Free Motion in Limine - District Court of Federal Claims - federal

Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 1 of 27

DEFENSE CONTRACT AUDIT AGENCY REPORT NO. 4261­2006S17900001 (Revised)
April 14, 2006 PREPARED FOR: Branch Chief (Mr. Harry K. Pimpong) U.S. Agency for International Development Office of Acquisition and Assistance Contract Audit Management Branch Cost, Audit and Support Division M/OAA/CAS, Room 7.08-051 1300 Pennsylvania Avenue, NW Washington, DC 20523 PREPARED BY: DCAA, Seattle Branch Office 14240 Interurban Avenue South, Suite 156 Seattle, WA 98168-4662 Telephone No. (206) 439-4800 FAX No. (206) 439-4870 E-mail Address [email protected] Report on Agreed-Upon Procedures to Support Civil Action No. 05-490C USAID Contract No. TRN-C-00-03-00054-00 Civil Action No. 05-490C Task No. IG-0-06-004 FCID No. 0710 Relevant Dates: See Page 25 SSA Marine, Inc. 1131 SW Klickitat Way Seattle, WA 98134

SUBJECT: REFERENCES:

CONTRACTOR:

REPORT RELEASE RESTRICTIONS: See Page 26 CONTENTS: Subject of Application of Agreed-Upon Procedures Scope of Application of Agreed-Upon Procedures Results of Application of Agreed-Upon Procedures Contractor Organization and Systems DCAA Personnel and Report Authorization Report Distribution and Restrictions Page 1 1 3 24 25 26

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EXHIBIT 3

Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

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Report No. 4261-2006S17900001 (Revised) SUBJECT OF APPLICATION OF AGREED-UPON PROCEDURES As requested by the United States Agency for International Development (USAID) in a memorandum dated November 15, 2005, reference Task No. IG-0-06-004, FCID No. 0710, and as discussed subsequently with your office, we applied agreed-upon procedures to SSA Marine Inc.'s (SSA) data and records in support of its April 22, 2005 claim for $4.4 million additional profit under USAID Contract No. TRN-C-00-03-00054-00. The contract provided for technical and other assistance to assess and plan implementation of port improvements, and technical and other assistance to directly operate part or all of the port of Umm Qasr, Iraq. In its letter to USAID dated August 12, 2003, SSA claimed that the contract allowed for profit on cargo processed as part of port operations, and proposed $2.20 per metric ton based on a selection of SSA's commercial contracts. In its complaint filed April 22, 2005, SSA claimed that it had processed 2 million metric tons through the port and was therefore entitled to $4.4 million. SSA also claimed that the government had failed to provide startup working capital, which caused SSA to provide its own funds. The purpose of our engagement was to perform the agreed-upon procedures to SSA's support for its claimed tonnage and profit rates and to SSA's cost, billing, and payment records for the contract. SCOPE OF APPLICATION OF AGREED-UPON PROCEDURES We have performed the mutually agreed-upon procedures enumerated below solely to assist you in evaluating SSA's claim under USAID Contract No. TRN-C-00-03-00054-00. This agreed-upon procedures engagement was performed in accordance with generally accepted government auditing standards. The sufficiency of the procedures is solely the responsibility of the requestor. Consequently, DCAA makes no representation regarding the sufficiency of the procedures described below, either for the purpose for which this report has been requested or for any other purpose. The following agreed-upon procedures were applied: · · · · · · · We reconciled a sample of SSA's claimed tonnage processed through the Port of Umm Qasr to SSA's books and records and reported our findings; We determined the basis of SSA's computation for its claimed profit rate of $2.20 per metric ton; We calculated the profit to sales ratio for the entire company using SSA's financial statements; We verified SSA's basis and computation of profits on the commercial contracts that SSA used for comparison in the claim; We prepared a schedule comparing the commercial contracts proposed by SSA and the USAID contract; We calculated profit rates for other SSA cargo handling locations using SSA's accounting records; and We prepared a schedule comparing the dates of SSA's public vouchers to dates that costs were recorded on SSA's books, dates payments were made, and dates payments were received from the government;

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Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 3 of 27

Report No. 4261-2006S17900001 (Revised) RESULTS OF APPLICATION OF AGREED-UPON PROCEDURES This report pertains only to the performance of agreed-upon procedures as listed and identified in the paragraph above concerning SSA's claim under USAID Contract No. TRN-C00-03-00054-00. We were not engaged to, and did not perform an examination, the object of which would be the expression of an opinion on the subject matter of this report. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. The application of agreed-upon procedures disclosed: · · · · · · · Differences between SSA's claimed tonnage quantity and its books and records; SSA judgmentally proposed $2.20 per metric ton to be representative of the low end of the profit per metric ton experienced on its selected commercial contracts; SSA's profit to sales ratio for the three fiscal years ended January 31, 2002 through 2004 ranged from (2.98) percent to 0.04 percent, and for its parent company Carrix Inc, 1.13 percent to 4.71 percent for the same period; SSA judgmentally selected commercial contracts for similarity to the USAID contract, and calculated profit rates as the difference between recorded revenues and recorded direct costs only; There are differences between SSA's selected commercial contracts and the USAID contract in scope, circumstances, or contract type; SSA's experienced profit rates for its other commercial cargo handling work during its fiscal year ended January 31, 2003 ranged from $0.14 to $8.49 per metric ton for break bulk, and $0.06 to $9.01 per metric ton for containers, and; SSA submitted its costs on public vouchers an average of 55 days after the costs were recorded on its books, and the government reimbursed SSA on an average of 31 days from the date vouchers were submitted for payment.

The detailed results of our agreed-upon procedures are provided in the following exhibits: Exhibit Results of Agreed-Upon Procedures for Cargo Tonnage Sampled Results of Agreed-Upon Procedures for Claimed Profit Rate Results of Agreed-Upon Procedures for Costs Incurred, Invoiced, and Paid A B C Page 3 12 22

We provided and discussed the factual data of this application of agreed-upon procedures with Mr. Bob Watters, Vice President, Managing Director, Mr. John Aldaya, Vice President, Finance and Accounting, and Ms. Denise Gellner, Corporate Accountant on April 7, 2006. We informed SSA that a draft copy of the report would not be provided prior to issuance. SSA will examine the report once issued and provided to SSA attorneys.

