Home » LAWSUITS » Cheryl Harris vs KBR » Army decision to deny millions in bonuses to KBR is “Right call, but only fist step”
 

Army decision to deny millions in bonuses to KBR is “Right call, but only fist step”

American Chronicle – Congressional Desk
February 26, 2010

Former Task Force SAFE Electrical Subject Matter Expert James Childs testifies before the Senate Democratic Policy Committee about the shoddy electrical work performed by KBR. Cheryl Harris, SSG Ryan Maseth's mother, sheds a tear as she listens to why her son was electrocuted and died in his shower in Baghdad on January 2, 2008.

WASHINGTON, D.C. – U.S. Senator Byron Dorgan (D-ND), who chaired Senate hearings on electrocutions of soldiers in Iraq resulting from shoddy contracting work by KBR, said Thursday the Army´s decision to deny million of dollars in bonuses to the firm for its 2008 work in Iraq “is the right call, but it is only a first step.”

Dorgan chaired two Senate Democratic Policy Committee (DPC) hearings in 2008 and 2009 on KBR´s shoddy electrical work in Iraq. The hearings revealed widespread problems with KBR´s electrical work there including countless electrical shocks including one that killed Staff Sgt. Ryan Maseth, and perhaps others, and injured dozens more on their own bases as they showered and engaged in other routine activities.

Following the hearings, Dorgan and Senator Robert Casey (D-PA) wrote the Army asking that it review KBR´s work and the electrocution death of Staff Sgt. Ryan Maseth. They also asked the Army to re-evaluate the millions of dollars in bonuses it has routinely awarded KBR for supposedly excellent work, even when the Army´s own evidence made clear it was highly questionable.

The Army´s investigation of Maseth´s January 2008 death found that KBR´s work exposed soldiers to “unacceptable risk.” A theatre-wide safety review that resulted from the Dorgan-Casey request — Task Force SAFE — also found widespread problems with KBR´s electrical work that exposed soldiers to life threatening risks.

“The decision to deny KBR millions in bonuses for its work in 2008 is welcome news, and is a significant change from the Army´s past practice, but the Army clearly needs go much further,” Dorgan said. “Specifically, it needs to review the $34 million bonus and other bonuses it awarded KBR for shoddy work that may have contributed to other electrocution deaths and other serious electrical shocks.”

Dorgan said the Army´s decision “will send a long overdue message to military contractors that they will be held accountable for their performance. But the Army needs to send that message much more powerfully. Not awarding a bonus for widespread sloppy contracting work that killed soldiers is just the beginning, not the end point, of accountability.”

Dorgan has chaired 21 Senate DPC hearings on waste, fraud and corruption in military contracting in Iraq and Afghanistan since 2003. Evidence at those hearings he said, “has been overwhelming that KBR´s work was shoddy and put the lives of U.S. soldiers at risk. KBR´s electrical workers were often unqualified, poorly trained and poorly supervised. When questions were raised, they simply denied there was a problem and proceeded with the same shoddy business as usual.” (Click HERE for original article)

my image

3 Comments

  1. Comment by Charles M. Smith:

    I have noted an apparent discrepancy in the filings and this story. KBR filings read that they took a $100 million charge to profits in 2008 due to this decision. Yet the decision is for one quarter of 2008 and appears to have cost KBR only $25 million.

    Does anybody know more about this?

    Thanks

    • Comment by FYI:

      It appears that they are projecting possibilities should they not receive any Award Fees for the remaining quarters of 2008/2009.
      —————-
      As a result, we re-evaluated our assumptions used in the estimation process related to the remainder of the open performance periods from May 1, 2008 through December 31, 2009, that were based on our historic experience, and in light of the discretionary actions of the Award Fee Determining Official (“AFDO”) in February 2010, and our inability to obtain assurances to the contrary, we concluded that we can no longer estimate the fees to be awarded. Accordingly, we reversed the remaining balance of the remaining award fees of approximately $112 million. If our next award fee letter has better performance scores and award rates are at levels for which we will recieve an award, our revenues and earnings will increase accordingly. See Note 2 to our consolidated financial statements for further discussion of our award fee accruals. Additionally, we recognized a $19 million charge in the fourth quarter of 2009 as a result of an unfavorable judgment against us in litigation with one of our LogCAP III subcontractors and additional charges totaling $17 million related to the correction of errors primarily associated with legal fees on various U.S. government related matters ongoing for the past several years.

      http://investors.kbr.com/phoenix.zhtml?c=198137&p=irol-sec

  2. Comment by sail:

    Don’t really know anything – however, could it be that they took the $100m charge as a reflection of not just this decission but also for not actually receiving the full 3% AF on the entire value of the work? As I beleive from what I read the award fees that were awarded were not the entire 3%.

Leave a Reply

Your email address will not be published. Required fields are marked *