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Originally published Friday, December 20, 2013 at 5:31 PM

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Navy chief expects contracting scandal to grow

Following bribery charges against the owner of the Navy’s main ship-supply company in the Pacific, Navy Secretary Ray Mabus said Friday audits are planned and a team will investigate the service’s contracting system and recommend changes to prevent fraud.


The New York Times

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WASHINGTON — As accusations of overbilling in the Navy’s ship-supply network expand, Navy Secretary Ray Mabus on Friday acknowledged gaps in the Navy’s oversight and announced plans to revamp its contracting practices.

Mabus said he had ordered a team of fleet and contracting officials to scrutinize the deficiencies in how the Navy awards the contracts and come up with changes to make it less vulnerable to fraud.

Mabus’ comments, his first in public about the scandal, came after the owner of the Navy’s main ship-supply company in the Pacific, Leonard Glenn Francis, was arrested in September on charges he bribed Navy officials to help him overcharge the Navy.

The service also suspended Inchcape Shipping Services last month from winning new contracts amid a civil fraud investigation at the Justice Department into accusations that it also overbilled the Navy for work in the Middle East and Africa.

This week, the Navy’s largest ship-supply firm, Multinational Logistic Services, which provides port services in Africa, the Mediterranean, Central America and the Pacific, put a senior executive on leave while looking into questions about how he handled contracts at his former employer, Inchcape.

“I do think there were gaps in the contracting,” Mabus said at the Pentagon.

He said the Navy was collecting more data about what provisions and equipment should cost in overseas ports and was working to set up a more centralized system for dealing with the suppliers.

Without that kind of system, firms that provide port services — including replenishing supplies, removing waste and providing port security — are easily able to charge inflated prices for certain vital items or services, causing contract costs to skyrocket, experts say.

Mabus, who also has ordered audits of all the supply contracts, credited the Navy’s efforts to ferret out corruption for bringing the bribery scandal involving Francis’ company to light.

“Without the Navy and Navy’s actions, there would almost certainly be no story today,” Mabus said.

He said there will be more disclosures about Francis’ company but did not elaborate. “I certainly don’t think we’ve seen the end of it,” he said.

Three Navy officials have been arrested on charges of accepting cash, trips or prostitutes from Francis in exchange for helping him inflate his charges for fuel, food and other supplies. Four other Navy officials, including two admirals, were suspended while their ties to Francis are under investigation.

Mabus also said he would create a special Navy board, headed by a four-star admiral, to review cases of people tied to Francis, even if they are not prosecuted, to ensure that they “will be held appropriately accountable.”



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