Home » LAWSUITS » Cheryl Harris vs KBR » KBR loses $25M in award fee bonuses for poor performance in Iraq (updated)
 

KBR loses $25M in award fee bonuses for poor performance in Iraq (updated)

They didn’t just lose $25M….they got ZERO! This is a classic example of how one person can make a difference. I do believe KBR underestimated Cheryl Harris’ tenacity. I applaud you Cheryl!

Contractor linked to Iraq death loses $25M in fees

By KIMBERLY HEFLING
Associated Press Writer
Feb 24, 10:42 PM EST

Cheryl Harris with her son Staff Sgt. Ryan Maseth. Ryan, 24, was electrocuted in his shower in Iraq on Jan. 2, 2008. Cheryl has filed a wrongful death lawsuit against KBR. That suit is currently sitting in the 3rd Circuit Court of Appeals awaiting a decision.

WASHINGTON (AP) — Military contractor KBR has lost about $25 million in bonuses from the government because of “failed” worked done in Iraq during the time a Green Beret was electrocuted in a barracks shower it was responsible for maintaining.

The U.S. Army Sustainment Command said in a statement released to The Associated Press Wednesday night that the Houston-based company failed to meet a level deserving of an award fee payment for work it did during the first four months of 2008. Award fees are written into contracts as an incentive for the contractors to do quality work.

The Army statement did not specifically mention the January 2008 death of 24-year-old Staff Sgt. Ryan Maseth of Pittsburgh in the statement but said a task force that has extensively reviewed electrical work in Iraq was consulted in making the decision as was the U.S. Army Criminal Investigation Command, which investigated Maseth’s death, but did not press charges against KBR.

Dan Carlson, a spokesman for the Army Sustainment Command, said in an e-mail that “multiple factors” led to the decision.

Investigators said in August there was “insufficient evidence to prove or disprove” that anyone was criminally culpable in Maseth’s death.

The uproar over Maseth’s death triggered a review of 17 other electrocution deaths in Iraq and widespread inspections of electrical work in Iraq, much of which was performed by KBR. Maseth’s family has a pending lawsuit in federal court against KBR.

Heather Browne, a company spokeswoman, declined to comment.

The company disclosed the loss of the award fees in a filing to the Securities and Exchange Commission. It said it also expects to lose an additional $112 million in award fees from the government for the period of May to December 2008. It said it expects to lose the money based on information from a contracting official who said he “based his decision on information from sources that were different from our past experiences with award fee determinations.” (click HERE for original article)

Below is the Security Exchange Commission (SEC) filing submitted by KBR.

Form 8-K for KBR, INC.
23-Feb-2010
Other Events

ITEM 8.01. Other Events.

On February 19, 2010, KBR, Inc. was notified by the U.S. Army’s LogCAP Program Award Fee Government Determining Official that KBR will not receive any award fees for Task Orders 139 and 151 for the period January 1, 2008 through April 30, 2008. The Determining Official for the Award Fee Board has discretion in the matters considered in determining an award fee, and in the current notice the official indicated that he had based his decision on information from sources that were different from our past experiences with award fee determinations, which have been historically based on monthly performance evaluations prepared by our customers in the field of operations. KBR had accrued award fees for the period January 1, 2008 to April 30, 2008 of approximately $20 million. KBR has additional accrued award fees in the amount of approximately $112 million for the period May 1, 2008 to December 31, 2009. In light of the reasoning used by the Award Fee Government Determining Official in denying KBR any award fees for Task Orders 139 and 151for the period January 1, 2008 through April 30, 2008, we have determined that, as a result of the action by the Determining Official, we can no longer rely on the customer’s monthly evaluations of our performance as a basis to estimate and accrue award fees under U.S. Generally Accepted Accounting Principles as we have in the past. Consequently, as of December 31, 2009 we have written off the full amount of the remaining accrued award fees of $112 million through December 31, 2009. The aggregate of these two write offs will reduce our after tax net income by approximately $80 million, or $0.50 of earnings per share for 2009. In addition, we previously announced that we expected our fiscal year 2010 earnings per diluted share from continuing operations to be in the range of $1.60 to $1.80. With the reduction in the accruals for LogCAP III award fees, we expect the lower end of our guidance for our fiscal year 2010 earnings per diluted share from continuing operations to be reduced by up to $0.10, reflecting the effect of no recovery of award fees for the period May 1, 2008 through December 31, 2009.

