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Largest Iraq Contract with KBR, Formerly a Division of Haliburton, Rife with Errors

A hat tip to Juan Cole for this story in yesterday's 'USA Today'.

Government auditors discovered something odd last year when they reviewed KBR Inc.'s annual cost estimate to provide support services for U.S. troops in Iraq. The contractor proposed charging $110 million for housing, food, water, laundry and other services on bases that had been shut down.

KBR got a contract extension for $3.7 billion, but it agreed (reluctantly, no doubt) to drop the proposed $110 million spending on closed bases and an additional $50 million of duplicate charges and math errors, according to Defense Department records obtained by USA TODAY under the Freedom of Information Act.

Linda Theis of the Army Sustainment Command, the agency that oversees KBR's troop-support contract, downplayed the errors. They amount to just 4.3% of the contract amount. This percentage does not indicate a systemic weakness in business systems, she said.

The errors occurred because KBR developed the proposal under a tight schedule, said company spokeswoman Heather Browne.The (Pentagon) contract-review process, Browne said, worked as intended.

Isn't that lovely. KBR were caught out, blatantly overcharging 110 milion dollars, out of thin air, for non-existing services on bases that no longer existed, (isn't that fraud, even if it's a no-bid contract?) And with no repentence, KBR praise the review process, for catching them, red-handed if not red-faced.

As an ex-CEO of Haliburton, KBR's former parent corporation, Dick Cheney would be proud of the way KBR manged to brazen such open cupidity, at taxpayers' expense, when caught by an oversight committee. Their company spokeswoman, Heather Browne could probably get a job in the White House tomorrow.


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Comments (16)

Steve
Billing disputes on large federal contracts are not unusual; in fact, they are the rule rather than the exception.
You impute such brazen motives to Kellogg Brown and Root and to VP Cheney. Prove that he is involved in their billing on Federal contracts. If you can, consider youself famous by any standard as a whistle blower.

While you're at the library, examine the billing disputes that occur as we speak, TODAY,EVERYDAY ,between the US Federal Government and...oh, say, Dames and Moore, Fluor, Bechtel, GD (that General Dynamics for the newbies), Lockheed, Boeing...want some more examples?

I love it how you libs think KBR and Cheney are the Root (pun intended) of all greed. Just out of curiousity, do any of you work in business? Have an accounting background? Have some experience in federal procurement? Have any experience in business?

superdestroyer:

It would be nice that if you are going to post about government contracts that you know something about it. The $110 million is just not handed to them. All of the payments are based upon bills submitted and then a contracting officer's representative is suppose to review the work and sign off on the payment.

If the bases did not exist then no work would be performed and no COR would have signed off on the work.

Lee Ward:

Because the government never makes mistakes, right superdestroyer -- and nothing gets past those sharp-eyed folks -- except this cost estimate, and who knows how many more contracts and billings like it.

VERY convincing argument.

kim:

"Could probably get a job"; do you have any idea how weak this sounds?
======================================

superdestroyer:

I love how the left compartamentalizes the government. You seem to believe that the civil servants and procedures at the DoD are different from any other part of the government.

If the civil servants who work at contracting officers are going to screw up on KBR contracts, then how can you argue forcefully for single payer healthcare. It would be the same civil servants managing the same type of contracts except it would be a factor of 100 larger.

Either you believe the government can do things or that it cannot. Or maybe you fall into the trap that if the right person is in charge, then all of the civil servants will work much harder and really do their jobs?

kim:

The Magic Word was Halliburton. That superdestroys logic on the left. It is BDS, plain and simple.

Did you guys know George Soros just sank some significant portion of his fortune into Halliburton?
===================

Steve Crickmore:

Others on our team have had more experience in business, but the fundamental premise is you take an invoice which you have paid, or a strictly itemised cost estimate and pass it on to the Pentagon, in this case The Defense Contract Audit Agency (DCAA) for approval...Kellog, Brown and Root a billion dollar company have their own highly-paid auditors as well, which still allowed math errors and duplicate billing. But I'm sure when KBR or are paying for sub-contracting services in which there wasn't any work done, their auditors would find that out very quickly.

Lee Ward:

Superdestroyer is playing with smoke and mirrors, - the contractor abuses in Iraq are widely known.

superdestroyer:

Lee, If you can provide a reference that I am wrong on how government job order contracts work, then please provide it. If not, then you should stop implying something while stringing together a list of half truths. The contract may say that KBR will support an FOB or LSA but if the the base has been closed, then there is no work order.