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Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 4 of 27 EXHIBIT A

Report No. 4261-2006S17900001 (Revised) SSA Marine, Inc. Seattle, Washington RESULTS OF AGREED-UPON PROCEDURES FOR CARGO TONNAGE SAMPLED Total Tonnage Claimed DCAA Sample % of Total Tonnage Tonnage Tonnage Invoiced Claimed 9.08% 49.68% 2.59% 18.77% 19.88% 100.00% 31,399 524,719 40,336 187,992 0 784,446 33,921 514,027 43,541 184,338 397,600 1,173,427

Cargo

Note Page 1 2 3 4 5 3 5 7 8 10

RORO 181,630 WFP 993,646 Project Cargo 51,758 Containers 375,368 Dhows 397,600 Total 2,000,002

We sampled 58.67 percent of the total tonnage claimed Explanatory Notes 1. Roll-On Roll-Off (RORO) a. Summary of Findings: Based on our agreed-upon procedures, we found that the claimed cargo tonnage for the RORO portion of total tonnage did not reconcile to SSA's books and records. b. Basis of Contractor's Submission: SSA's claimed tonnage for the RORO portion of total tonnage is based on the tonnages taken from the vessel's cargo documents or bills of lading, whenever possible. When this was not possible, SSA based the tonnage on a professional estimate made by the SSA Program Manager at the Port of Umm Qasr. SSA stated that, due to a lack of electricity, there was no operational weighbridge to accurately weigh any of the incoming cargo at the Port of Umm Qasr. c. Agreed-Upon Procedures: We judgmentally selected a sample of invoices based on the highest claimed cargo tonnage. For the sample selected, we requested original invoices from SSA and was informed that the original invoices have been left in the custody of the Port Authority for the purposes of collecting on accounts receivable. Therefore, we requested and obtained copies of the invoices and payment receipts from SSA to confirm that the tonnage invoiced is the tonnage paid for by customers. 3

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Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 5 of 27 EXHIBIT A

Report No. 4261-2006S17900001 (Revised)

We observed from the sample selected, the claimed cargo tonnage for the RORO portion of total tonnage is less than the amount invoiced. However, because we could not compare the claimed tonnage to original invoices, we verified the existence of the claimed tonnage by comparing the amounts invoiced to the amounts recorded on wire transfer receipts that support the accounts receivable transactions. We were not able to reconcile the amounts invoiced to the amounts recorded on the wire transfer receipts. The majority of these invoiced amounts contain differences that are identified as bank wire transfer fees, but several of the invoice payments were below what was invoiced. According to SSA, these were simply regarded as "prepayments." SSA was unable to provide any support showing that the remaining balances have been paid. A summary of our findings is presented as follows:
Voyage No. 120 119 185 127 7 126 8 132 12 135 1 4 140 141 144 27 142 19 145 6 3 4 4005 3 4007 4 156 162 35 12 165 166 221 42 Original Invoice Amount $41,247 41,153 22,189 41,737 33,979 34,111 34,909 31,059 33,110 27,300 14,987 19,888 24,585 24,333 26,316 52,957 24,913 27,486 21,078 12,513 25,693 30,665 27,038 24,426 32,454 27,405 25,061 18,561 12,073 65,990 22,720 16,544 14,539 27,405 $960,424 Final Invoice Amount $26,556 30,192 18,356 34,987 33,979 32,393 34,909 31,059 33,110 27,300 14,987 19,888 24,585 24,333 26,316 52,957 24,913 27,486 21,078 12,513 25,693 30,665 27,038 24,426 32,454 27,405 25,061 18,561 12,073 65,990 22,720 16,544 14,539 27,405 $922,471 Invoice Payment $20,000 15,977 9,677 20,144 33,960 19,086 35,330 31,033 33,091 27,275 14,964 19,844 24,560 24,308 26,291 52,957 24,888 27,467 21,053 12,493 25,668 30,640 27,013 26,383 32,429 27,341 25,036 18,538 12,054 65,964 22,695 16,521 14,516 27,386 $866,582 Original Tonnage Invoiced* 922 976 403 1,050 716 918 774 875 906 1,005 158 162 1,135 1,107 1,249 836 1,119 633 988 126 1,462 1,748 1,602 370 1,157 416 2,965 805 501 1,268 951 645 504 948 31,399 Tonnage Claimed* 830 924 431 1,050 716 912 772 875 893 983 240 1,298 1,112 1,060 1,192 624 1,114 633 988 126 1,462 1,772 1,590 2,220 1,200 1,916 1,148 801 500 1,474 951 670 504 942 33,921 Final Tonnage Invoiced* 830 924 431 1050 716 912 774 945 707 905 758 146 987 943 1081 824 963 633 893 126 1462 1772 1602 391 1270 2244 1028 739 501 1608 767 574 440 550 30,497

Year 2003

Month July August September October November

Vessel Jabal Ali 3 Jabal Ali 2 Jabal Ali 1 Jabal Ali 3 Medif 2 Jabal Ali 2 Merdif 2 Jabal Ali 2 Medif 2 Jabal Ali 2 Sea Diamond Novorossivisk Jabal Ali 2 Jabal Ali 2 Jabal Ali 3 Modern Link Jabal Ali 2 Merdif 2 Jabal Ali 2 FAYE Jabal Ali 4 Jabal Ali 4 Jabal Ali 4 Rose V Jabal Ali 4 Rose V Jabal Ali 2 Jabal Ali 3 Merdif 2 Jabal Ali 4 Jabal Ali 3 Jabal Ali 3 Jabal Ali 1 Merdif 2 Totals

December

2004

January

February

March

April May

June

* Contains Rounding Differences

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Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 6 of 27 EXHIBIT A

Report No. 4261-2006S17900001 (Revised)

Our sample consisted of 33,921 tons of the claimed 181,630 tons of total RORO cargo (18.68 percent). 2. World Food Program (WFP) a. Summary of Findings: Based on our agreed-upon procedures, we found that the claimed cargo tonnage for the WFP portion of total tonnage did not reconcile to SSA's books and records. b. Basis of Contractor's Submission: SSA's claimed tonnage for the WFP portion of total tonnage is based on the tonnages taken from the vessel's cargo documents or bills of lading, whenever possible. When this was not possible, SSA based the tonnage on a professional estimate made by the SSA Program Manager at the Port of Umm Qasr. SSA stated that, due to a lack of electricity, there was no operational weighbridge to accurately weigh any of the incoming cargo at the Port of Umm Qasr. c. Agreed-Upon Procedures: We judgmentally selected a sample of invoices based on the highest claimed cargo tonnage. For the sample selected, we requested original invoices and were informed that the original documents have been left in the custody of the Port Authority for the purposes of collecting on accounts receivable. Therefore, we requested and obtained copies of the invoices and also requested payment receipts from SSA to confirm that the tonnage invoiced was the tonnage paid for by customers. We observed from the sample selected, the claimed cargo tonnage for the WFP portion of total tonnage is reported at less than that invoiced. However, because we could not compare the claimed tonnage to original invoices, we verified the existence of the claimed tonnage by comparing the invoiced amount to the accounts receivable support in the form of wire transfer receipts. We compared the original invoice amounts and final invoice amounts for differences, and then compared the final invoice amounts to the wire transfer receipts in order to verify that the tonnage claimed is actually tonnage that was paid for. We observed one transaction that is significant in the lack of payment. On May 15, 2004 the vessel Thor Triumph, Invoice No. UQ1684, with a final invoiced amount of $174,878, paid SSA $23,000. We inquired with SSA about the remaining balance, and SSA was unable to locate any additional support for the difference owed. A summary of our findings is presented as follows:

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Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 7 of 27 EXHIBIT A

