December 21, 2009 / 7:09 AM / 10 years ago

UPDATE 1-Agility says DynCorp ditches unit, mulling options

* Agility says DynCorp ejects its U.S. unit from contract

* Says move violates deal, considering legal options

(Adds background)

KUWAIT, Dec 21 (Reuters) - Logistics firm Agility (AGLT.KW) said on Monday that U.S. defence contractor DynCorp International (DCP.N) had dropped its U.S. unit as a subcontractor in a U.S. Army deal, breaching contractual terms.

The Kuwaiti firm said it was looking at legal options over DynCorp International’s decision to drop Agility Defense and Government Services Inc as a subcontractor as of Dec. 17.

“Agility DGS Inc believes DI’s termination is in breach of the contractual terms between the parties and is looking at legal options available in this regard,” Agility said in a statement posted on the bourse website.

It did not give further details or say how big its loss would be due to DynCorp’s move.

In November, a U.S. grand jury indicted Agility under its previous name, Public Warehousing Co, on charges of fraud and conspiracy alleging that it overcharged the U.S. Army on $8.5 billion worth of contracts to provide food to soldiers in Iraq, Kuwait and Jordan. [ID:nLH545993]

Agility, which supplies food to U.S. soldiers in Iraq and Kuwait, later said it had been temporarily suspended, but not debarred, from new U.S. government contracts pending the outcome of the grand jury indictment. [ID:nLI21800]

If convicted of violations of the False Claims Act, the firm faces probation and a fine of up to twice the gain it realised or twice the loss to the United States.

In July, Agility DGS secured a role the U.S. Army deal with a group led by DynCorp International worth up to $5.874 billion for logistical support in Afghanistan. Agility did not give details about its share of the deal at the time. [ID:nLC416546]

DynCorp has said that the task order value is $643.5 million for the one-year base period. But, Agility said at the time that the deal also includes four one-year option periods with a total value of $5.874 billion. (Reporting by Inal Ersan; Editing by Mike Nesbit)

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