Updated 02/26/2010
Below is the email communication sent to KBR employees after the announcement of the ZERO award fee.

From: (Edited)
Sent: Friday, February 26, 2010 8:25 AM
To: DL_KBR LOGCAP III All Hands ME
Subject: 2008 Iraq Award Fee Announcement

TO: LOGCAP III Middle East Employees

FROM: Guy LaBoa, Principal Program Manager, LOGCAP III Middle East

SUBJECT: 2008 Iraq Award Fee Announcement

As most of you know, LOGCAP III is a Department of the Army cost-plus-award-fee contract – meaning KBR is reimbursed for the costs associated with servicing the contract, and can be awarded an “award fee” based on performance. The award fee is determined by an Award Fee Determining Official based on input from an Award Fee Evaluation Board (AFEB). The last AFEB for Iraq was held in June 2008 and covered the period January 2008 through April 2008.  This week, the Award Fee Board Determining Official notified KBR that the award fee for this period was zero. The official said his determination was based on various government agency reports that were critical of KBR’s work during this period.

I want to ensure our employees that the award fee determination does nothing to diminish the great pride that KBR takes in the LOGCAP III project and its employees.  Day in and day out, what you do for our soldiers, sailors, airmen and Marines is phenomenal. The enormity of services we provide the military is unrivaled in history, and you should be proud of what you are doing.  Thank you for what you do each day.

WE DELIVER!

Guy

Guy LaBoa
Principal Program Manager
LOGCAP III ME/CA
FI – ID 43382
APO, AE 09344
Office: (281) 669-5600
DSN: 318-485-3697

I will agree with Mr. LaBoa that KBR has some great people on the ground who are doing as good a job a possible under difficult circumstances. They are just normal people trying to support our troops and their families. The problem is KBR management. Most of the “boots on the ground” working people are not familiar with the contract requirements, may not necessarily know if they are committing fraud or violating the contract in some way. But the managers who are instructing these people should and many do. It is the arrogance of KBR management who are responsible for this ZERO award fee.

Ms Sparky

my image

10 Comments

  1. Comment by Jims Thoughts:

    About time and hopefully they will lose all other awards from 2008 to the end of 2009 because up until I left there, there was little to no real attempt to improve skills or professionalism unless the Task Force Safe team found something, if KBR were doing their jobs the TFS team would not have found so many issues and a quick review of work orders would easily identify the worst culprits and how little was done to improve safety and standards.

  2. Comment by Elizabeth:

    When I reported my refusal to comply with my foreman demanding that I hook up a piece of equipment to an ungrounded 26,000volt generator, it took two weeks before the supervisor investigated. Had not a seniour ranking army electrician been present and verified the safety hazard and backed up my refusal, I likely would have been written up by the foreman’s “good ‘ol boy” friend, the supervisor who got him to the site, for my refusing a direct order, as threatened. Part of the problem in the war zone with safety violations/hazards is that there is nobody effectively safety-oriented to report to, OSHA has no jurisdiction, and if someone speaks up then frequently they are “axed”/retributed against. So many times I heard, “Yes, that is the way it is supposed to be done…But this is how we do things in Iraq”.

  3. Comment by Widowmaker:

    My heart goes out to Cheryl Harris and I am so proud of her for pursuing justice for her son Ryan and all the others who were injured or may be injured by contractors performing substandard work.

    Has KBR denied all 17 electrocutions because I dont think it is that common to get electrocuted in the shower (you don’t hear about it happening in the US where there is oversight and accountability). The problem is these big contractors are overseas and they think they are untouchable.

    I am glad Ms. Harris is reaching out and touching them and if it means taking their money, we all know that is their biggest concern. Hit them where it hurts and that is in the pocketbook!!

    To find out that someone caused your loved one’s death (AND DENIES IT COMPLETELY)increases the pain and suffering by 100%. Nothing will bring back Ryan or the others wrongfully killed by negligent contractors (KBR, Blackwater, DyCorp, etc). I hope the pursuit of Justice through the legal system is sucessful and please know that there are many of us standing behind you.

    May your heart be filled with love as your memories of Ryan fill you with peace.