Report No. 4261-2006S17900001 (Revised)

Year 2003

Month June July August September October November December

Vessel Thor Orchid Sirorat Naree Thai Bihn Jaipur Ibn Al Haitham Vega Star Sumana Noree Sunrise Ocean APJ Sushma Vega Star Ocean Hope Primavera Favorita Ocean Star Golden Star Seaboss 1 African Falcon Polar Star Thor Nexus Thor Lotus Thor Triumph Vinh Phuoc Oskana Morning Star Sun Bright Totals

Original Invoice Amount $389,300 299,700 134,510 143,520 182,396 289,613 270,686 158,666 157,003 129,672 202,357 137,588 387,516 124,606 161,223 205,374 283,542 167,136 126,690 261,171 171,315 84,606 163,308 151,425 164,620 $4,947,543

Final Invoice Amount $340,760 263,071 155,124 120,690 163,754 141,071 149,606 158,666 157,003 142,328 202,357 145,542 295,272 124,606 161,223 205,374 283,542 167,136 123,189 272,788 174,878 84,605 163,308 152,862 164,620 $4,513,375

Final Invoice Payment $340,760 263,071 155,124 120,690 163,754 141,071 149,606 158,666 157,003 142,328 202,357 137,516 285,500 124,509 161,148 205,300 283,495 167,076 123,189 295,250 23,000 84,506 163,308 149,975 164,585 $4,362,787

Original Tonnage Invoiced 30,000 23,200 13,500 10,600 13,167 20,500 20,000 22,000 21,250 20,500 28,000 17,853 31,260 21,500 16,500 27,512 24,962 22,500 18,097 31,500 20,500 10,527 20,100 18,700 20,491 524,719

Tonnage Claimed 30,000 23,200 13,500 9,500 13,125 20,500 20,250 22,000 23,500 20,500 28,000 17,780 31,260 16,500 21,500 27,512 24,000 22,558 18,000 20,500 20,500 10,500 20,100 18,742 20,500 514,027

Final Tonnage Invoiced 30,000 23,200 13,500 9,500 13,125 20,500 20,250 22,000 21,250 20,500 28,000 17,773 30,955 16,500 21,500 27,512 24,000 22,558 17,597 31,582 20,553 10,505 20,100 18,748 20,500 522,208

2004

January February

March

April May June

Our sample consisted of 514,027 of the claimed 993,646 tons of total WFP cargo (51.73 percent). 3. Project Cargo a. Summary of Findings: Based on our agreed-upon procedures, we found that the claimed cargo tonnage for the Project Cargo portion of total tonnage did not reconcile to SSA's books and records. b. Basis of Contractor's Submission: SSA's claimed tonnage for the WFP portion of total tonnage is based on the tonnages taken from the vessel's cargo documents or bills of lading, whenever possible. When this was not possible, SSA based the tonnage on a professional estimate made by SSA Program Manager at the Port of Umm Qasr. SSA stated that, due to a lack of electricity, there was no operational weighbridge to accurately weigh any of the incoming cargo at the Port of Umm Qasr. 6

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Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 8 of 27 EXHIBIT A

Report No. 4261-2006S17900001 (Revised) c. Agreed-Upon Procedures:

We judgmentally selected a sample of invoices based on the ships with the highest claimed cargo tonnage. For the sample selected, we requested original invoices and was informed that the original documents have been left in the custody of the Port Authority for the purposes of collecting on accounts receivable. Therefore, we requested and obtained copies of the invoices and also requested payment receipts from SSA to confirm that the tonnage invoiced was the tonnage paid for by customers. We observed from the sample selected, the claimed cargo tonnage for the Project Cargo portion of total tonnage reported is greater than that invoiced. However, because we could not compare the claimed tonnage to original invoices, we verified the existence of the claimed tonnage by comparing the invoiced amount to the accounts receivable support. We compared the totals on the final invoices with the amounts shown on the wire transfer receipts, and were not able to reconcile the amounts invoiced to the amounts paid. A summary of our findings is presented as follows:
Original Invoice Amount Final Invoice Amount Invoice Payment Tonnage Tonnage Invoiced Claimed 3,787 3,000 4,847 1,863 4,787 5,254 1,373 477 5,195 5,754 4,000 40,337 3,787 3,236 4,847 4,700 4,587 5,254 1,373 477 5,518 5,754 4,008 43,541

Year 2003

Month

Vessel

2004

October Regal Star $ 56,802 $ 63,356 $ 63,316 November Beluga Inspiration 134,300 134,300 134,300 December Zhong Yang Men 106,000 106,000 105,985 January Industrial Challenge 70,833 70,833 75,837 February Phenix 109,787 102,416 102,336 Xenia 165,584 167,340 165,097 March Amir Kabir 28,477 28,477 28,432 Feliyeh 10,754 10,754 10,694 April Paraskevi II 130,068 132,110 128,555 Atlantic Leader 4,522 189,436 184,914 May Zaid 89,766 89,766 89,746 Totals $906,893 $1,094,788 $1,089,212

Our sample consisted of 43,541 tons of the claimed 51,758 tons of total Project Cargo (84.12 percent). 4. Containers a. Summary of Findings: Based on our agreed-upon procedures, we found that the claimed cargo tonnage for the Containers portion of total tonnage did not reconcile to SSA's books and records.

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Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 9 of 27 EXHIBIT A

Report No. 4261-2006S17900001 (Revised) b. Basis of Contractor's Submission:

SSA's claimed tonnage for the Containers portion of total tonnage is based on the number of containers moved and an estimate of 14 tons per container. The 14 ton estimate was developed by SSA Program Manager at the Port of Umm Qasr. SSA stated that, due to a lack of electricity, there was no operational weighbridge to accurately weigh any of the incoming cargo at the Port of Umm Qasr. For determining the number of containers and claimed tonnage for the containers, SSA needed to determine a process to ensure consistency in the estimates beyond that already established for estimating tonnage. To accomplish this, SSA needed to establish a constant unit for each container, and the solution was the twenty foot equivalent unit (TEU). As all containers entering the Port of Umm Qasr had measurements of either 20 feet or 40 feet in length, the 20 foot containers were given a TEU of one and the 40 foot containers were given a TEU of two. c. Agreed-Upon Procedures: We judgmentally selected a sample of invoices based on the highest claimed cargo tonnage. For the sample selected, we requested original invoices and was informed that the original documents have been left in the custody of the Port of Umm Qasr for the purposes of collecting on accounts receivable. We therefore requested and obtained copies of the invoices and also requested and obtained payment receipts from SSA to confirm that the number of containers invoiced was the number paid for by customers. For the accounting of tonnage for the Containers, SSA needed to determine a process to ensure consistency in the estimates beyond that already established for estimating tonnage. To accomplish this, SSA needed to establish a constant unit for each container, and the solution was the twenty foot equivalent unit (TEU). As all containers entering the Port of Umm Qasr had measurements of either 20 feet or 40 feet in length, the 20 foot containers were given a TEU of one and the 40 foot containers were given a TEU of two. In our procedure we multiplied the number of 40 foot containers by two in order to perform our reconciliation of the number of TEU's being claimed by SSA to the number containers on the invoices. According to the SSA Program Manager at the Port of Umm Qasr Mr. Moran, and based solely on his professional judgment, each TEU container contained approximately 14 tons of materials or supplies. There is no documentation to support or refute his estimate of 14 tons per TEU container. We observed that from the sample selected, the claimed cargo tonnage for the Container portion of total tonnage is reported at less than that invoiced. We could not compare the claimed tonnage to original invoices; however, we evaluated the existence of the claimed tonnage by comparing the invoiced TEU amount to the accounts receivable support in the form of wire transfer receipts. We compared the totals on the invoice copies with the amounts shown on the wire transfer receipts and were not able to exactly reconcile the amounts invoiced to the amounts paid. A summary of our findings is presented as follows:

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Case 1:05-cv-00490-TCW Report No. 4261-2006S17900001 (Revised)

Document 30-6

Filed 08/29/2006

Page 10 of 27 EXHIBIT A

(a) Original Invoice Amount Final Invoice Amount Payment Amount

(b)

I Convert to TEU (b*2) 242 174 284 120 48 126 202 554 346 192 556 292 272 260 566 108 224 276 218 220 236 236 200 226 212 386 140 372

(d) Total Invoiced (a+b) 461 451 313 140 210 204 182 520 372 107 477 511 654 400 517 235 295 329 319 284 291 277 290 292 310 405 583 355

Month

Vessel

TEUs Invoiced 20' 40'

(e) Total Invoiced TEU's (a+c) 582 538 455 200 234 267 283 797 545 203 755 657 790 530 800 289 407 467 428 394 409 395 390 405 416 598 653 541 13,428

(f)

(g)

(h) Convert to TEU (g*2) 242 174 84 0 42 126 214 554 346 192 556 294 272 260 566 108 224 278 218 220 236 238 200 226 212 386 140 372

(i) Total Counted (f+g) 461 450 213 121 207 204 191 520 372 107 477 512 654 400 517 239 295 330 319 284 291 278 290 292 310 405 583 355

TEUs Claimed 20' 40'

(j) Total Claimed TEU's (f+h) 582 537 255 121 228 267 298 797 545 203 755 659 790 530 800 293 407 469 428 394 409 397 390 405 416 598 653 541 13,167

Jul. Aug. Sep. Oct. Nov.

Dec. Jan.

Feb. Mar.

Apr.

May

Jun.

Westwind Westwind Sima Tara Sima Kija Sima Tara Explorer Explorer Manila Bay Sima Tara Ghazze Manila Bay Sima Tara Sima Tara Sima Tara Manila Bay Sima Tara Xpress Alexander Sima Tara Xpress Alexander Sima Tara Xpress Alexander Sima Tara Xpress Alexander Sima Tara Xpress Alexander Sima Tara Manila Bay Sima Tara Totals

$ 101,498 63,819 51,289 52,760 34,422 60,360 72,323 81,513 77,031 25,499 99,548 97,724 120,536 84,978 106,023 53,509 58,692 69,504 62,247 59,439 58,402 58,791 57,257 61,677 60,687 84,293 104,538 76,250 $1,994,609

$ 101,498 63,819 51,289 60,500 86,088 60,360 72,323 81,513 77,031 29,596 179,738 136,711 120,536 84,978 188,879 79,803 95,418 69,504 108,057 59,439 99,264 58,791 95,653 61,677 86,157 84,293 124,538 76,250 $2,493,703

$ 101,480 0 51,289 60,479 62,658 32,442 31,822 81,488 76,691 21,199 80,443 135,634 120,536 84,858 85,343 80,008 39,594 69,504 36,973 59,439 35,010 58,791 34,262 61,677 36,124 84,293 95,083 76,250 $1,793,370

340 364 171 80 186 141 81 243 199 11 199 365 518 270 234 181 183 191 210 174 173 159 190 179 204 212 513 169

121 87 142 60 24 63 101 277 173 96 278 146 136 130 283 54 112 138 109 110 118 118 100 113 106 193 70 186

340 363 171 121 186 141 84 243 199 11 199 365 518 270 234 185 183 191 210 174 173 159 190 179 204 212 513 169

121 87 42 0 21 63 107 277 173 96 278 147 136 130 283 54 112 139 109 110 118 119 100 113 106 193 70 186

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Document 30-6

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Page 11 of 27 EXHIBIT A

Report No. 4261-2006S17900001 (Revised)

Tonnage Calculation 13,428 TEU's Invoiced x 14 Tons per TEU 187,992 Tons Invoiced 13,167 TEU's Claimed x 14 Tons per TEU 184,338 Tons Claimed

Our sample consisted of 184,338 tons of the claimed 375,368 tons of total Container cargo (49.11 percent). 5. Dhows a. Summary of Findings: Based on our agreed-upon procedures applied to the dhow tonnage, the claimed tonnage did not reconcile to SSA's books and records or invoices. b. Basis of Contractor's Submission: SSA based the Dhow tonnage on a professional estimate made by Mr. Moran at 500 tons per vessel call. SSA stated that, due to a lack of electricity, there was no operational weighbridge to accurately weigh any of the incoming cargo at the Port of Umm Qasr. c. Agreed-Upon Procedures: We requested original invoices relating to the tonnage claimed for the Dhows, which are small, wooden, privately owned country boats operated throughout the Iraqi ports. We were informed that the accounting for the Dhows was not consistent with the rest of the invoiced tonnage, as these were small country boats with limited cargo and, according to the SSA Program Manager at the Port of Umm Qasr, only capable of carrying a certain amount of weight. During our initial discussion regarding the dhows, the SSA Program Manager of the Port of Umm Qasr informed us that due to the size of the dhows, it was easiest to simply estimate each shipment coming in on the dhows as 500 tons per shipment. The dhows' owner/operator was charged $1 per ton, for a total of $500 per shipment. As stated by the Program Manager, these shipments were recorded in dual carbon copy receipt books, with one copy going to the owner/operator of the dhow, and the other copy recorded as cash received in the receipt book. We verified the cash receipts included in all of the books to the summary report of cash receipts; however, according to the information provided for on these receipts, the payment received was for a daily docking fee and port charges. It does not show anywhere on these receipts that there was any agreement to the tonnage handled. We attempted to confirm that the method used to estimate this tonnage was correct in an e-mail sent to the SSA Program Manager of the Port of Umm Qasr. The reply we received from the SSA Program Manager was different than what was originally stated in that the $1 per ton is purely coincidental. SSA estimated that each vessel contained 500 tons of cargo, while the Director General of the Iraq Port Authority (IPA) ordered the charge of $500 per vessel. 10

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Case 1:05-cv-00490-TCW

Document 30-6

Filed 08/29/2006

Page 12 of 27 EXHIBIT A

Report No. 4261-2006S17900001 (Revised)

Initially, this charge was $250 per vessel per day, and was increased with the order of the Director General of IPA to $500 per vessel. We requested this change of order from SSA, but SSA does not have any written record of this change order being made. In order to verify the receipt of cash for the dhows, we requested the cash receipts report from SSA to trace the payments for the dhows through SSA's accounting system. We also obtained a bank summary showing the deposits and withdrawals for the dhows, and were able to trace the cash received from the dhows entering SSA's U.S. account. However, based on our agreed-upon procedures applied to the claimed dhow tonnage, we were unable to reconcile any of the claimed tonnage to SSA's books and records or invoices.

