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Pentagon offers little reason to rescue trucking companies

WASHINGTON – The Department of Defense provided few details to a congressional oversight committee on why a struggling trucking company YRC Worldwide was deemed essential to national security, a designation that earned it a $ 700 million stimulus loan.

The loan, which was approved in July by the Treasury Department, has been the subject of a Congressional inquiry into whether the money was properly allocated and why YRC, which ships military supplies, was named as essential to national security. The Congressional Oversight Commission, which was set up to monitor stimulus funds, also examined whether YRC’s ties to the White House were a factor in a loan.

In a letter to members of the commission, the Defense Department provided limited explanation as to why YRC deserved such government assistance.

The letter, which was reviewed by the New York Times, stated that YRC was eligible for the loan because it was the Department of Defense’s largest domestic transportation provider, carrying food, electronics and d ‘other supplies to military bases across the country. The explanation echoed the rationale shared by the Treasury Department when approving the loan in July, but provided no additional reason why the company, which was on a shaky financial footing and had been sued by the government, should receive a bailout when other transportation providers did. available.

YRC lost over $ 100 million in 2019 and was being sued by the Justice Department for defrauding the federal government for a period of seven years. The case is not resolved.

The Defense Department said in the letter that it had access to other shipping companies such as FedEx and UPS. YRC is the fourth largest small freight carrier in the United States.

Asked why the company was deemed essential to national security, Ellen M. Lord, Under Secretary of Defense for Procurement and Sustainment, wrote: “It is important that our troops have the supplies they need to be able to perform their duties and defend the country. “

The Defense Department confirmed that it sent the letter to members of the commission last week. Amber Venzon, the chief clerk of the Congressional Oversight Committee, did not immediately respond to a request for comment.

In a Congressional Oversight Committee report earlier this month, the Treasury Department said that YRC provides 68 percent of the Department of Defense’s small transportation and provides services to the Department of Homeland Security and the US Customs and Border Protection Agency. As to why this made it critical to national security, the Treasury turned over to Defense Secretary Mark Esper, who is responsible for this certification.

A new commission report released on Friday did not include the Pentagon letter but noted that it had been received and expressed frustration with the Pentagon.

“The committee finds the Defense Ministry’s delay inexcusable and its responses incomplete,” the report said. “The committee looks forward to further consideration of this issue in its November report.”

In the letter, Ms Lord said the Defense Department had not contacted other trucking companies to see if they could meet its needs if YRC scaled back or ceased operations and said the agency no had not developed contingency plans in the event of YRC shutting down.

Members of the Commission had expressed concerns that the company could have received a loan because of its ties to the White House. YRC is financially supported by Apollo Global Management, a private equity firm with close ties to Trump administration officials.

Lawmakers on both sides wrote letters to the Treasury Department earlier this year urging the Trump administration to support YRC, which employs 30,000 workers.

The $ 17 billion fund to help businesses deemed essential to national security was created from the $ 2.2 trillion economic relief bill passed by Congress in March. Businesses can apply for the loans to the Treasury Department, which must require the Department of Defense to affirm that they meet national security requirements.

The Pentagon said in the letter that 19 other companies had been certified as essential to national security through the program. YRC is the only company to have received a loan to date.

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