By RICHARD LARDNER (AP) – 54 minutes ago
WASHINGTON — Pentagon auditors are warning the Army’s primary support contractor in Iraq, responsible for everything from mail and laundry to housing and meals, to cut its work force there or face nearly $200 million in penalties for keeping thousands too many on the payroll.
According to an internal Defense Department audit, Houston-based KBR Inc. has increased employee levels while U.S. troops steadily leave the country after more than six years of war. As a result, the U.S. government is paying far more in labor costs in Iraq than it should as military resources are shifted to Afghanistan.
“Each day that passes without taking action results in continued overstaffing and inefficiency,” the report from the Defense Contract Audit Agency says.
The Oct. 26 audit, obtained by The Associated Press, opens a window into a behind-the-scenes battle over KBR’s billing and management practices. The company provides crucial battlefield services under a $33.8 billion, 10-year deal signed in 2001.
There have been serious disagreements between KBR and defense auditors, who have challenged billions of dollars in charges as questionable. And KBR’s critics, many of them Democrats on Capitol Hill, have accused the company of gouging the government during a time of war instead of being a responsible steward of public money.
The report from the audit agency, the military’s first line against waste and fraud, is sure to reinvigorate KBR’s detractors. The audit also reveals a confrontational approach that a congressional oversight committee has said the agency uses too sparingly when dealing with contractors.
Last week, director April Stephenson was forced out of her job following unflattering reviews of the agency’s performance. Stephenson, whose last day as director is this coming Friday, is scheduled to appear Monday at a hearing held by the independent Commission on Wartime Contracting on the management of contractors in Iraq and Afghanistan.
KBR officials reviewed the audit before it was finalized and their responses are included in the 26-page report. They disagree with many conclusions, saying the company has planned to cut employee levels in Iraq. But these efforts have been slowed while KBR waited for formal guidance from the military on the drawdown, they said.
In an e-mailed statement, KBR spokeswoman Heather Browne said the company is reviewing the final audit and is closely engaged in the military’s drawdown planning. She said the company’s work in Iraq “is being conducted in the ever-changing environment of a war-zone which brings its own daily challenges and priority tasks.”
But KBR’s planning consists of a series of “disjointed processes” and weak accounting procedures when a detailed, forward-looking strategy is needed for dealing with a drawdown that was announced nearly a year ago, the report says. A small company might be excused for such a shortcoming, it says, but KBR should not be.
“A large corporation with nearly 17,000 direct hire employees in Iraq can not effectively communicate a consistent strategy at all levels of management without a formal written plan,” the audit states.
KBR had 17,034 employees in Iraq in January 2008, when there were about 160,000 American forces there to quell a growing insurgency, the audit says. Yet as of this Sept. 1, there were 17,095 KBR employees in Iraq even though troop levels had dropped to about 130,000, bases had closed and the services KBR provides were being scaled back.
Current plans call for the number of U.S. troops in Iraq to fall to 50,000 by August 2010. All American forces are scheduled to be out of the country by December 2011.
Although KBR already should have made significant reductions, the report proposes giving KBR until Jan. 1 to put in place a plan that would trim 2,857 employees identified in the audit as excess. Each full-time KBR employee earns about $8,425 a month in pay and benefits, the audit says, so the employee cuts will produce nearly $193 million in labor costs between the first of January and the end of August, the audit says.
The auditors say if KBR does not make the recommended changes or take even more aggressive steps, the agency will challenge future costs for the excess staff as being “unreasonable,” which means the company may not be paid by the government.
The final call, however, on whether to implement the audit’s recommendation and withhold any payments rests with the contract managers at Army Sustainment Command in Rock Island, Ill.
The command said Friday it has not completed its analysis of the audit. Lee Thompson, a senior command official, is scheduled to testify at the contracting hearing Monday.
Michael Thibault, co-chairman of the commission, said contractors have an obligation to reduce costs without being told to do so by the government.
“I would hope that the Army is going to be all over this,” he said. (click HERE for original article)
I wonder if KBR will chose to lay off Americans first or Foreign Nationals, such as Bosnians and others from the Balkans first. It will be interesting to see.
You can bet that it won’t be the FN’s…If I know KBR it will be the highest paid non-management that go first.
Ms Sparky’s Response:
I don’t know!! I will have to ask exactly how they charge out on wages. Has that changed from cost plus a %? If not…it would not make $$ sense for KBR to lay off the higher paid employee. It would make more sense to lay off the Labor Foreman etc at the lower wages.