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Document 30-6

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Page 13 of 27 EXHIBIT B

Report No. 4261-2006S17900001 (Revised) SSA Marine, Inc. Seattle, Washington RESULTS OF AGREED-UPON PROCEDURES FOR CLAIMED PROFIT RATE

1.

Summary of Findings:

We determined that SSA's operating profit percentages from its operations ranged from .04 percent to negative 2.98 percent of revenue. and that its parent company's operating profit percentages ranged from approximately 1 to 5 percent during contractor fiscal years (CFYs) ended January 25, 2002, January 31, 2003, and January 30, 2004. SSA judgmentally proposed $2.20 per metric ton to be representative of the low end of the profit per metric ton experienced on its selected commercial contracts. We prepared a schedule comparing the commercial contracts proposed by SSA to the USAID contract and determined there are differences. We calculated profit rates for other SSA cargo handling locations based on SSA accounting records. The procedures performed disclosed that SSA's container profits per metric ton for other commercial contracts SSA did not use in the comparison ranged from $0.06 to $9.01, and break-bulk profits ranged from $0.14 to $8.49. 2. Basis of Contractor's Submission:

SSA cited several of its existing commercial contracts as examples of its commercial profit expectations. SSA chose the comparison contracts as being most like the USAID contract. SSA judgmentally arrived at $2.20 per metric ton to be representative of the low end of the profit per ton experienced on the comparison contracts. 3. Agreed-Upon Procedures: a. Company Profitability We obtained financial statements for CFYs 2002 through 2004 and computed operating profits for SSA and for its parent company, Carrix Inc., as follows: CFYE 1/2002 CFYE 1/2003 SSA Marine: Revenues Operating Income Operating Profit Percentage $646,109,593 $ 290,621 0.04% CFYE 1/2004

$697,114,898 $ 796,171,526 $(20,792,546) $ 5,191 (2.98)% 0.00%

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Report No. 4261-2006S17900001 (Revised) Carrix: Revenues Operating Income Operating Profit Percentage

$780,348,882 $ 31,939,153 4.09%

$837,111,346 $ 9,491,867 1.13%

$1,038,081,620 $ 48,921,010 4.71%

The operating profit percentage (Revenues minus Cost of Revenues minus G&A Expenses=Operating Income)/Revenues) reveals the return from standard operations, excluding the impact of extraordinary transactions and other comprehensive income. It shows the extent to which a company is earning a profit from standard operations, as opposed to resorting to asset sales or unique transactions to post an "artificial" profit. Because the figure excludes miscellaneous income and tax expenses, both of which are the result of a company's financing decisions, the operating profit percentage produces an accurate picture of the profitability of the primary business based solely on its operating characteristics. SSA stated that its income statements show a very low or negative operating profit because they include G&A expenses that are incurred for foreign operations of its parent company, Carrix. SSA provided the Carrix financial statements as an additional point of reference for the operating profit percentage. b. Comparison Contracts We obtained detailed data regarding SSA's proposed commercial comparison contracts and prepared the following comparison chart:
SSA's Proposed Comparison Contracts: Container Mexico Panama YTI Mexico Panama California Container Container Container 258,310 558,088 632,206 131.87 92.21 16.97 13 13 13 10.14 7.09 1.31 Fixed Rate Fixed Rate multiple single per container per container yes no 0-5% / 95-100% 0% / 100% no no yes no no no some some some some most similar no no no Note (5) Note (6) Not sole provider Not sole provider

Customer Location Cargo type (Note (1)) Container Moves Profit/move (Note (2)) Est. Ton/Move (Note (3)) Profit/ton Contract Attributes: 1. Contract type 1.a Single/multiple shippers 1.b Rate type 2. Infrastructure investment 3. Breakbulk / Container 4. Port Assessment 5. Plan / Implement Port Improvements 6. Plan / Directly Operate Port 7. Full range of services 8. Specified personnel 9. Comms., vehicles/GPS, support 10. Nominate local professionals 11. Work scope, sole provider of these services at that port

USAID Iraq Container & Break Bulk

Fixed Rate multiple per container no yes 25% / 75% 0-5% / 95-100% Yes (CLIN 001) no Yes (CLIN 002) yes Yes (CLIN 003) no Yes (CLIN 003) some Yes (Sec C VII) some Yes (Sec C VII) most similar Yes (Sec C VII) no Note (4) Assess, improve, maintain, Not sole provider Operate Umm Qasr port; sole provider

Cost multiple

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Report No. 4261-2006S17900001 (Revised)

Customer Location Cargo type (Note(1)) Tons Profit/ton (Note (3))

Eastern Car Liner Tacoma Break bulk 22,447 4.47

SSA's Proposed Comparison Contracts: Breakbulk New Zealand Toko Kaiun Lumber Kaisha SK Shipping Term 37 (Seattle) Terminal 2 Terminal 2 Steel Lumber Steel 4,381 107,476 135,939 2.99 4.74 7.71

Steelscape Longview Steel + Misc 305,916 2.14

1. Contract type Fixed Rate Fixed Rate Fixed Rate Fixed Rate Fixed Rate 1.a Single/multiple shippers single single single single single 1.b Rate type per ton per ton per ton per ton per ton 2. $ Infrastructure investment no no no no no 3. Breakbulk / Container 100% / 0% 100% / 0% 100% / 0% 100% / 0% 100% / 0% 4. Port Assessment no no no no no 5. Plan / Implement Port Improvements no no no no no 6. Plan / Directly Operate Port no no no no no 7. Full range of services no no no no no 8. Specified personnel no no no no no 9. Comms., vehicles/GPS, support no no no no no 10. Nominate local professionals no no no no no 11. Work scope, sole provider of Note (7) Note (8) Note (9) Note (10) Note (11) these services at that port Not sole provider Not sole provider Not sole provider Not sole provider Not sole provider

(1) Types of cargo for the USAID contract, as described in SSA's June 30, 2004 press release (http://www.ssamarine.com/news/pr/063004.html): "Over 280 vessels, 1.2 million metric tons of cargo and more than 8000 people have called the port. The main cargoes handled included containers, break-bulk, RoRo, construction, bulk grain, bagged rice and sugar." (2) SSA judgmentally estimated that, on average, the containers contained 13 metric tons cargo each. We note that SSA used 14 metric tons per container in determining how much container tonnage to include in the claim. (3) SSA computed profit as the difference between revenues and direct costs. G&A costs were not included in the calculation, and so the profit includes an element of G&A.

