WASHINGTON: A Kuwaiti firm with 8.5 billion dollars in contracts to supply food to US troops in the Middle East has been indicted on charges of defrauding the Pentagon, US authorities said.

A grand jury indicted Public Warehousing Company on multiple counts related to overcharging the US Department of Defense for food supplies to troops in Iraq, Kuwait and Jordan, the Federal Bureau of Investigation said.

"This indictment is the result of a multi-year probe into abuses in vendor contracts in the Middle East involving the illegal inflation of prices in contracts to feed our troops," said Gentry Shelnutt, the acting US Attorney working on the case.

Public Warehousing Company (PWC) won three major contracts to supply food for US troops between May 2003 and July 2005, worth a total of 8.5 billion dollars, the FBI said.

PWC now faces six counts including fraud, making false statements, making false claims and wire fraud.

It is accused of submitting false pricing information and statements to the US government and claiming for expenses without taking into account rebates and discounts the firm had received.

It is also accused of ordering suppliers to shrink parcel sizes in order to double the number of packages delivered under Pentagon contracts.

The case is just the latest in a series of multi-million dollar fraud accusations leveled at US government contractors in Iraq, including allegations that Halliburton subsidiary KBR overcharged for oil and other supplies.

US officials warned that actions against PWC were "only the first step," in tackling dishonest government contractors.

In a statement posted on the website of Agility -- PWC's current trading name -- the firm said it was "confident that once these allegations are examined in court, they will be found to be without merit."

It described the case as "a contract dispute" and said that the "prices it charges have been negotiated with, agreed to, and continually approved by the US government.

"The company has long cooperated with government reviews, inspections, audits and inquiries necessary to ensure taxpayer dollars are being spent appropriately," it added.

Agility boasts 6.8 billion dollars annual revenue, according to the firm's own figures, with 37,000 employees operating in 120 countries.

The firm just last week announced it had won a contract from the US government's Agency for International Development (USAID) to store food destined for Djibouti. A deal is potentially worth 50 million dollars.

PWC now faces an arraignment hearing November 20 and fines worth double its cash gains from the deal, or double the loss incurred by the US government.