A Tale of Government Contracting at Its Worst

As President Obama's approval ratings continue to slip, more scandals emerge. While it is by no means on the same scale as the scandal at the Department of Veterans Affairs, which has seen veterans die as they wait for treatment at military medical facilities across the country, a new controversy at the Department of Defense has raised troubling questions about competency, perhaps even national security.

Each year, the families of 650,000 service members are affected by the military's need to transfer personnel from one base to another, both within the United States and overseas. One benefit the military provides is the shipping and storing of vehicles owned privately by service members. It's a major operation, since, at any given time, 10,000 vehicles are being transported on ships or trucks while another 8,500 are in storage.

Since 1998 the transporting of these privately owned vehicles was handled by American Auto Logistics (AAL), a defense contractor based in New Jersey. By all accounts, military personnel were pleased with the company's performance. Then, on Oct. 24, 2013, in a surprise move, the contract for these services for Fiscal Year 2014 (which ends in September 2015) was awarded to International Auto Logistics (IAL), a newly formed company based in Brunswick, Georgia. Of the five bids submitted for the $305-million contract, IAL was a long shot. With 10 employees and an annual revenue of less than half a million dollars, the privately held company had no experience in the area of expertise required by the contract it won.

Not surprisingly, screw-ups started as soon as IAL took over from AAL, in part because, in order to comply with the barebones bid it submitted to land the contract, IAL had to close eight of the existing 46 processing centers, four stateside and four overseas. One service member in Seattle said, "The new [address] listed [on the website] is incorrect." Another in Atlanta said:

The new IAL in Atlanta is off to a horrible start. I can't get a hold of anybody.... I tried to call but no one answers. The only numbers I have ... transfer you to [one where] no one answers. The voicemail box is full and you can't leave one. I wrote an email and no one is responding. They are six hours away so I can't go over there. Very disappointing.

Still, Congressman Jack Kingston, a Republican who represents the district in which Brunswick is located, was highly complimentary. "This is a critical service for those who dedicated themselves to serving our country abroad," he said in a statement before commending IAL for its "continued excellence" -- odd, since the company had just been formed. One wonders if Congressman Kingston -- and others like him who have a record of ardently supporting the military -- know the background of International Auto Logistics.

Formed in August 2012 with the sole purpose of pursuing this contract, IAL submitted a bid two months later. IAL's parent company is International Auto Processing, also in Brunswick, whose chairman is Park Sang-Kwon. Anything but a native Georgian, Park is a global financial figure who was chairman of Pyeonghwa Motors, a joint venture between North and South Korea -- a rarity indeed. Billed as "The Bridge between South and North Korea," the partnership was formed in 1999 between Pyonghwa Motors of South Korea, owned by the late Rev. Sun Myung Moon's Unification Church, and Ryonbong General Corp. of North Korea.

Though the company's headquarters was in Seoul, Park enjoyed a close relationship with the North Korean regime. At a time when travel between the Koreas is difficult, Park has visited North Korea 200 times. In late 2012 he was even awarded an honorary citizenship in North Korea, only the second person ever to receive such a commendation. "This means that North Korea has acknowledged the trust they had put in me," Park told Agence France Presse at the time. "They were also encouraging me to start new projects in the North, more freely and aggressively."

Throughout its history, Pyeonghwa Motors struggled. In 2012 the joint venture ended when Park and the Unification Church relinquished their interest in the failing enterprise to the North Koreans. One report suggested that the company was given to the North Korean regime for the right to conduct future business in the country. At the same time, Park submitted an application to the Ministry of Unification in South Korea to undertake new businesses in the North. It was at that time -- as Park was dealing with this business failure -- that his International Auto Processing formed IAL, which ended up with a $300-million defense contract.

When asked if the Department of Defense was concerned about awarding a contract to a company with strong ties to the North Korean communist regime, especially since the job of IAL is to help facilitate troop movements around the world -- information the military should want to keep confidential -- a spokesperson said the matter had been examined "repeatedly" and the department was "unconcerned" about any national-security risk.

Sen. David Vitter, a Republican from Louisiana, has expressed worry about whether "our service members continue to receive exceptional service" from IAL. Given Park Sang-Kwon's political and business associations, perhaps there are far greater concerns. Without question, by awarding a defense contract under such dubious circumstances, the Obama administration seems to have committed yet another regrettable gaffe.