A US security firm has challenged the $290m (£158m) Iraq contract awarded to Aegis Defence Services, a British firm run by Lieutenant-Colonel Tim Spicer, who was at the heart of the Sandline "Arms to Africa" scandal.
The placing of the contract with the small company took the security industry, and particularly DynCorp, by surprise three weeks ago.
Aegis beat DynCorp to the contract to provide 75, eight-man, close-protection teams for three years and to co-ordinate intelligence to a range of security contractors. Major Gary Tallman, a spokesman for the US Army, said that part of the contract is to create a co-ordination hub for the security operation for every reconstruction contractor and sub-contractor. "Their job is to disseminate information and provide guidance and co-ordination throughout the four regions of Iraq," he said.
The contract was placed by the US-run project management office of the Coalition Provisional Authority and will be paid for by the US Department of Defence (DoD).
DynCorp's protest is registered on the General Accounting Office website. The site says the dispute will be resolved before 20 September. The basis of the protest is unclear.
A spokesman for DynCorp said: "I can [only] confirm that we protested the contract award." Aegis would not comment.
When the complaint was lodged more than a week ago, the DoD issued a so-called "stay" notice, which put the contract on hold. A spokeswoman for Aegis said that this was lifted on Friday evening. However, the DoD is still investigating DynCorp's complaint.
In the 1990s, Lt-Col Spicer was part of Sandline, a British company contracted to supply the Sierra Leone government in exile of Ahmad Tejan Kabbah with military advisers and 30 tons of weapons. This was considered to be in contravention of a UN arms embargo, though it had been arranged with the apparent help of the Foreign Office.
The then Foreign Secretary, Robin Cook, distanced himself from Sandline's operation.
Lt-Col Spicer and his men were arrested in Papua New Guinea in 1996. The former Scots Guard is a friend of ex-SAS officer Simon Mann, who isin a Zimbabwean jail accused of plotting a coup in Equatorial Guinea.Reuse content