Defense contractors charged with bid-rigging

During an 18-month span in 2005 and 2006, a pair of European aircraft ground support contractors had a run of good luck, winning three successive Defense Department contracts to supply fuel for military and civilian planes stationed across the globe. But according to the Justice Department, the firms may have gained an inside track on the contracts by conspiring to steal trade secrets from their biggest competitor.

On Sunday, the heads of two Defense contractors were arrested in New York City and charged with rigging the competitions by illegally obtaining secret information about a competing firm's bid.

Christopher Cartwright and Paul Wilkinson, who co-founded both the Prague-based Far East Russia Aircraft Services Inc. and the Isle of Man-based Aerocontrol Ltd., were charged with multiple counts of defrauding the U.S. government and conspiracy to commit wire fraud and steal trade secrets.

A third defendant, Matthew Bittenbender of Baltimore, was charged Monday with stealing confidential bid data from his former company, Avcard in Hunt Valley, Md., and selling the information to Cartwright and Wilkinson.

"These cases demonstrate that we will aggressively investigate and prosecute those who attempt to derail the efforts of the Department of Defense to obtain essential goods and services, such as aviation fuel, at competitive prices," said Thomas Barnett, assistant attorney general in charge of the Justice Department's antitrust division.

According to the indictment, between February 2005 and July 2006, Far East Russia Aircraft Services and Aerocontrol were bidding against Avcard for fuel supply contracts at more than 100 airports in Eastern Europe and Asia, including at Bagram Air Field in Afghanistan. At the time, Bittenbender served as the senior contract fuel manager at Avcard and was responsible for preparing the company's bid packages.

Bittenbender allegedly agreed to supply Cartwright and Wilkinson with confidential bid data and other proprietary information about Avcard's bids and the airports at which they were competing for contracts. The European firms would use that data --which included a spreadsheet comparing Avcard's price margins with those of FERAS' and Aerocontrol's -- to undercut Avcard's price and bid non-competitively at those sites, according to the indictment.

In return for his assistance, Bittenbender would receive a flat fee, a percentage of the fuel sales and 10 percent of the profits at each location where FERAS or Aerocontrol was the winning bidder, officials said.

Ultimately, Avcard lost each competition in which it was bidding head-to-head with FERAS or Aerocontrol.

The indictment did not identify the dollar value of the contracts nor if the two indicted firms still have contracts outstanding with Defense. Neither the Justice nor Defense departments responded to requests for comment. The Defense Energy Support Center lets Pentagon contracts for aviation fuel.

Cartwright and Wilkinson are U.S. citizens who have been living recently in Prague. According to bios on FERAS' Web site, Cartwright is a native of California who worked in cargo container leasing in Taipei and San Francisco prior to starting up FERAS in 1992. Aerocontrol was established in 1996.

Wilkinson, meanwhile, managed a caviar production company and has an extensive background in international business. According to the Web site, Wilkinson was the "recipient of numerous industry recognitions for aircraft services to heads of state, air forces and VIP corporate clients as well as cargo carriers."

Otto Wright, a spokesman for FERAS, said, "We are all surprised by this and still trying to get a better understanding of the situation," but that the company had no other comment.

An e-mail sent to Aerocontrol and a phone message left at Bittenbender's home were not returned.

The indictment indicates that several other individuals at FERAS and Aerocontrol "participated as co-conspirators" and "performed acts and made statements" in support of the conspiracy. The Justice Department did not indicate why they have not been charged.

Avcard, which according to its Web site, has fuel supply and service agreements at more than 7,200 airports in 190 countries, also did not respond to a request for comment. Since 2000, Avcard's parent company, Kropp Holdings L, has received nearly $120 million in fuel service contracts from Defense.