The government alleged that, from 2007 to 2008, ICCB paid bribes to Army Corps of Engineers procurement official John Salama Markus, 41, of Nazareth, Pa., to obtain information that gave it an advantage in bidding on several construction contracts with the Department of Defense in Iraq. The contracts supported reconstruction efforts involving the Iraq war, including infrastructure and security projects and the building of medical facilities and schools. ICCB then knowingly overcharged the U.S. for services provided under the contracts, according to the government’s allegation.

“It is offensive that anyone would see projects to promote stability, health and education in a rebuilding country as a way to make illegal cash on the side,” said U.S. Attorney for the District of New Jersey Paul J. Fishman. “We will not abide companies paying to play in such a system.”

“The Defense Criminal Investigative Service (DCIS) is committed to protecting the integrity of the Defense acquisition process from personal and corporate avarice,” said Special Agent in Charge, DCIS Northeast Field Office Craig Rupert. “Ensuring the proper use of U.S. taxpayers’ dollars and preventing contract fraud is in our nation’s interest and remains a priority.”

The settlement is part of a larger investigation initiated by the U.S. Attorney’s Office for the District of New Jersey. As part of that investigation, Markus pleaded guilty on Sept. 7, 2012, to wire fraud, money laundering and failure to report a foreign bank account in connection with more than $50 million in contracts awarded to foreign companies in Gulf Region North, Iraq. Markus was sentenced to 13 years in prison on March 12, 2013, in Newark, N.J., federal court.

The investigation is being handled by the U.S. Attorney’s Office for the District of New Jersey and the Civil Division’s Commercial Litigation Branch, in cooperation with the Defense Criminal Investigative Service, the Major Procurement Fraud Unit of the Army’s Criminal Investigation Command, the Criminal Investigative Division of the Internal Revenue Service and the Department of Homeland Security. The claims resolved by the settlement are allegations only; there has been no determination of liability.

The investigation is due to report by the end of next month. The company has also been given until the end of November to transform its business practices or face being frozen out of further government outsourcing competitions.

Serco is one of Britain’s biggest support services group with total revenues of US $7.5 billion. In the defense sector here, the company is involved in outsourcing everything from the Royal Navy laundry service to aircraft maintenance and supporting early warning at the Fylingdales anti-ballistic missile warning system, along with the intelligence mission for the UK and US at Menwith Hill.

Its US operation employs around 10,000 people and has annual revenues of $1.2 billion.

As things stand, Serco can bid and be selected for defense deals with the MoD, but cannot actually sign a contract ahead of the issues it is facing being resolved.

Despite that, this week Serco secured a one-year extension on a training contract for the armed services due to expire at the end of this year.

A decision on a strategic business partner for the Defense Infrastructure Organization (DIO) is not expected until early next year.

Before that, though, Serco faces a decision by the MoD on whether it will retain its position as the service supplier at the Royal Air Force Fylingdales missile detection and early warning base.

Serco is in competition with Babcock as it tries to hold on to a contract it has held for decades providing 24-hour maintenance, operational, engineering and logistics support to the base, a key part of the UK and US ballistic missile defense screen.

Contract selection is expected by the end of the year.

The DIO, which manages everything from naval bases to troops accommodation and catering is looking for a private sector partner to improve the skills and efficiency of its US $5.2 billion a year operation.

The deal is set to run for 10 years and could be worth up to $400 million to the winning bidder.

Consortiums led by Serco, Telereal Trillium and Capita originally submitted proposals in June and the new submissions delivered this week are a further refining of the bid.

A spokesman for the DIO confirmed the revised bids have been submitted by the contenders

“DIO recently carried out a short exercise to revise and confirm aspects of the tenders. DIO must receive responses from the three consortia competing to become its strategic business partner by late October. Its business partnering team will now carry out further evaluation of the bids, backed by the continuing support of a wide group of subject matter experts from across the organization and wider government,” he said.

Serco leads a consortium that includes US contractor Bechtel.

Bechtel is also the lead on a consortium vying with a CHM2 Hill / Serco / Atkins team to secure a controversial deal to hand management of the MoD’s procurement and support operation to the private sector in a government-owned contractor-operated (GOCO) system.

A competition between the two US-led consortiums to secure the deal is underway, even though the government has yet to finally make up its mind whether it will proceed with the GOCO or opt for another plan based on a more effective version of the Defense Equipment & Support organization known as DE&S Plus.

A decision on how to proceed with reforming the $14 billion a year procurement and support effort is expected early next year.

The Financial Times on Oct. 17 said the GOCO scheme was starting to unravel because the CHM2 Hill team may have to withdraw due to Serco being embroiled in the controversy with the UK government.

Serco confirmed it had submitted a bid for the DIO competition but declined to comment on the media speculation over the GOCO.

Having a single bidder for such a controversial scheme would be untenable, said industry executives here.

A URS and KBR team has already pulled out of the competition.