  4. Comment by Justice4all:

    Anyone watch the president of Toyota yesterday. He took accountability for his companies failures and apologizes to the victims. It doesn’t take away the fact that many people have died but it does somehow allow the families of those who have died to feel that someone cares that their loved one was killed by a faulty vehicle.

    Our American Companies ( KBR, DynCorp, Blackwater, etc.) who have caused injuries such as Ryan’s need to take a lesson from Toyota. Accept responsibility and be accountability for your company!

    Denying wrongdoing DOESN’T make the problem go away, especially when the evidence clearly shows fault on behalf of the company. The one thing that everyone I have talked to that has lost a loved one while working for KBR, DynCorp, and Blackwater have been treated like they (the families) are the wrong-doers for suing these companies. The families want ACCOUNTABILITY but what they get is DENIAL of any mistakes/errors/negligence.

    KARMA – what comes around goes around and the wrongdoing of many of these large companies is coming around and biting them in the ass!!!

    Justice4all

  5. Comment by original1:

    This is great news! Speaking on behalf of some of the DCMA and original TF Safe members who worked many long hours on the CAR this is long overdue. Remember this CAR left Iraq as a Level 4 and was downgraded to Level 3. This was the correct decision IMO. By leaving Iraq as a Level 4 it showed the severity of the problems with KBR. It had to be downgraded because the result of a Level 4 is immediate termination. This was not a possibility. The correct answer was to show the severity of the problems and force KBR to give a Corrective Action Plan (CAP). This was accomplished however I am not convinced KBR is now being held to this CAP.
    I can tell you that many long hours were spent by this team scouring KBR’s own records of work orders requests, CHIMPS, and other reports in their own STEAM system. This is where many of the reports showing their unsafe and incompetent work were generated. From their own reports!
    Many hours were spent with CID going over these documents showing CID the incompetence of KBR. Many of the people responsible for awarding these bonuses were not aware of these reports and deficiencies. I am relieved this injustice is being reversed.
    One item that needs clarification is the number of electrocutions that were directly KBR responsibility. Half of the electrocutions are from contact with overhead wires etc while on patrol. Of course KBR is not responsible for these unfortunate deaths. The other electrocutions were investigated several times and IMO only SSG Maseth’s unfortunate death is directly related to KBR. However again IMO and many others opinion KBR is absolutely, positively responsible for SSG Maseth’s death. Notice in the report from the investigators they say no one is “criminally” responsible. They do not say KBR’s lack of competent workers and supervisory were not responsible. Just that there was no criminal evidence.

    Cheryl Harris is my hero.

  6. Comment by lumpy:

    Is it possible for the Army CID to search through the service tickets from KBR about these tragic electrocutions and personally go after the electrical foreman/supervisor who signed off on the completed job?
    I think atleast the “electrician” and (I use that term very loosely) should also be accountable for thier work.
    I know with my license that I am personally responsible for the work being done under my watch as a master. I think the very least the CID could do would have the local jurisdiction that thier license (if any) was granted, that it is revoked.
    I am also happy to see that KBR is losing these bonuses and they never, never should have gotten any from the beginning.

    • Comment by Ms Sparky:

      I agree. I always felt bound by my license whether it was applicable in Iraq or not. I took personal accountability for my work. But I have to say, I didn’t care much for the person who ordered the material and consistently used the “or equal” for substitutions. They didn’t have a clue. Material was the cheap knock off garbage!

  7. Comment by for-what-it's-worth:

    Since so many things have changed in Iraq – regarding accountability to the Iraqi Gov’t. and their laws – now – wouldn’t the responsible parties be held to the Iraqi legal system for crimes committed in their country ( innocent until proven guilty). At the least, I would think KBR should as a corporation fall under the same guidelines when a single person commits a serious crime like – murder, in their country. What do you folks think?

  8. Comment by Ms Sparky:

    I just updated this post with an email from the LOGCAP III Program Manager Guy LaBoa about the ZERO Award Fee. See above.

  9. Ping from Blackwater or Xe….: A Skunk By Any Other Name Smells Just As Stinky « Streams of consciousness:

    […] claims act violations over improper costs for private security in Iraq.” 02/24/10 MS Sparky KBR loses $25M in award fee bonuses for poor performance in Iraq (updated) “They didn’t just lose $25M….they got ZERO! This is a classic example of how one person […]

Leave a Reply

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