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Report No. 4261-2006S17900001 (Revised) (4) SSA provided the following work scope description for Mexico: · · · · · · · · · · · · · (5)

Documentation and reports of actual import and export shipments Tracking customs and customer clearance for container release Container processing and handling for receiving and delivery of containers to/from the terminal Berthing plans Container load/discharge planning Loading/discharging containers to/from vessels Discharging containers from truck in receiving process Loading containers to truck in delivery process Gate interchange documentation Communications with customers' ship crew on stowage plans and with documentation staff on cargo clearances for release Invoicing customers Security Facilities and equipment procurement and maintenance

SSA Marine provided the following work scope description for Panama: · · · · · · · · · · · · · Documentation and reports of actual import and export shipments Tracking customs and customer clearance for container release Container processing and handling for receiving and delivery of containers to/from the terminal Berthing plans Container load/discharge planning Loading/discharging containers to/from vessels Discharging containers from truck in receiving process Loading containers to truck in delivery process Gate interchange documentation Communications with customers' ship crew on stowage plans and with documentation staff on cargo clearances for release Invoicing customers Security Facilities and equipment procurement and maintenance

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Report No. 4261-2006S17900001 (Revised) (6) SSA Marine provided the following work scope description for YTI: · · · · · · · · · · · · · (7)

Documentation and reports of actual import and export shipments Tracking customs and customer clearance for container release Container processing and handling for receiving and delivery of containers to/from the terminal Berthing plans Container load/discharge planning Loading/discharging containers to/from vessels Discharging containers from truck in receiving process Loading containers to truck in delivery process Gate interchange documentation Communications with customers' ship crew on stowage plans and with documentation staff on cargo clearances for release Invoicing customers Security Facilities and equipment maintenance

SSA Marine provided the following work scope description for Eastern Car Liner: · · · · · Documentation and reports of actual import and export shipment Cargo load and discharge planning Loading/discharging cargo to/from vessels Communications with customers' ship crew on stowage plans and with documentation staff on cargo clearances for release Invoicing customers

(8)

SSA Marine provided the following work scope description for SK Shipping: · · · · · Documentation and reports of actual import and export shipment Cargo load and discharge planning Loading/discharging cargo to/from vessels Communications with customers' ship crew on stowage plans and with documentation staff on cargo clearances for release Invoicing customers

(9) Lumber:

SSA Marine provided the following work scope description for New Zealand

· · · · ·

Documentation and reports of actual import and export shipment Cargo load and discharge planning Loading/discharging cargo to/from vessels Communications with customers' ship crew on stowage plans and with documentation staff on cargo clearances for release Invoicing customers

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Report No. 4261-2006S17900001 (Revised)

(10) SSA Marine provided the following work scope description for Toko Kaiun Kaisha: · · · · · Documentation and reports of actual import and export shipment Cargo load and discharge planning Loading/discharging cargo to/from vessels Communications with customers' ship crew on stowage plans and with documentation staff on cargo clearances for release Invoicing customers

(11) SSA Marine provided the following work scope description for Steelscape: · · · · · Documentation and reports of actual import and export shipment Cargo load and discharge planning Loading/discharging cargo to/from vessels Communications with customers' ship crew on stowage plans and with documentation staff on cargo clearances for release Invoicing customers

c. Other Commercial Work and USAID Contract Profit We obtained accounting data on cargo volume, revenue, costs, and profits on SSA's other commercial work for CFY ended January 31, 2003. This is the same CFY that SSA Marine used for its proposed comparison contracts. SSA provided this data by location and customer. For ease of use we extracted and compiled summary data by location, and segregated the data for locations by container work and by break bulk work. SSA defined break bulk as cargo that is not containerized. For this purpose, we included such items as steel, lumber, bagged goods, and other bulk items similar to the cargo described for the USAID contract, and similar to the cargo handled in SSA's comparison contracts above.

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Break Bulk (Note (2)) Profit/ Loss before G&A Profit/ Loss after G&A Profit/Loss per Metric Ton Before After G&A G&A

Location Note (1) Port of Stktn Tacoma Terminal 2 Longview Coos Bay Berth 204/207 Port Hueneme San Diego Gulfport R-W Panama City R-W New Orleans-RW Little Rock-LSI Leetsdale-GN-LSI Port Arthur Charleston Steve Savannah Steve Georgetown Steve Jacksonville Wilmington Steve Morehead City Total Weighted Avg. Maximum Minimum

Cargo Type Note (2) break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk break bulk

Metric Tons

Revenue

Direct Cost Note (3)

G&A @ 36.8% Note (4)

Total Cost

474,915 360,582 264,656 1,494,470 1,239,864 362,808 69,388 469,748 626,501 385,038 5,026,910 272,611 30,258 305,274 164,916 550,351 937,702 253,433 1,149,422 90,277 14,529,124

$ 4,908,172 $ 3,603,916 $ 1,304,256 $ 1,326,241 972,863 764,708 208,155 281,413 4,981,335 3,087,019 1,894,316 1,136,023 5,565,562 4,354,798 1,210,764 1,602,566 865,628 696,287 169,341 256,234 9,609,603 7,570,664 2,038,939 2,786,004 314,123 235,118 79,005 86,523 1,285,959 915,955 370,004 337,071 2,966,532 1,993,204 973,328 733,499 1,688,508 1,021,273 667,235 375,828 9,788,427 5,774,851 4,013,576 2,125,145 1,160,786 401,569 759,217 147,777 292,254 35,226 257,028 12,963 1,172,151 918,239 253,912 337,912 2,301,184 1,609,381 691,803 592,252 7,543,551 5,365,338 2,178,213 1,974,444 2,918,640 1,825,576 1,093,064 671,812 2,345,081 1,876,280 468,801 690,471 7,753,685 5,388,882 2,364,803 1,983,109 2,127,225 1,423,104 704,121 523,702 $70,561,269 $48,861,388 $21,699,881 $17,980,989

$ 4,930,157 1,046,121 4,223,042 5,957,364 952,521 10,356,668 321,641 1,253,026 2,726,703 1,397,101 7,899,996 549,346 48,189 1,256,151 2,201,633 7,339,782 2,497,388 2,566,751 7,371,991 1,946,806 $66,842,377

$

(21,985) (73,258) 758,293 (391,802) (86,893) (747,065) (7,518) 32,933 239,829 291,407 1,888,431 611,440 244,065 (84,000) 99,551 203,769 421,252 (221,670) 381,694 180,419 $3,718,892

$2.75 $0.58 $7.16 $0.81 $0.14 $5.62 $1.14 $0.79 $1.55 $1.73 $0.80 $2.78 $8.49 $0.83 $4.19 $3.96 $1.17 $1.85 $2.06 $7.80 $1.49 $8.49 $0.14

