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;
of course the army brass caters to contractors. when they retire they don’t want to have to get a real job.
the military to contractor relationship is just as incestuous as the fed/treasury to wall street hook-up.
hooray for free markets. if you can find one.
911 opened the floodgates for no-bid contracting. The move toward contracting out government functions, even to the point of reinterpreting the definition of “core function” of the government, work that was not in the government’s interest to contract out, really took off with Dubya and the small government philosophy. I was working for the government (DOD) and got to observe it from inside the beast. It was always a way to hide the size of the government and pay off political friends.
GSA determined that contracting out even under the bidding system wasn’t more economical in aggregate than doing it in-house. Surprise, the major saving was in employee wages and benefits but added layers of management and profit ate that up. That knowledge did not impede the decision to contract out everything it was humanly possible to contract out.
This kind of overcharging is the purpose of war, no matter how much flag-waving there may be.
https://en.wikipedia.org/wiki/War_Is_a_Racket
Excellent Raff…… One would think that they got away with as much because the CIC was in bed with the rest…..
Darren,
Thanks. That is the amazing part of the contracting business these days. The military gave up many of its jobs under the guise of saving money and for more efficiencies and it got taken to the cleaners. Follow the money.
Good article Larry. It amazes me how a government so far in debt can partake in such reckless abandon of billion dollar expenses.
I have to agree too there is often little contractors can do where the military can’t given KBR’s contract. We seemed to have made it through WWII without them.
Now that the Supine Court has declared corporations “persons,” it seems only fair to conscript them into military service and pay them poverty-level wages while subjecting them to the very real possibility of death and maiming. As “persons,” we can expect our corporate camp followers and dogs-of-war mercenaries to submit passively to every indignity and injury imaginable — out of a deep and abiding “patriotism.” Then, we can all sincerely thank them for their selfless service. War-profiteers, we incarcerate or hang, like in the good old days.
To Nick Spinelli
KBR =’s Kellogg, Brown and Root — they are a spin-off from Halliburton
To Steve Fleischer,
Today Hackworth, who I admire immensely, would have to add the term “perfumed princesses” as well ….
If you gave money to an R or a D for national office, you probably helped this situation out. We need to change and change will not come about because some R or D says he is all about Hope and Change. He is a D and takes money and doles it out to his buddies just like the Rs do. This may have begun with an R helping out but I’m sure you can find plenty of links to Ds that mixed up in the money game as well. True change will only come about when we elect a new party. And when that new party is caught in the money game, throw them out.
Dredd 1, July 14, 2013 at 4:19 pm
Whatever their flaws, we owe our military (WW2 is the prime example).
The U.S. military is the very best of a bad breed. Just ask any German who was alive in 1945 about the difference between the U.S. Army and the Russian army (or for that matter the French and British armies).
The U.S. military has a lot of room for improvement (especially in a time of less than crisis), but (especially at the lower and middle ranks), our military is admirable.
My problem lies with the general officers – the ones that David Hackworth described as the “perfumed princes”.
Steve Fleischer 1, July 14, 2013 at 3:51 pm
… I admire the military …
======================
That, following the other things you said about the military, sounds like the Stockholm Syndrome bug that is rampant in our culture, which allows the wrongs you listed to metastasize (Stockholm Syndrome on Steroids? – 2).
That link points out that the public also admires the military even though their NSA agency violates the constitution and spies on all Americans.
Congress is not admired even though it was made permanent by the U.S. Constitution.
The military on the other hand in the constitution was only to be funded a short time, and there was to be no standing army (like Costa Rica).
The founding fathers did not admire “the military”, they loathed it:
(Quotes, emphasis added). Just sayin …
raff, Never heard of KBR and this is a disturbing record. Thanks.
One of the less discussed attributes is the culture of mendacity that exists in the military.
In spite of the of the “code of honor” that military officers often refer to – and use to silence critics – senior officers lie frequently and publicly.
Former military will scream in outrage, but just look at the officer review process.
An average officer is rated “superlative”; if you write that an officer “performed well, is competent, and met all expectations”, you will kill his career. This grade inflation is used to give senior officers enormous power – by being truthful he/she will destroy a career. To promote a subordinate, a senior officer has to lie.
Two further quick examples.
Remember the institutional lying about the death of Pat Tillman? Gen. McChrystal’s career only suffered years later when he insulted Pres. Obama.
Remember when the turret on the USS Iowa blew up and killed 47 sailors? The navy blamed a young sailor and concocted a story about a homosexual affair gone bad. Later evidence suggests that the Navy libeled the young sailor to cover an operating error.
I admire the military, but we need to aware of the culture of mendacity that exists – Mr. Rafferty’s excellent column is just further evidence of that culture.
The Major General was inadvertently (over)defending KBR over the lives of those electrocuted by KBR’s shoddy workmanship ???
…. say it isn’t so …. !!!
Oh I forgot, that Major General needs a job after retirement and if he went up on Capitol Hill and did not staunchly defend KBR then he would never get in on the GRAVY TRAIN that has become the military-industrial complex, whether it may be KBR, Halliburton, Dyncorp, Northrop etc etc.
Nobody these days heeds Eisenhower’s words … Too busy making the fast buck.
In WW II, the services took care of their own — I have showered in an Army tent in the field on numerous occasions and oh yes, was NOT electrocuted
BTW KBR went to great lengths to try to say that the electrocutions were the responsibility of the local Iraqi electricians that they hired to do the work and thus they were blameless. Did these former Generals who run KBR go and tell that to the families of those electrocuted personally after their deaths?? I think not. ( isn’t the number of electrocutions around 30…???)
Lastly, we have DICK-LESS Cheney — you remember him …. 43rd Shadow President of the USA …. What was his VEEP’s name again?? … Oh yes, George W. Bush. Cheney’s most famous quote, though, still has to be this one …
When asked why he never served in the military his response was:
” I couldn’t be bothered” ….
( except that is to make a profit off of the soldiers backs when I sent them into a war for falsified reasons)
Sleep well Dick-Less Cheney …. You’ve earned every ill-gotten dime.
Private contractors or not the militarily is an expensive evil profession.
Reblogged this on Randy C White.
I can see no reason at all to outsource military duties to private contractors. Nor can I understand protecting these contractors when they screw up.
If KBR installed a shower in my house, and it electrocuted a member of my family due to incompetent installation, I doubt many civil court juries would let them walk on the tort claim. But our military and Department of Defense did just that. Repeatedly.
Whoever thought it would be a good idea to hire either KBR or Blackwater/Xe in the capacities they did, should be keelhauled.
i was in procurement and bidding for decades and few things have gotten my goat more than the insanity of how our government does it’s business. In private business they would all be fired with criminal charges filed against many………..
“Is it possible that the Army officials who have treated KBR with kid gloves have a financial stake in their “kindness” to the contractor?”
Many of them go from Pentagon to Halliburton, KBR, or other war profiteer international corporations, when they retire –if they “perform” well.
They have built their own little Utopia in the U.A.E. which has a direct pipeline to government officials.
They have a shadow Chamber of Commerce:
(MOMCOM: The Private Parts – 5). The location of this activity is USCENTCOM which was headed up by Petreaus when it was in Tampa, Florida.
It has since moved forward Headquarters to the U.A.E. Utopia.