Reply #109: Defense Contractor Led By Ex-Treasury Secretary Bids For Army Deal

[PerfectSage]

16:24 EST Friday, November 03, 2006

WASHINGTON (AP)--A small defense contractor now controlled by former Treasury Secretary John Snow is taking on Halliburton Co. by bidding for one of three U.S. Army contracts worth up to $50 billion each to provide food and shelter to U.S. troops in Iraq and Afghanistan.

Within days of Snow becoming chairman of the New York hedge fund that owns IAP Worldwide Services Inc., the company submitted its bid for huge U.S. Army contracts that will be awarded by year-end.

Cerberus Capital Management LP owns Cape Canaveral, Florida-based IAP, which is led by former executives from Halliburton subsidiary Kellogg, Brown & Root.

KBR is currently the U.S. Army's sole contractor for providing food and shelter to the military in Iraq and Afghanistan. But the Army now wants multiple contractors for these services and KBR is bidding again. Some defense analysts are predicting both KBR and IAP, which is run by former KBR executives, will each win one of the 10-year deals that start in 2007.

IAP Chief Executive Al Neffgen, who joined the company in December 2004, served as KBR's chief operating officer of government and infrastructure for the Americas Region, while president Dave Swindle was vice president of KBR's business acquisition and national security programs before joining IAP in April 2005. Chuck Dominy, a retired Army lieutenant general, joined IAP in July 2005 after serving for years as Halliburton's chief lobbyist in Washington.

IAP was founded in 1990 by a former Army logistician as the U.S. was preparing for Operation Desert Storm and now has 5,500 employees. Cerberus became majority owner in May 2004.

IAP, which has smaller logistics and maintenance pacts with the Navy and Air Force, last month said it submitted a proposal for the Army contracts with a team that includes Lockheed Martin Corp. and Electronic Data Systems Corp., as well as Home Depot Inc., Microsoft Corp. and Sodexho Alliance SA of France.

An Army spokeswoman said bids were due Oct. 31, but she declined to provide details about the proposals. An IAP spokeswoman said Swindle, its president, was traveling in the Middle East and unavailable to comment.

Defense industry analysts said other potential bidders on the Army logistics deals include DynCorp International and L-3 Communications Holdings Inc. Representatives from those firms either did not return calls or declined to comment.


(END) Dow Jones Newswires
11-03-06 1624ET
Copyright (c) 2006 Dow Jones & Company, Inc.