* Tentative agreement and plea could come early this week
* Agility suspended from bidding on US contracts
By Matthew Bigg
ATLANTA, April 26 The U.S. government says it is close to a deal with Kuwaiti logistics company Agility (AGLT.KW), which is accused of defrauding the U.S. military in the Middle East on multibillion-dollar supply contracts.
There was no word on Monday on the timing or terms of a possible deal between prosecutors and Agility, the main supplier to the U.S. Army in the Gulf.
But for the first time, the government has acknowledged negotiations toward a settlement.
"In the last week, substantial progress has been made in resolving the administrative aspects of this matter, the final component that needed to be resolved," U.S. prosecutors said in a court filing on Friday.
"It is anticipated that an agreement in principle on an administrative resolution will be reached early next week," the filing said.
The case emerged in November when prosecutors accused the company of overcharging the U.S. Army over 41 months on $8.5 billion in contracts first signed at the start of the Gulf War in 2003.
Since November Agility, formerly Public Warehousing Co KSC, has been suspended from bidding on new contracts.
The issue of whether the suspension is rescinded, freeing Agility to bid on new contracts, is seen as crucial to any deal.
The filing was made in response to a "motion to quash" the indictments and the government said it would respond to that motion on May 3 if no "tentative agreement" had been reached.
"The parties expect that before May 3, 2010, they will ... allow time for defendant PWC's board of directors and general assembly of shareholders to approve all aspects of the settlement agreement, including a resolution of this case by a plea," the filing said.
U.S. prosecutors raised the stakes this month by issuing a fresh indictment on Agility. It added no new charges but named a U.S.-based subsidiary as well as a Kuwait-based logistics company as well as the parent to the indictment.
The company argues that the indictments were never properly served and are thus invalid.
This month the U.S. Defense and Logistics Agency awarded Dubai-based ANHAM FZCO LLC a $2.2 billion contract to provide food and support services to the U.S. military in Kuwait, Iraq and Jordan.
The suit, No. 1:09-CR-0490-AJB-TWT, is being heard at the U.S. District Court for the Northern District of Georgia, Atlanta division.
It is United States of America v The Public Warehousing Company, K.S.C., a/k/a Agility. (Additional reporting by Jeremy Pelofsky, editing by Gerald E. McCormick)