A story in Supply & Demand Chain Executive reports that ongoing performance issues relating to a U.S. military helicopter procurement has sparked calls for supplied debarment and has caught the eye of U.S. auditors and criminal investigators:
WASHINGTON (AP) — Yuri Borisov’s performance on a lucrative U.S. military contract was dismal — cost overruns, blown deadlines, forged paperwork. Yet that didn’t keep the Russian entrepreneur from winning more business with the Department of Defense, according to interviews and documents obtained by The Associated Press. Borisov, who specializes in refurbishing Russian Mi-17 helicopters, had an ally in Bert Vergez, an Army colonel who ran an obscure defense acquisition office in Huntsville, Ala.
When Borisov insisted on being paid millions of dollars extra for overhaul work his companies were late on, Vergez supported him. When Borisov sought a new multimillion helicopter overhaul contract, it was Vergez’s office that approved the deal. Even when auditors from the Pentagon inspector general’s office were uncovering signs of illegal activity, it was Vergez who pitched a plan to install new engines on Mi-17s bound for Afghanistan — an arrangement that promised millions of dollars in revenue for Borisov.
The relationship between the two men is at the heart of a criminal investigation into why the Huntsville office Vergez once commanded kept dealing with Borisov despite an alarming catalog of problems. The case is a glimpse into the labyrinth of military procurement, where even today, Borisov’s companies, AviaBaltika Aviation and Saint Petersburg Aircraft Repair Company, remain technically eligible for federal contracts. The inspector general’s audit recommended that the Army take steps to debar or suspend the companies, but no such action has been taken more than a year later.
“I am deeply concerned by the Department of Defense’s stubborn refusal to stop contracting with firms that stand accused of defrauding the U.S. government,” said Sen. John Cornyn of Texas, the Senate’s second-ranking Republican. “If the Pentagon fails to take the formal steps to bar these firms from future contracts, the real victim will be the American taxpayer.”
The FBI and Defense Criminal Investigative Service are leading the inquiry. Representatives for both agencies declined comment.
