UPDATE 1-DynCorp sees growth in Afghanistan business

Wed Dec 2, 2009 3:43pm EST

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* Defense contractor sees upside from Afghan troop surge

* Looking to strengthen compliance policies

* Shares up 7 pct

ATLANTA, Dec 2 (Reuters) - Defense contractor DynCorp International Inc DCP.N said on Wednesday it expects to gain more business in Afghanistan as U.S. troop levels rise there.

"We expect to see relatively steady growth in our business in Afghanistan largely because we have a pretty broad portfolio of services at work in the country today," DynCorp Chief Executive Bill Ballhaus said during a Credit Suisse conference that was broadcast over the Internet.

DynCorp, a government services provider to the U.S. Department of Defense and State Department, was chosen earlier this year to support U.S. troops in the southern part of Afghanistan under the Logistics Civil Augmentation Program, or LOGCAP.

Ballhaus said his company, which provides police training as well as dining and other logistics services, was well-positioned to support U.S. President Barack Obama's plan to send more troops to Afghanistan.

At the same time, he added that DynCorp expected increased business in Iraq as it expands into new services, even as troop levels decline there.

The company, which works with subcontractors in providing services abroad, also said it was bolstering its compliance procedures.

"The ability to perform, ensure compliance and ensure employee conduct is right at the center of the radar screen for our customers because they are increasingly under tremendous oversight and scrutiny," Ballhaus said.

Shares of DynCorp came under pressure last month after a Kuwaiti food supplier that was a subcontractor to the company was indicted on allegations that it overcharged the United States. The case deals with issues prior to DynCorp's relationship with the supplier.

Additionally, DynCorp disclosed in a November regulatory filing that certain payments, which it believed totaled about $300,000, had been "made to expedite the issuance of a limited number of visas and licenses from foreign government agencies," potentially violating the U.S. Foreign Corrupt Practices Act.

The company added that it brought the payments to the attention of the U.S. Justice Department and Securities and Exchange Commission. Last week, DynCorp disclosed that its executive counsel had been terminated without cause.

"Like many companies, we have had a select number of incidents in most cases that we have brought forward as a part of our efforts to be transparent, proactive and accountable," Ballhaus added.

DynCorp shares rose 92 cents, or 7 percent, to $14.05 on the New York Stock Exchange late Wednesday afternoon.

(Reporting by Karen Jacobs; Editing by Richard Chang) ((karen.jacobs@thomsonreuters.com + 1 404 493 3656; Reuters Messaging: karen.jacobs.reuters.com@reuters.net))

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