Penalized for a Pentagon Feast

12.14.11

Supreme Group Ordered to Repay Taxpayers $760 Million

After a Daily Beast exposé about alleged excessive charges from Supreme Group, a major contractor in Afghanistan, the government is making the firm repay taxpayers a whopping $760 million.

The Pentagon is ordering Supreme Group, one of its major contractors in Afghanistan, to repay taxpayers a jaw-dropping $756.9 million, just a few weeks after The Daily Beast highlighted the company’s no-bid contract extension and allegations it was overcharging for its work supplying food and fuel to U.S. troops in the war theater.

Supreme is a little-known company based in Holland that has been awarded $8 billion in Pentagon contracts since 2005. Every U.S. soldier in Afghanistan eats food brought into the country by Supreme, and the company was awarded a lucrative sole-source contract extension worth up to $4 billion in 2010. The Beast reported Nov. 27 that it was under investigation for its billing practices, which including charging as much as $455 million for food transportation that was not explicitly authorized in its contract.

The Defense Logistics Agency is now demanding that Supreme repay the agency “for transportation overpayments from December 2005 through September 2011,” according to Michele McCaskill, a DLA spokeswoman.

In a report earlier this year, the Pentagon inspector general’s office outlined how Supreme charged $455 million for food-transportation flights that auditors said were not part of the contract. The auditors said Supreme charged as much as $8.35 per pound shipped when it used a helicopter instead of an airplane and billed the Pentagon in one year for 8.8 million pounds of food flown by helicopter, when it really only flew 7.7 million pounds.

Auditors said Supreme charged as much as $8.35 per pound shipped when it used a helicopter instead of an airplane.

In a statement released on Wednesday, Supreme said it will fight the Pentagon’s request to be reimbursed: “The Supreme Group strongly disputes this request made by the DLA, and intends to appeal."

The firm said that the DLA, when the agency on Dec. 9 demanded the money back, “unilaterally” set new prices that were not what had been agreed upon. The statement added that “Supreme has performed this mission to a very high standard.”