CACI leaps GSA debarment hurdle

The General Services Administration will not suspend or debar CACI International Inc. from doing further business with the federal government.

In a July 7 letter to the company, Joseph Neurauter, GSA's suspension and debarment official, said he would not take formal action against CACI, which has been under investigation because of interrogation services it provided to the U.S. military in Iraq.

After an Army report on prisoner abuse at Abu Ghraib prison said CACI provided interrogation services at the prison, GSA began an investigation to determine whether CACI's work fell outside the scope of the GSA contract used to procure the interrogation services.

Although Neurauter said he would not take action at this time, he expressed concern about CACI's role in preparing the statement of work for the contract. He requested additional information from CACI, including a clearer explanation of the company's statements of work and information on any pending federal or state lawsuits against CACI as well as copies of judgments and resolutions.

He also asked for information about the training and backgrounds of investigators who handle calls and complaints on CACI's three telephone hotlines for general improprieties, accounting improprieties and concerns about the company's code of ethics.

Under its contract for interrogation services, CACI has 11 task orders worth $66 million. The company gets between 30 percent and 35 percent of its revenue from GSA-schedule vehicles, according to CACI. In 2003, the Arlington, Va., company had revenue of $843.1 million.

GSA and other federal agencies started reviewing CACI's contracts for work in Iraq after an Army report on prisoner abuse at Abu Ghraib prison said CACI provided interrogation services at the prison, outside Baghdad.

In a related development, the California State Teachers' Retirement System, called CalSTRS, will decide at its next board meeting in September whether to include an amendment in its investment policy to exclude investments in companies engaged in torture, Paul Hefner, spokesman for the California State Controller's Office told Washington Technology today.

CalSTRS is one of the nation's largest pension funds. According to its last report filed with the Securities and Exchange Commission for the quarter ended March 31, CalSTRS held 77,882 shares of CACI's Class A stock. CACI shares were trading at just under $42 Thursday afternoon, which would put CalSTRS' holdings at more than $3 million.

Hefner said that members of CalSTRS' corporate governance subcommittee yesterday authorized the fund's staff to organize a meeting with CACI executives to inquire about the company's alleged involvement in the Iraqi prisoner-abuse scandal.

"Common sense and common decency would tell you that we don't want to invest in companies engaged in torture," Hefner said, adding that there appears to be a gap in the pension fund's investment policy in this area.

Hefner also said that California State Controller Steve Westly was surprised that CACI attacked him personally in a press release the company issued July 7 in response to a statement his office put out July 6.

In that statement, Westly, who serves on the CalSTRS board, called for the pension fund to restrict its investments in companies engaged in torture. He also said that CalSTRS' subcommittee on corporate governance would discuss a proposal to question CACI executives about the company's role in the prisoner-abuse scandal.

Hefner said that the issue of excluding companies that engage in torture from the fund's investment portfolio was raised by another CalSTRS board member, not Westly, and that Westly's office made no allegations against any specific company.

"This is not about putting one company under a microscope," Westly's statement said. "This is about setting a clear, responsible standard that applies to everyone ? weeding out the bad guys ? and demanding that every company respect human rights, whether it's operating in Iraq or Indiana."

CACI's statement denounced what it called Wesley's "vile and unsubstantiated accusations that contractors in Iraq are profiting from torture."

It went on to say: "CACI is appalled by yesterday's baseless, inflammatory and malicious press release by California State Controller Steve Westly. While posing as a protector of 'common decency' and corporate ethics, Mr. Westly appears, in fact, to be chasing headlines for his own political benefit. He has taken an Alice-in-Wonderland approach: 'Sentence first ? verdict afterwards.' "

No charges have been filed against any CACI employee, according to the company. CACI said it is cooperating with all official inquiries and has not found any wrongdoing in its own internal reviews.