GSA won't debar CACI over prison contract

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.

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.

CACI shares rose modestly after the company released Neurauter's letter, reaching $41.40 July 7 after closing at $39.36 July 6.

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.

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.

CalSTRS is one of the nation's largest public pension funds with more than $100 billion. 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 valued at more than $3 million.

Hefner said that members of CalSTRS' corporate governance subcommittee 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 California State Controller Steve Westly was surprised that CACI attacked him 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. But Hefner said Westly's office made no allegations against any specific company.

In its statement, CACI denounced "vile and unsubstantiated accusations that contractors in Iraq are profiting from torture."

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

Staff Writer Roseanne Gerin can be reached at rgerin@postnewsweektech.com.