Anyone else want to chime in on this?
Wartime Contracting hearing to probe three accountability issues in Iraq and Afghanistan
ARLINGTON, VA, Oct. 27, 2009 – A Nov. 2 hearing of the Commission on Wartime Contracting will examine three issues bearing on contractor accountability: the lack of an accurate count of contractor employees, the adequacy of contract oversight during the drawdown of U.S. in Iraq, and coordination of two key Defense Department agencies that manage and audit contracts. The hearing “Counting Contractors: Where Are They and What Are They Doing?” will start at 9:30 a.m. on Monday, Nov. 2, in Room 216 of the Hart Senate Office Building in Washington, DC.
1. COUNTING THE CONTRACTORS
2. MANAGING THE IRAQ DRAWDOWN
3. IMPROVING DOD CONTRACT MANAGEMENT/AUDIT COOPERATION
Regarding labor foremen – I can speak only about TTM-Labor Foreman that I personally had the unfortunate driver relationship with. Most of these with the exception of ONE in a two year stint with KBR were not qualified to supervise someone to tie shoes for a living, much less supervise adults. I will mention the ONE by first name only BARRY. He was fair minded, for the driver-not management, he made perfect sense when dealing with a problem – large or small. He did not suck-up or brown nose to upper so-called management. He did his job better than anyone else and all the driver’s will have nothing but a kind word for this man.
Someone please pass this on to Heather Browne
Out of all the labor foremen in Iraq – HE is the only one that I would work with (If I wasn’t injured) in Iraq or anywhere else in the world.
KBR feels that one should rule with an iron fist, not an understanding, caring, individual.
I hope BARRY @ T.Q. – B6 – if he chooses – is the last labor foreman to leave Iraq – and he should write a book after it’s all over – over there
Just because one is in a war-zone – one doesn’t have to stop caring or being friendly, or close minded. If you don’t have character, a kind heart, a sense of honor, being truthful, honest, caring of other’s – before you go into a war-zone – - – you will not find these traits in a war-zone.
It’s cost plus 1%. I would expect them to get rid of the lowest paid first. Unless KBR weighs heavy on the fierce loyalty of the Bosnians they will go first then the labor foreman.
This is where the term, “Mission Essential or “Mission Critical” become defined.
this could be true to some of the rumors floating around transition team is that some of us my go to Irsq.
i agree KBR Guy the lowest first then the ones that have multiple write ups we can all hope they do not bring any bosnians over.
nothing new going on here at Bagram
Does anyone know where I can read the Health and safety requirements for LOGCAP 4? Is it pulic information? Thank you for any info…:)
Ms Sparky’s Response:
It should be listed in the Statement of Work (SOW) for each Task Order (TO). I don’t have any SOW for LOGCAP IV…..yet. If anyone has access to an SOW for a LOGCAP IV TO please forward. Thanks in advance.
mssparky,
How can I forward you the information needed?
To Flour Foreman,
Is KBR still performing design build construction services at Bagram?
KBR acts as a temp agency for the government…
How does a temp agency charge it’s customers?
Think about that… I would think they are charging per individual not by cost of individual. So the cost to the government is the same for everyone, but not for KBR.
They make more profit on FN’s than on expats, if that is how they are truly charging the Gov.
A new arrival in Northern Iraq, guess I got on the gravy train a little late in the game…they are telling us here that we have until about Mar’10 (unless the elections go terribly wrong). Not much confidence in getting an EFT to Afghanistan…dropping my resume for the “other” contractors as I blog here.
Hopefully they are keeping the higher paid ExPats a little longer…My base is higher than most of my comrades…
Ms Sparky’s Response:
Thanks for this info.
If you still have a KBR job count yourself lucky!!! There are tons of folks that worked for KBR and got sent home for nothing and are having hell finding jobs. I find it amazing that they sent home men by the droves, then started hiring like crazy, and now they are under a new investigation as to why they still have so many there. Watch out KBRLand, you could be next on their axe list. You might do something minorly wrong and not realize it, you might ask someone to do their job and they have more high up friends than you, you may be sick and need a day off, etc. KBR will use you up, throw you out, and never look back. If you can find employment elsewhere you better go for it!!! Good luck with the job hunting!!!
Ms Sparky’s Response:
You nailed that right on the head!!