US Navy suspends Inchcape Shipping Services contract

27 November 2013 (Last Updated November 27th, 2013 18:30)

The US Navy has suspended contracting services with Inchcape Shipping Services Holding (ISS) over claims it significantly overcharged on a contract.

The US Navy has suspended contracting services with Inchcape Shipping Services Holding (ISS) over claims it significantly overcharged on a contract.

Owned by Dubai-based investment firm Istithmar World, ISS primarily supplies ships for navies across the world and handles the majority of the work for the fifth fleet in the Middle East and the sixth fleet in the Mediterranean.

On 26 November, Navy officials recommended the suspension of ISS services after they found evidence of ‘questionable business integrity’.

The action prevents Department of the Navy (DON) and all other Federal departments and agencies from entering into new contracts, exercising options under existing contracts or issuing any new task or delivery orders under indefinite quantity contracts with ISS or its affiliates during the period of suspension.

The Navy is currently assessing whether the suspension would impact any of its fleet operations.

Navy information chief Rear Admiral John F. Kirby said, "The SDO’s decision reinforces the high standards of conduct and business practices to which the DON holds contractors who desire to do business with the Federal Government.

"It also reflects the mandate of the Secretary of the Navy, Ray Mabus, to ensure that DON contractors are fully compliant with contracting regulations and procedures."

Inchcape public relations consultant Andrew Baud was quoted by The New York Times as saying that the company is committed to ethical contracting and cooperated with the government over an inquiry into its business practices.

The latest suspension comes on the heels of Navy’s ongoing criminal investigation on its main ship supplier in the Pacific, Glenn Defense Marine Asia (GDMA).

GDMA CEO Leonard Glenn Francis was arrested in September 2013 for reportedly bribing Navy officials, while two Navy commanders and a Naval Criminal Investigative Service agent were charged in the San Diego federal court.

Earlier this month, the Navy cancelled contracts worth more than $200m with GDMA.