Agility is one of those companies whose name gives you no clue as to what it actually does. It could be physical therapy or investments, but what Agility, which is actually a Kuwaiti logistics firm, seems to do very adeptly these days is getting itself in trouble with the U.S. government. On November 16, 2009, the company was indicted on multiple charges of conspiracy and fraud for allegedly overcharging the U.S. Department of Defense for food. Agility (formerly operating under the much more pedestrian and not-so-PR-friendly name Public Warehousing Corp.) is the top food supplier for U.S. troops in Iraq, and is accused milking the Army on $8.5 billion worth of contracts. A whistleblower, Kemal Mustafa, filed the initial case. Mustafa had excellent inside information–his company had originally partnered with Public Warehousing Corp. to get U.S. military contracts.
Now, the government has extended the indictment to two of Agility’s subsidiaries: DGS Holdings and KSCc. The company has been doing extremely well financially up until now, so it remains to be seen how the extra indictments will affect things. On April 11th, Agility posted a 22 percent rise in fourth-quarter profit–evidence that its enormous military contracts are an extremely lucrative business, even if it involves vast overchargings for a couple of bananas or some Romaine.
Today’s overpriced banana is the modern version of the $600 toilet seat–the modern military outsources even the most mundane details, not just procurement of equipment. Although the extensive use of contractors puts the military at a much higher risk of being subjected to fraud, this does not excuse any contractor who overcharges for goods and services. It’s taxpayers who ultimately end up footing the bill.
UPDATE: As we were writing this post, it was announced that Agility has lost its contract to supply food to troops in Iraq! Agility stated on the Kuwaiti Stock Exchange website that another company had been appointed to take over its duties, but that Agility would continue on for six more months.
This dramatic turn of events was brought about by a whistleblower without whom Agility’s fraud may never have come to light. The company could have gone on overcharging the military and taxpayers for many more years, but fortunately in sixth months we won’t be buying any more overpriced Iceburg lettuce from this outfit.