$(0.05) $(0.20) $ 2.87 $(0.26) $(0.07) $(2.06) $(0.11) $ 0.07 $ 0.38 $ 0.76 $ 0.38 $ 2.24 $ 8.07 $(0.28) $ 0.60 $ 0.37 $ 0.45 $(0.87) $ 0.33 $ 2.00 $ 0.26 $ 8.07 $(2.06)

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Containers Profit/Loss per Metric Ton (Note (5)) Before After G&A G&A

Location Note (1) Berth 54/55-LA No. American Term Gulfport R-W New Orleans-RW Port Manatee Pac Mar Svc Charleston Steve Savannah Steve Jacksonville Wilmington Steve Total Weighted Average Maximum Minimum

No. of Containers

Revenue

Direct Cost Note (3)

Profit/ Loss before G&A

G&A @ 36.8% Note (4)

Total Cost

Profit/ Loss after G&A

12 10,667 26,150 100 515 472,995 328,204 223,345 52,065 22,911 1,136,964

7,459 $ 6,053 $ 1,406 $ 2,228 $ 8,281 $ (822) 1,295,820 1,221,786 74,034 449,617 1,671,403 (375,583) 781,105 760,168 20,937 279,742 1,039,910 (258,805) 5,780 4,566 1,214 1,680 6,246 (466) 63,549 42,717 20,832 15,720 58,437 5,112 70,496,306 37,749,019 32,747,287 13,891,639 51,640,658 18,855,648 34,132,675 29,975,362 4,157,313 11,030,933 41,006,295 (6,873,620) 24,884,732 23,022,253 1,862,479 8,472,189 31,494,442 (6,609,710) 9,853,490 9,081,470 772,020 3,341,981 12,423,451 (2,569,961) 2,616,020 2,147,459 468,561 790,265 2,937,724 (321,704) $144,136,936 $104,010,853 $40,126,083 $38,275,994 $142,286,847 $ 1,850,089

$

$9.01 $0.53 $0.06 $0.93 $3.11 $5.33 $0.97 $0.64 $1.14 $1.57 $2.71 $9.01 $0.06

$(5.27) $(2.71) $(0.76) $(0.36) $ 0.76 $ 3.07 $(1.61) $(2.28) $(3.80) $(1.08) $ 0.13 $ 3.07 $(5.27)

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Report No. 4261-2006S17900001 (Revised)

(1) Each location includes multiple customers that shipped cargo in and out of the location. In response to our request, SSA provided a hard copy printout of this data, amounting to several hundred pages, and it was not practical to compile all of it by customer, so we extracted summary data by location. In comparison, the USAID contract at Umm Qasr port also involved multiple carriers shipping cargo in and out of the port. (2) For break bulk, we included volume data listed in SSA Marine's accounting data for various non-containerized cargo types such as steel, lumber, grain, etc. (3) Direct costs are listed in SSA's accounting data as "labor" and "other." SSA stated that these costs are considered direct costs. (4) For this analysis we estimated SSA's G&A rate at 36.8 percent. We used SSA's financial statements for CFY ended January 31, 2003, G&A Expenses of $193 million as the expense pool and Cost of Revenues of $524.9 million as the allocation base. The 36.8 percent G&A rate is a company-wide rate. (5) We used 13 tons per container, consistent with SSA's judgmental estimate. We are unable to directly verify the accuracy of SSA's estimate. We note that SSA used a 14 metric tons per container estimate to prepare its claimed tonnage amount of 2,000,002 million tons. d. USAID Contract Claimed Profit In addition, we also computed profit rates for the cargo items specifically associated with the Port of Umm Qasr for comparison purposes. Our findings are as follows: DCAA Sample (a) (b) Invoiced Tonnage Amount Invoiced $ 922,471 $4,513,375 $1,094,788 $2,493,703 $ 556,669 30,497 522,208 67,019 187,992 397,600 (d) (e) (c) Claimed Computed Dollars per Profit per Profit Ton Ton Rate
(a/b) (d/c)

Cargo RORO WFP Project Cargo Containers Dhows *

$ 30.25 $ 8.64 $ 16.34 $ 13.26 $ 1.40

$2.20 $2.20 $2.20 $2.20 $2.20

7.27% 25.45% 13.47% 16.59% 157.13%

* Because the dhows did not have invoices, we used the total cash collected and the total tonnage claimed. We computed an average dollar per ton for each cargo classification by dividing the total dollars paid for the operating and stevedoring charges (exclusive of vessel charges) by the invoiced tonnage. 20

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Report No. 4261-2006S17900001 (Revised)

Based on the table above, our findings disclose that the dollars per ton, depending on the type of cargo handled, is in the range of $1.40 per ton to $30.25 per ton. Using SSA's expected profit of $2.20 per ton, we can observe that SSA is claiming a profit rate of 7.27 percent for RORO up to 157.13 percent for Dhows.

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Report No. 4262006S17900001 (1(Revised) SSA Marine, Inc. Seattle, Washington RESULTS OF AGREED-UPON PROCEDURES FOR COSTS INCURRED, INVOICED, AND PAID 1. Summary of Findings:

We prepared a summary schedule of the voucher amounts, dates vouchers were submitted, dates SSA received the payments from USAID, payment amounts and the dates SSA paid and recorded the costs. We found that on average, SSA was paid by the government 31 days after submitting its public vouchers on the contract. We found that on average, SSA submitted its expenses on public vouchers 55 days after posting those expenses on its books of account, and posted its expenses 18 days after paying the expenses. 2. Basis of Contractor's Submission:

In its complaint filed on April 22, 2005, SSA asserted that the government did not provide startup working capital, thus forcing SSA to fund startup operations with its own money. 3. Agreed-Upon Procedures:

We obtained accounting data from SSA on expenses, payments, and dates and prepared the following comparison schedule for the vouchers, USAID payments, and SSA's expenses:
Weighted Average Days from Days from Days from SSA Pmt SSA Posting SSA to SSA to SSA Voucher to Posting Voucher Govt Pmt. (Note a) (Note b) (Note c) -157

Voucher No. 001 002 002 002 002 003 004 005 006 007 008 009 010 011 012 013 014 Total $

Voucher Amount 841,271

Date Submitted 6/26/2003

Date Funds Rec'd From USAID 7/23/2003 9/9/2003 12/9/2003 1/6/2004 11/25/2003 12/23/2003 1/13/2004 2/24/2004 3/23/2004 5/21/2004 7/16/2004 9/28/2004 9/28/2004 11/4/2004 5/26/2005

Days to Pmt. 27 28 119 147 29 18 25 27 25 24 15 55 26 38 28 $

Payment Amount 841,271 149,082 564,908 3,861 2,463,410 830,579 875,129 1,056,456 1,582,068 2,499,575 1,157,883 1,039,080 168,410 35,750 1,466 $13,268,928

717,881 2,463,410 830,579 875,129 1,056,456 1,582,068 2,499,575 1,157,883 1,039,080 168,410 35,750 1,466 29,655 $13,298,613