Actually, one of the big problems is the constantly changing COR and high turn over in government personnel. This creates a do not care attitude among the civil servant and thus much waste. If you have ever been to the DMV, the Post Office, the SS office, you should recognize the attitude.

Lee Ward:

SuperDestroyer - if you can provide a reference disproving the source I cited, a source which provided extensive testimony to the House Appropriations on contractor fraud and abuse, please do so.

If not, you should stop throwing up strawman arguments in front of this latest report, which cites an over estimate by KBR on the order of $160 million.

How many millions in errors has not been caught?

I understand what you're saying about the contract requiring work orders and proof of work performed before payment is made, but when the Army Sustainment Command Group misses the fact that the cost estimate from KBR included estimated charges for bases which were closed, I don't have a lot of faith in the Army's ability to not make a similar mistake with regard to payments.

If such payment mistakes didn't occur, then the Army wouldn't need the post-contract audits that caught the mistake cited in this post, now would it?

"SuperDestroyer - if you can provide a reference disproving the source I cited, a source which provided extensive testimony to the House Appropriations on contractor fraud and abuse, please do so"

No, no, bullshit on that Lee.

I have no idea if KBR or other contractors are looting the government. If you do have eveidence, bring it and own it! If you want to trade in rumors then continue to do so.

A warning, I have been involved in bussines my entire career. If you are going to accuse major corporations of fraud, do it first person and take ownership of your charge. If you lack the courage to do that, go the whistleblower route and privately contact a local US Atty or a sympathetic congressman. Absent that, just shut up.

Lee Ward:

You're obviously a sloppy drunk, Hugh. You get more abusive as the evening wears on.

I haven't accused anyone of anything, so grab another beer and drink yourself to sleep.

Lee

....hold on a minute (hic!), I dropped the six pack...sheesh, now I'll have to wait....oh, ok,

"Because the government never makes mistakes, right superdestroyer -- and nothing gets past those sharp-eyed folks -- except this cost estimate, and who knows how many more contracts and billings like it."

That qualifies as an accusation (hic!).....

"Superdestroyer is playing with smoke and mirrors.."

That qualifies (hic!) as same.....

"Because the government never makes mistakes, right superdestroyer -- and nothing gets past those sharp-eyed folks -- except this cost estimate, and who knows how many more contracts and billings like it."

The sarcasm in this accusation just drips, like my six pack on the floor....the horror.

As Kim mentioned above Lee, the majic word is Halliburton. And just as Pavlov demonstrated, say the word and observe the foaming....at the mouth, not my beer.

If I sound more "abusive" then take a step back and take a deep breath. Just as in your Spelling Incident", wherein YOU made the initial accusation and were subsequently exposed, I think I hit a nerve again. You really don't know anything about federal contracts and billing, do you? You just parrott what you read elswhere, right? I have personally supervised billing over $200mm in Federal Contract revenues. It is a byzantine process that is almost impossible to get right the first time..on each invoice.
Read my 9:56 post (hic!) and disabuse yourself of the notion that you are the only sober person here (hic!)

Lee Ward:

Ahh, the "Spelling Incident", where i manipulated you into spell checking every single one of my posts? That incident?

I am so ashamed...

"Ahh, the "Spelling Incident", where i manipulated you into spell checking every single one of my posts? That incident?"

No Lee, you chastised me for spell checking your COMMENTS , which you very anxiously differentiated from your POSTS. So I spell checked several days of your POSTS. Have you deleted that comment or should I go back and find it? But let's not forget the provenance of this insult....your original remark that Republicans could not spell. That started it all potato(e) head. I warned you about throwing stones while residing in a glass house.

And Lee, calling you a fool is an opportunity (albeit one that .....what was the phrase in Top Gun... is a target rich environment here at Blue?) and isn't the result of any manipulation. Stop dreaming....or drinking. You simply invite scrutiny with your inanane and senseless comments, and recoil from such scrutiny when it hits home.

Feel the shame Lee. Embrace it. And when you're done, get over to Wizbang and answer some questions.

Lee Ward:

"our original remark that Republicans could not spell."

I resent this mischaracterization. I suggested that YOUR Republican friends would need help spelling their street addresses because some of those street names have 3 or more syllables. Idiots seem travel in packs, and congregate in central locations.

"get over to Wizbang" - See, just like I said.


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Publisher: Kevin Aylward

Editors: Lee Ward, Larkin, Paul S Hooson, and Steve Crickmore

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