No-Bid Defense Contract Wastes Billions in Tax Dollars to Benefit Foreign Corporations
WASHINGTON, Dec. 10, 2012 /PRNewswire/ — A sole source U.S. Army contract was awarded to an Australian based company, Lend Lease, despite a Congressional GAO Report stating it would cost U.S. taxpayers an additional $75 million annually to implement the contract. Lend Lease obtained a 50 year lease of federal U.S. military land, and it sub-contracted to U.K. based InterContinental Hotels Group (IHG) to run the hotel operations on 42 U.S. Army bases.
Steve Howard of PAL Exposed noted: “The Privatization of Army Lodging (PAL) program was a no-bid contract which is unnecessarily costing U.S. taxpayers tens of billions of dollars over the next 50 years. It has also affected minority and U.S military veteran owned businesses which are now struggling to stay open. Since we launched the PAL Exposed website in August 2012, there have been repeated hacking attempts to take our website down.”
PAL Exposed was recently notified that hospitality businesses near Fort Huachuca, Arizona have had dozens of Soldiers pulled back to the IHG Army Hotel on base instead of remaining with the original contracted lodging provider. This move is costing the government an additional $100,000 over a two month period. The main reason behind this move was that IHG has a guarantee of occupancy under an exclusive In-License Agreement with the Army. Soldiers may only stay off base once the IHG hotel on post is 100% full. It took a Freedom of Information Act (FOIA) request to produce documents related to this In-License Agreement which was never available in open source documents.
Howard added: “The legality of this In-license agreement is highly questionable. The PAL program stated that IHG would have to compete for business like everyone else, but Lend Lease could not raise sufficient funds in the private bond market; two top credit rating agencies rated the bonds as below investment grade because there was no guarantee that Soldiers would choose to stay at the private hotel on base over a hotel in town. Within weeks of this rating, and without notice to Congress or an official notice though Department of Defense contracting channels, an In-License Agreement between the Army and Lend lease was signed. This amounts to a guarantee of occupancy, and a monopoly, for Lend Lease and IHG.”
Howard went on to note: “In essence, this is no different than the Army forcing soldiers to eat at a Burger King on base. It is a private, for-profit company, and not allowing competition goes against the free market system. Lend Lease and IHG are both foreign based, private, and for-profit companies. Forcing soldiers to stay in their facilities at a higher cost to the U.S. taxpayer is un-American.”
This is a follow up to a previous Press Release regarding the Privatization of Army Lodging issued on August 13, 2012. In the near future, we will be issuing another press release about how small business owners, including veteran owned companies, near these 42 Army bases have been severely impacted or put out of business. Local business groups near a handful of these installations have also banded together and contacted PAL Exposed in the interest of bringing this issue to light. PAL Exposed has engaged the offices of Senator John McCain and Senator Carl Levin through a Congressional Letter but has yet to receive any official comment or position.