The Army command that hired San Diego's Titan Corp. to provide Arabic linguists to units in Iraq is evaluating whether the lucrative contract should be awarded to another company.
The evaluation under way at INSCOM, the Army's Intelligence & Security Command at Fort Belvoir, Va., is part of a five-year renewal process for the Army's worldwide linguist support services contract. INSCOM awarded the five-year contract in 1999.
The contract has come under increased scrutiny after revelations that civilian translators working for Titan were involved in the abuse and torture of Iraqi prisoners at the Abu Ghraib prison.
Titan has sought to renew the contract, which has become the company's single biggest revenue source. But competing bids for the linguist contract, valued at $657 million, have been submitted by Northrop Grumman, L3 Communications and Computer Sciences Corp.
The Pentagon also began withholding 10 percent of its payments to Titan under the contract because of accounting deficiencies, according to congressional testimony March 11 by Dr. Dov S. Zakheim, then an Undersecretary of Defense and the Pentagon's chief financial officer.
A Pentagon spokeswoman could not immediately determine yesterday if the Army is still withholding payments on the contract.
But Titan spokesman Wil Williams said the procedures identified by Zakheim have been corrected and "our customer is happy with our performance." Williams maintained that withholding payments is a routine practice by Pentagon contract management officials.
Williams declined to discuss how many Titan interpreters are working in Iraq, saying threats to civilian contract workers are still pervasive. Titan disclosed in November that 13 of its employees had been killed in Iraq, including two Americans, but the company has refused to discuss any casualties since then.
Some U.S. soldiers who worked with the translators in Iraq also have said that some of the Titan employees lacked sufficient experience and skill to serve as useful interpreters.
"I don't mind saying that a large number of our linguists have received commendations for our work in both Afghanistan and Iraq," Williams countered.
Nevertheless, the contract renewal comes at an especially sensitive time for the company, which said last week it fired an employee who had worked as a translator for American interrogators at Iraq's Abu Ghraib prison.
An internal Army investigation had identified the employee, Adel L. Nakhla, as a "suspect" in the abuse of Iraqis held at the prison. No charges have been filed against any U.S. civilians implicated in the scandal, but soldiers who also were named as suspects in the Army report now face courts martial.
John Israel, another civilian who has since been identified as a Titan subcontractor, was named in the Army report as either directly or indirectly responsible for the prisoner abuses.
Titan has another major reason to be sensitive about the timing of the contract renewal.
The San Diego defense contractor has twice postponed its sale to Lockheed Martin because of federal investigations into allegations that Titan paid bribes overseas to win business. Titan agreed to accept a reduced offer to keep the deal alive, but the company also must resolve the Justice Department probe to complete the $1.7 billion deal.
Titan and Lockheed had indicated the remaining loose ends should be tied up in time to complete the deal by June 25.
Now the linguist contract is up for renewal. The Army is expected to announce the award "by the end of June," said Debbie Parker, a spokeswoman at INSCOM headquarters.
If the Army awards the contract to another bidder, Titan and Lockheed would have to decide if the loss in future revenue represents a significant material change that could kill the deal.
That's because the once-modest, $10 million award to supply foreign-language interpreters to the Army has grown so dramatically over the past two years that it now represents Titan's single biggest source of revenue.
Revisions after the Sept. 11 terrorist attacks expanded the requirements, so the Army contract now provides up to $657 million for as many as 4,800 linguists to the Army.
Titan has cited the contract as a significant factor in its stronger-than-expected financial results over the past year. For the year ended Dec. 31, Titan said revenue under the contract amounted to $112.1 million - or roughly 6 percent of the company's $1.8 billion in total revenue for 2003.
Out of the other 2,000 contracts active at Titan, none represents more than 2 percent of the company's annual revenue, Williams said.
On the other hand, Lockheed spokesman Tom Jurkowsky noted that Lockheed was chiefly interested in Titan's success in providing information technology and communications systems when the acquisition was announced last September.
The Web site Washington Technology recently ranked Titan as the ninth largest federal prime contractor in the government market for information technology.
Staff writer Dean Calbreath contributed to this report.