POGO: Double Slam on KBR Today

[maddezmom]

Double Slam on KBR Today
On two separate issues, the New York Times and the Pentagon's top watchdog (pdf) slam KBR for overcharging and poor accounting.

The Times recounts the story of an Army official who was canned after he refused partial payments for $1 billion in questionable costs submitted by the Vice President Cheney-connected company. KBR is the largest contractor in Iraq and is responsible for Army logistics and oil infrastructure reconstruction. The Army would not allow payments to be cut to KBR, which the Army feared would lead to a reduction in services to troops -- essentially a work stoppage and a major reason why privatizing a vast extent of critical logistics support in a war zone is a dangerous and foolhardy idea. The Times reports:

The official, Charles M. Smith, was the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the war. Speaking out for the first time, Mr. Smith said that he was forced from his job in 2004 after informing KBR officials that the Army would impose escalating financial penalties if they failed to improve their chaotic Iraqi operations.

Army auditors had determined that KBR lacked credible data or records for more than $1 billion in spending, so Mr. Smith refused to sign off on the payments to the company. “They had a gigantic amount of costs they couldn’t justify,” he said in an interview. “Ultimately, the money that was going to KBR was money being taken away from the troops, and I wasn’t going to do that.”

But he was suddenly replaced, he said, and his successors — after taking the unusual step of hiring an outside contractor to consider KBR’s claims — approved most of the payments he had tried to block.

more:http://pogoblog.typepad.com/pogo/2008/06/double-slam-on.html

[maddezmom]

1. Bypassing the DCAA - Serco and KBR's Iraq Contracts

Bypassing the DCAA - Serco and KBR's Iraq Contracts
Congressional investigators would be well-advised to turn their sights on this part of Army whistleblower Charles M. Smith's story on how the Army refused to hold KBR accountable and then did an endrun on the Defense Contract Audit Agency (DCAA), which had found significant problems with KBR, by privatizing oversight of KBR:

Soon after Mr. Smith was replaced, the Army hired a contractor, RCI Holding Corporation, to review KBR’s costs. “They came up with estimates, using very weak data from KBR,” Mr. Smith said. “They ignored D.C.A.A.’s auditors,” he said, referring to the Defense Contract Audit Agency.

Lt. Col. Brian Maka, a Pentagon spokesman, disputed that. He said in a statement that the Army auditing agency “does not believe that RCI was used to circumvent” the Army audits.

Paul Heagen, a spokesman for RCI’s parent company, the Serco Group, said his firm had insisted on working with the Army auditors. While KBR did not provide all of the data Mr. Smith had been seeking, Mr. Heagen said his company had used “best practices” and sound methodology to determine KBR’s costs.

more:http://pogoblog.typepad.com/pogo/2008/06/bypassing-the-d.html

[enough]

2. K&R for KBR (nt)