KBR Inc. has been downgraded to Neutral at Broadpoint AmTech Research . Broadpoint AmTech Research downgrades KBR to Neutral from Buy until they get closer to more visible catalysts. More visible catalysts? I think that’s “broker speak” for contract awards? The firm says the award opportunities they anticipated when they upgraded the stock in May have been determined and award tracker suggests sluggish awards prospects for KBR until mid-2010. Would that mean the potential for future contracts is slim? They believe KBR shares provide attractive valuation for investors looking 6 months + out, but absent any near-term award catalysts, they prefer other Buy rates names.
KBR saw little change in price throughout September and most of October. Then on October 22nd KBR started consistently trending down. This was just a week before KBR’s announced it’s 3Q profits were down %14.
Since October 22, KBR has lost almost 25% of it’s value. That means all those Board Members and executives that we can’t seem to indict are now worth that much less. For the other shareholders who have lost money…. I’m sorry that’s what happens when you sleep with the devil!
Yesterday an announcement was made that a criminal indictment had been filed against PWC aka Agility Logistics for, among other things, over charging for food for our soldiers. The US Government is seeking to recover $3-9 Billion. I have to ask…..just how involved is KBR in that? They managed the dining facilities that prepared the food. They ordered the food!!
I’ll bet KBR can feel those gators nipping at their asses about now….and rightfully so!
Ms Sparky
LOL, sparky you are working hard to link KBR to this one
They may manage the dining facility but the cotr have over sight. No they don’t own Agility or PWC.
Ms Sparky’s Response:
Call it woman’s intuition or “Sparky Sense” I’m telling you KBR is involved somehow!
The contract with Agility is directly with the US Government. The Government oversees Agility, manages the contract, and sets the DFAC menu. KBR is required to order enough food to meet the demand. Looking at the charges, Agility is accused of not passing discounts to the Government (I believe Agility gets reimbursed at cost for the food), and submitting false supporting documentation to the Government (i.e. false competition and false pricing information). The only thing KBR has to do with this, is Agility is run by former KBR managers.
good article as usual!
The Agility (PWC) story has some interesting twists to it. In the beginning of LOGCAP in Afghanistan, Iraq and other places KBR provided total dining facility services, including food. In late 2003 the Army was instructed to ammend KBR’s contract to change food to a Government provided material under the Prime Vendor Subsistence contract with PWC. This was done, though it took PWC a while to set up their distribution in Iraq.
At the time I thought this was just a “rice bowl” fight between two DoD agencies, but now I wonder. This was quite a large order for PWC, who may have had some ability to influence the decision.
PWC was awarded the Prime Vendor contract out of Defense Personnel Support Center Philadelphia, which is a part of Defense Logistics Agency (DLA). The have subsequently received a competitive follow-on award. PWC’s managing director, Tarek Sultan, is a member of the Sultan al-Essa family. Another member of the family is chairman and managing director of the board of the National Real Estate Company of Kuwait, PWC’s largest stockholder. PWC has a broad shareholding base that includes prominent private and public sector investors such as the National Real Estate Company (owners of the Free Trade Zone Concession) and the Public Institute for Social Security (PIFSS). Part of the possible fraud involves subcontracts with various of these interlocking business interests.
With some scandals brewing PWC has changed its name to Agility. In July 2008 they announced two management changes:
1. Agility named Dan Mongeon as CEO of its Defense & Government Services (DGS) business group. Mongeon, a retired U.S. Army major general, has been president of Agility DGS since June 2006. Mongeon joined Agility, formerly PWC Logistics, in 2006 after 34 years in the Army. He is former director of operations at the Defense Logistics Agency in Fort Belvoir, Va. He also served as deputy chief of staff for logistics, U.S. Armed Forces Command at Fort McPherson, Ga., and was commander of the Defense Personnel Support Center in Philadelphia. Hmmmm.
2. Agility announced that retired Army Lt. Gen. Paul Cerjan joined the company as President of its Defense & Government Services business group responsible for Europe, Middle East and Africa. Before joining Agility DGS, Cerjan held senior management positions at L-3 Government Services, KBR, Loral and Lockheed Martin. Cerjan was also President of Regent University which supplied a host of young Christian conservatives to the Bush Administration, remember Monica Goodling. This is a guy who had easy entry to some high levels of the Bush administration.
Cerjan was at KBR as manager of LOGCAP for about a year. That was the year I was forced out and the Army started channeling money to KBR. Cerjan strikes me as a real fixer, not a manager.
Agility is not particularly a KBR problem. It is another issue of money which should have provided additional support for the troops siphoned off to unearned revenue for private firms.
Sorry for the long post, but this is critical stuff.
Here’s a related CNN article about this PWC indictment.
http://www.cnn.com/2009/CRIME/11/16/soldier.food.charges/