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Oversight Hearing on AEY Contracts with the U.S. Government

Posted on by Jesse Lee

The Oversight Committee is currently holding a hearing, “Examination of AEY Contracts with the U.S. Government.” The hearing will address failures by AEY, Inc., to provide weapons and ammunition under contracts with the United States Government, and the deficiencies within the government that allowed AEY to be awarded these and other contracts. Representatives of the Defense and State Departments will testify.

Watch the hearing live >>

Chairman Henry Waxman gives opening remarks:

Chairman Waxman: “One contracting official told us: ‘I just don't trust the guy. … I couldn't take anything he said credibly.’ He told us that AEY was the single worst company he dealt with in Iraq, saying: ‘that was my lemon I had to make lemonade out of.’ In testimony to be delivered today, the witness from the Defense Contract Management Agency continues to assert that ‘AEY had a history of satisfactory performance.’ That's simply ridiculous. Rating AEY's performance as ‘excellent’ and ‘satisfactory’ is an insult to the taxpayer.”

Chairman Henry Waxman questions the witnesses:

Chairman Waxman: “The same inspector also wrote this to Mr. Diveroli, the head of AEY: ‘Some people got a little wound up when they saw the daily receiving report. They remembered the 10,000 helmets you sold them earlier this year and the junk AK’s we still have in the warehouse. Several scenarios were being planned for you, none of them pleasant.’ Another official wrote, ‘Bottom line, the helmets are damaged goods and we don’t want them.’ General Phillips does this sound like satisfactory performace to you?”

Rep. Elijah Cummings (MD-07) questions the witnesses:

Rep. Cummings: “What struck me with the number of times AEY failed to perform and then came up with outlandsih excuses for why it didn’t fulfill the contract… Diveroli said the German government was interfering in the delivery of these Italian-made pistols, he said that the transport planes couldn’t fly because of bad weather, he even said that there was a fiery plane crash that destroyed the documents necessary to secure an export license needed to ship the goods. But that wasn’t all! Mr. Diveroli said at one point he failed to deliver the weapons because a hurricane hit Miami, Florida where AEY was based. He told a contracting officer that they had no water and ‘his life was terrible.’ As it turns out, this wasn’t true. In an interview with the Committee staff, this is what your contracting officer told us: ‘We could tell there was no hurricane in Miami, it wasn’t like we didn’t have the internet in the Green Zone.’”

Rep. Stephen Lynch (MA-09) questions the witnesses:

Rep. Lynch: “I hear and I read that the contracts have been cancelled, terminated. Now I was in Iraq at the Taji weapons depot a few weeks ago and I asked a commanding general there about the AEY contract. He said ‘yeah, they’re shipping into us.’ So myself and Mr. Platts from Pennsylvania actually asked the general to give us some detail and went around and started opening up some crates. They were all AEY contacts, it looks like they’re still performing in this contract, and that doesn’t jive with the testimony and documents I have before me. So can you tell me, is AEY still performing on some contracts in Iraq?”
Jeffrey Parsons, Executive Director, Army Contracting Command: “Sir, I am not aware, and I will have to get back to you on whether they are still performing…”
Rep. Lynch: “That’s not good enough…”
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