A Kuwaiti logistics company accused of defrauding the U.S. government on contracts for feeding troops in Iraq, Kuwait and Jordan is one of the contractors on the massive Arsenal-based contract known as LOGCAP, officials said.

PWC, also known as Agility, is suspended from new contracts as a result of the indictment, an Arsenal-based spokeswoman said. However, that will not immediately affect the LOGCAP contract.

"PWC is a subcontractor to the LOGCAP III contractor and one of the LOGCAP IV prime contractors," said Linda Theis, spokeswoman for U.S. Army Sustainment Command, which oversees the multibillion-dollar logistics contract that provides basic services to the Army throughout the world. "The suspension of PWC and certain of its affiliates does not permit or authorize the government to terminate any of its prime contracts with PWC or direct the termination of any subcontracts."

PWC was indicted by a federal grand jury in Atlanta on charges that it committed major fraud against the United States, according to the U.S. Attorney's Office for the Northern District of Georgia.

The $8.5 billion worth of contracts at issue were issued by the Department of Defense.

"This indictment is the result of a multi-year probe into abuses in vendor contracts in the Middle East involving the illegal inflation of prices in contracts to feed our troops," prosecutor F. Gentry Shelnutt said. "The indictment alleges PWC submitted false information and manipulated prices to overcharge for food.

"Others who have engaged in similar conduct should beware. This indictment is only the first step. Our investigation of entities and persons who have defrauded the United States and our military is ongoing."

The LOGCAP contract is not mentioned in the indictment.

PWC responded to the charges by calling it a "contract dispute." In a statement, company officials said they were "surprised and disappointed" by the government's decision to file charges. The government also decided to intervene in a civil lawsuit against the company.

"The company has been the principal food supplier for the U.S. military in Kuwait and Iraq since 2003. PWC's service has been timely, reliable and cost-effective throughout its work on these competitively awarded contracts, and its performance has been unparalleled," the statement said. "The prices it charges have been negotiated with, agreed to, and continually approved as by the U.S. government since then. The government has consistently found PWC's prices to be fair and reasonable."

The False Claims Act lawsuit was filed by Kamal Mustafa Sultan, a company owner who has a "long history of strong animosity towards PWC," officials said. Sultan has filed several other legal actions against PWC, they said.

"Our company has provided unparalleled service to U.S. troops and exceptional value for American taxpayers under the most demanding conditions ever faced by a contractor. Our success has come at a very high price," the company's statement says. "More than 30 employees have been killed and 200 injured in carrying out their work in a war zone. Attacks on our convoys have destroyed more than 300 trucks and damaged another 700."

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