Global Knowledge®

A recent decision by the U.S. District Court served as a major victory for Agility Logistics, a global supply chain management company who has been charged with defrauding the U.S. military of $68 million on a food supply contract with several countries in the Middle East.  U.S. Magistrate Judge Alan Baverman ruled that the Justice Department failed to properly serve the company with an indictment.  Agility argued that the U.S. government should have delivered papers to its parent company, Public Warehousing Co, which is in Kuwait.  Instead, papers were delivered to the U.S. office of its Agility Defense & Government Services unit.
 
The judge recommended that the case not proceed because the government violated Agility’s due process rights.  In another blow to the Justice Department, Baverman also rejected their claim that Agility is a “fugitive.”  Prosecutors have asked that the remaining charges be dropped; however, prosecutor Barbara Nelson claims that investigators are still gathering information on the company’s contracts, which means a new indictment might be in Agility’s future.
 
So, what did Agility do to cause all this ruckus?  Apparently the Justice Department began investigating them in 2007 for not passing on supplier rebates to reduce food costs.  November’s indictment also claimed that Agility inflated fees ”by asking vendors to manipulate the way the products were packed, enabling it to bill the government twice as much as it should have.”  Of course, Agility thinks the dispute was related to the interpretation of a contract, and should be a civil (rather than criminal) matter:

Agility’s prices, suppliers and business practices were disclosed to, approved and routinely reviewed by its U.S. government customer.

If the case does proceed (or if other indictments are filed), Agility will continue to be suspended from bidding on U.S. government contracts until the disputes are resolved.
 
(Article courtesy of American Shipper.)

The USDA’s Economic Research Service has issued a report on Karnal bunt (KB), a wheat disease of limited distribution in the United States, as affected areas are quarantined to limit spread of the disease.  Currently, the KB regulatory program allows the USDA to issue phytosanitary export certificates stating that a wheat shipment is from an area where KB is not known to occur.  Some in the wheat marketing chain, particularly elevator operators, find the regulatory program burdensome and advocate ending it.  A model developed by the ERS was used to analyze the market effects of ending the certification.  An average annual loss of 15.1% in export markets for US wheat producers would be only partially offset by increased use of lower priced wheat for domestic livestock feed.