8/12/2003 10/27/2003 12/5/2003 12/19/2003 1/28/2004 2/27/2004 4/27/2004 7/1/2004 8/4/2004 9/2/2004 9/27/2004 4/28/2005 12/16/2005

18

58 79 65 48 58 57 71 78 64 63 69 164 157 55

31

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Report No. 4261-2006S17900001 (Revised)

a. We determined that on average SSA paid its expenses 18 days prior to posting the expenses to it's generally ledger. We computed the weighted average days from SSA paying its expenses to posting expenses on its books of account using detailed data obtained from SSA. SSA provided a listing of expenses by month posted, spread out by months in which the expenses were paid by SSA. Our detailed calculations are available on request. However, we did note that the weighted average days by month between payment of expenses and posting of expenses varied from -52 (meaning that on average, SSA posted the expenses in the month 52 days prior to payment) to 126 days during the months of March 2003 through August 2005. b. We computed the weighted average days from SSA posting expenses to SSA submitting the expenses on a public voucher using detailed data obtained from SSA. SSA provided a listing of expenses by voucher, spread out by months in which the expenses were posted to SSA's books of account. The negative days for voucher 1 are caused by a large posting in July, 2004, relating to reclassifying certain June, 2003 expenses as a result of a previous DCAA audit. If the effect of this large posting were left out of the calculation, the weighted average days for Voucher 1 would be 36, and the total would be 66. Our detailed calculations are available on request. The following is an example of the calculation for Voucher No. 3: Posted to ledger Month Amount Submitted on Voucher 3 Weight Date Days (Amount x Days) 209 179 148 118 87 56 79 $ 3,079,197 2,598,364 2,545,304 22,030,128 85,212,237 49,017,248 $164,482,478

4/2003 $ 14,733 10/27/2003 5/2003 14,516 10/27/2003 6/2003 17,198 10/27/2003 7/2003 186,696 10/27/2003 8/2003 979,451 10/27/2003 9/2003 875,308 10/27/2003 Total $2,087,902 Weighted average days (total Weight / total Amount)

c. We computed the weighted average days from SSA submitting vouchers to the Government paying the vouchers by multiplying the voucher payment amounts by the number of days to pay each voucher, and dividing the total by the total of the payment amounts.

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Report No. 4261-2006S17900001 (Revised) CONTRACTOR ORGANIZATION AND SYSTEMS 1. Organization

SSA Marine, Inc. (SSA), formerly known as Stevedoring Services of America, is a privately owned and operated company, headquartered in Seattle, Washington. SSA was formed in 1949 as the Bellingham Stevedoring Company, which was the beginning of cargo handling operations for what would become SSA. Sales for the fiscal years ended January 31, 2003, January 30, 2004, and January 28, 2005, were approximately $697 million, $796 million, and $861 million, respectively. The percentages of these sales from government contracts were approximately 2.23 percent, 4.16 percent, and 2.23 percent for each respective year. SSA is the largest privately held container terminal operator and cargo handling company in the world, operating in 150 locations worldwide. It provides a full spectrum of transportation services, including marine terminal and rail operations, equipment procurement, professional management, personnel training, trucking and warehousing, information system management, feasibility studies, and marketing support. SSA currently employs more than 10,000 employees. 2. Accounting System USAID has previously

We have not formally examined SSA's accounting system. reviewed SSA's accounting system.

The following schedule describes the indirect cost pools and related allocation bases that SSA intends to use for allocating overhead costs and G&A to the USAID Contract. Indirect Cost Pool G&A Overhead* * Allocation Base Total costs excluding salaries and wages of Longshoremen and related fringe benefits Direct labor dollars plus fringe benefits

Under the provisions of the USAID contract, the G&A and overhead rates are limited to 10 percent.

However, as determined under DCAA audit, Audit Report No. 04261-2004S17900007, dated December 21, 2004, SSA's normal business practice is to record all indirect labor and indirect expenses to its G&A expense account series (series 6000). Therefore, SSA only has one indirect allocation pool in which to allocate all indirect expenses (G&A).

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Report No. 4261-2006S17900001 (Revised) DCAA PERSONNEL Telephone No. Primary contacts regarding this agreed-upon procedures report: Robert L. Skaggs, Auditor Sterling S. Munro, Technical Specialist Keith B. Mullen, Supervisory Auditor Other contact regarding this agreed-upon procedures report: Debora A. Yee, Branch Manager (206) 439-4825 (206) 439-4862 (206) 439-4856

(206) 439-4800

Seattle Branch Office

FAX No. (206) 439-4870

Seattle Branch Office

E-mail Address [email protected]

General information on audit matters is available at http://www.dcaa.mil/.

RELEVANT DATES Request for Agreed-Upon Procedures Engagement ­ Dated November 15, 2005; Received November 16, 2005 Initial Confirmation of Agreed-Upon Procedures to be Performed ­ Dated December 1, 2005; Received December 8, 2005 Final Confirmation of Agreed-Upon Procedures to be Performed ­ Dated and Received December 15, 2005

REPORT AUTHORIZED BY:

/Signed/ DEBORA A. YEE Branch Manager DCAA, Seattle Branch Office

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Report No. 4261-2006S17900001 (Revised) REPORT DISTRIBUTION AND RESTRICTIONS DISTRIBUTION Branch Chief (Mr. Harry K. Pimpong) U.S. Agency for International Development Office of Acquisition and Assistance Contract Audit Management Branch Cost, Audit and Support Division M/OAA/CAS. Room 7.08-051 1300 Pennsylvania Avenue, NW Washington, DC 20523 Task No. IG-0-06-004 U.S. Agency for International Development Office of Inspector General ATTN: Mr. Andrew Katsaros Director, Financial Audits Division OIG/A/FA, Room 8.10-001 1300 Pennsylvania Avenue, NW Washington, DC 20523 U.S. Department of Justice ATTN: Mr. Thomas Dinackus 950 Pennsylvania Avenue Washington, DC 20530-0001 Defense Contract Audit Agency ATTN: OAL ­ Sr. Non-DOD FLA 8725 John J. Kingman Road, Suite 2135 Fort Belvoir, VA 22060-6219 RESTRICTIONS 1. Information contained in this report may be proprietary. It is not practical to identify during the conduct of the evaluation those elements of the data which are proprietary. Make proprietary determinations in the event of an external request for access. Consider the restrictions of 18 U.S.C. 1905 before releasing this information to the public. 2. Under the provisions of Title 32, Code of Federal Regulations, Part 290.7(b), DCAA will refer any Freedom of Information Act requests for reports received to the cognizant contracting agency for determination as to releasability and a direct response to the requestor. 3. The Defense Contract Audit Agency does not object to release of this report, at the discretion of the contracting agency, to authorized representatives of SSA Marine, Inc. 4. This report was prepared using procedures agreed-upon by the identified requestor. The reported findings do not include an audit opinion. The information contained in this report is intended solely for the use of the identified recipients, and should not be used by them or by others for any purpose other than that for which the procedures were established. 26 E-mail Address [email protected]

[email protected]

[email protected]

[email protected]

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