Respectfully submitted by Lawrence E. Rafferty (rafflaw)-Guest Blogger

It has been discussed for years how expensive the privatization of military support programs can be.  It is also not news that the privatization by the military has dramatically increased since 2001.  What you might consider news is just how much one large military contractor received on its decade long contract and how much more they are demanding in a Federal Claims Court from the Army just to close out the contract!

“Jim McElhatton, in an excellent article in the May 5 Federal Times, highlights the classic case of this phenomenon: the Army’s treatment of KBR on the LOGCAP III contract. This contract, which provided services for troops in Iraq, Afghanistan and other locations from 2001 to 2011, is the Army’s largest service contract ever. KBR was paid over $38 billion for providing this support. Now that the contract is over, KBR is claiming it will cost at least $500 million to perform “close-out” activities under the contract. Knowing KBR’s proclivity to throwing political and legal tantrums for years, the Army has asked KBR for a fixed price to perform these actions. KBR refuses to work under this contract that can control costs and instead, wants an open-ended contract which will cover all of their costs plus a profit. KBR, as described in the Federal Times article, has filed suit in the Federal Court of Claims on this issue.”  Truth-Out

I may be naiive, but to read that KBR was paid over $38 Billion since the contract started in 2001 just blew my socks off.  They are a big Military contractor, but just one of many.  This is the same KBR that was under fire for providing unhealthy drinking water to our troops overseas and they were also implicated in shoddy construction practices that may have led to soldiers being electrocuted in KBR installed showers.

“Over the course of KBR’s performance, soldiers suffered from sickness due to improperly treated water at several bases. Several soldiers died from electrocution suspected to have been caused by KBR’s substandard wiring at bases. The Army had to institute a special program to correct electrical problems at bases in Iraq, Kuwait and Afghanistan. Of course, KBR continued to receive high award fees under the contract.” Truth- Out

As was noted in the Truth-Out op-ed linked above, the Army is at fault for continuing to pay KBR all these years even knowing that these abuses were occurring and knowing that the Defense Contract Audit Agency had raised serious doubts over at least $1 Billion in costs.  The Army actually took pains to make sure that KBR was paid and then protected when the Senate attempted to investigate the claims of bad work and over charges.

“In April of 2007, the Senate Armed Services Committee held a hearing on management of the LOGCAP contract. Sen. Carl Levin (D-Michigan) the chairman, opened the hearing by stating, “There is a history of highly favorable treatment of this contractor throughout the contract …The contractor resisted providing us the information that we needed to monitor and control costs. There were almost $2 billion in overcharges on the contract. The contractor received highly favorable settlements on these overcharges.”

The Army, represented by the assistant secretary of the army for acquisition, logistics and technology and the major general commanding the Army Sustainment Command, inadvertently confirmed this charge of favorable treatment by continually defending KBR during the hearing and providing information to the committee that was misleading or false. They tried to deny overcharging, KBR responsibility for poor water quality and even misstated the amount of money paid KBR for housing. They incredibly stated that KBR earned high award fees for having good business systems, when DCAA auditors found exactly the opposite. The Army was forced to issue corrections to the testimony and DOD IG investigations confirmed the inaccuracies in the testimony.” Truth-Out

I guess I should not be shocked with anything the military industrial complex will do when big Federal dollars are at stake.  What does shock me is that Army officials actually gave, at best, inaccurate testimony in front of a Senate committee, and at worst they lied to those Senators.  All done to protect the Billions being sucked up by KBR.  Is it too much to ask that contractors be paid for their services and products at normal rates of profit?  Is it possible that the Army officials who have treated KBR with kid gloves have a financial stake in their “kindness” to the contractor?  What steps can be taken to prevent these kind of contracting abuses?  Can the military resume many of these privately contracted jobs and save headaches and Billions?

Shouldn’t the Army actually listen to and consider the results of their audit agencies when dealing with any military contractor?  Even the special child named KBR?  As the author of the Truth-Out op-ed suggests, he expects the court to throw the matter back into the Army’s lap for resolution.  If that does occur the Army should actually grow a spine and hold KBR accountable to normal business practices.  If the Army does not put its foot down, KBR will be consuming Hundreds of Million of Dollars more just to “close” our the contract that has already garned over $38 Billion!  Taking a stand here just may put a dent into the sacred Military Industrial Complex.

By the way, does anyone remember which politically connected company that  KBR used to be part of?  If you don’t remember, just ask former Vice President Dick Cheney.  He can just check his W-2 or 1099’s for you and give you the name!

Additional Reference:  KBR;

Commission on War Time Contracting;