale of three DynCorp units (DynCorp International, DynMarine and certain DynCorp Technical Services contracts) to Veritas Capital Fund, LP for US$850 million.
In 2006, DynCorp went public on the New York Stock Exchange under the symbol DCP.
On April 12, 2010 DynCorp announced a conditional deal to be acquired by private equity investment firm Cerberus Capital Management at a price of $17.55 per share ($1 Billion). The deal was agreed on 7 July 2010
Abuses in Iraq
The New York Times reported on February 1, 2007 that the Special Inspector General for Iraq Reconstruction found that DynCorp seemed to act almost independently of its reporting officers at the Department of State, billing the United States for millions of dollars of work that were not authorized and beginning other jobs without a go-ahead. According to the report, the findings of misconduct against DynCorp on a $188 million job to buy weapons for, and build quarters for, the Iraqi police were serious enough to warrant a fraud inquiry.
In February 2007 federal auditors cited DynCorp for wasting millions on projects, including building an unapproved, Olympic-sized swimming pool at the behest of Iraqi police officials.
On October 11, 2007, a DynCorp security guard in a US State Department convoy killed a taxi driver in Baghdad. According to several witnesses, the taxi did not pose a threat to the security of the convoy.
A US government audit report of October 2007 revealed that $1.3 billion was spent on a contract with DynCorp for training Iraqi police. The auditors stated that the program was mismanaged to such an extent that they were unable to determine how the money was spent.
A January 2010 report by the SIGIR assessed that oversight of DynCorp police training contracts by the Bureau of International Narcotics and Law Enforcement Affairs found that INL exhibited weak oversight of the DynCorp task orders for support of the Iraqi police training program. It found that INL lacks sufficient resources and controls to adequately manage the task orders with DynCorp. As a result, more than $2.5 billion in U.S. funds were vulnerable to waste and fraud.
In April 2011, DynCorp agreed to pay $7.7 million to the US government to settle claims that it had inflated claims for construction contracts in Iraq.
July 2010 Afghan incident
On July 30, 2010, four Afghan civilians were killed on a road near Kabul International Airport when their car was struck by a vehicle belonging to DynCorp. After the accident, the DynCorp employees were attacked by a crowd and their vehicle was set on fire. A second vehicle with DynCorp employees came to the site to assist, but was also attacked, and their vehicle was also set on fire.
Kabul police then arrived on scene and dispersed the crowd, after which they safely removed the DynCorp teams. DynCorp said it was investigating the accident which involved employees who were working under a program sponsored by the U.S. Department of State