Contracting Transparency Please


What would you say if the Defense Department outsourced the arming of our allies in Afghanistan to a company run by a serial stalker and a licensed masseur? The New York Times reports that the main supplier of munitions to Afghanistan’s fledging military and police forces, AEY, Inc., has been sending 40 year old munitions acquired from former Soviet bloc countries that do not work. AEY, Inc., is headed by Efraim Diveroli, a young man who used his position as a defense contractor to try and weasel his way out of court appearances regarding stalking charges filed against him by a girlfriend who alleged abuse and was nearly convicted of felony battery. The entire story really must be read in total. The AEY story is reminicent of the great movie Lord of War, except the protagonist here, Diveroli, is a bumbling, corrupt fool and not a successful enabler of mass murder like the Nicholas Cage character.

With the award last January of a federal contract worth as much as nearly $300 million, the company, AEY Inc., which operates out of an unmarked office in Miami Beach, became the main supplier of munitions to Afghanistan’s army and police forces.

Since then, the company has provided ammunition that is more than 40 years old and in decomposing packaging, according to an examination of the munitions by The New York Times and interviews with American and Afghan officials. Much of the ammunition comes from the aging stockpiles of the old Communist bloc, including stockpiles that the State Department and NATO have determined to be unreliable and obsolete, and have spent millions of dollars to have destroyed.

In purchasing munitions, the contractor has also worked with middlemen and a shell company on a federal list of entities suspected of illegal arms trafficking.

Moreover, tens of millions of the rifle and machine-gun cartridges were manufactured in China, making their procurement a possible violation of American law. The company’s president, Efraim E. Diveroli, was also secretly recorded in a conversation that suggested corruption in his company’s purchase of more than 100 million aging rounds in Albania, according to audio files of the conversation.

Two federal officials involved in contracting in Baghdad said AEY quickly developed a bad reputation. “They weren’t reliable, or if they did come through, they did after many excuses,” said one of them, who asked that his name be withheld because he was not authorized to speak with reporters.

By this time, pressures were emerging in Efraim Diveroli’s life. In November 2005, a young woman sought an order of protection from him in the domestic violence division of Dade County Circuit Court.

Mr. Diveroli sought court delays on national security grounds. “I am the President and only official employee of my business,” he wrote to the judge on Dec. 8, 2005. “My business is currently of great importance to the country as I am licensed Defense Contractor to the United States Government in the fight against terrorism in Iraq and I am doing my very best to provide our troops with all their equipment needs on pending critical contracts.”

Diveroli and AEY’s track record, and lack of experience, act as yet another example that failure to provide transparency and an open bidding process when award national security/defense contacts is a recipe for failure. There is an over reliance on hiding information from the public solely based on national security or defense concerns. In many, or perhaps most, cases the public revelation of information would likely protect national security by preventing goons like Diveroli from being involved in the nation’s defense policy, particularly as it relates to a difficult situation like Afghanistan. At the Change Congress launch, Matt Stoller brought this issue up and has since blogged about the over reliance on government secrecy based on national security at Open Left

There have been a number of bills submitted over the past year that seek to reform the contracting world. Congress needs to get together and fix this mess or else the next President will have to.