Windfalls of war: KBR, the government’s concierge
Despite Greenhouse’s allegations, and a series of audit reports criticizing the contingency contract, Army officials continued to deny that there was anything improper with the decision to sole-source the oil contract to KBR.
In the meantime, as LOGCAP grew, the problems became hard to ignore. Pentagon audits and government reports accused KBR of overbilling. At one Wartime Contracting Commission hearing, April Stephenson, then head of the Defense Contract Audit Agency, confirmed that the LOGCAP III contract had generated $553 million in questionable billing and 32fraud referrals for investigation. “I have to say in the history of DCAA I do not think we are aware of a program, a contract or a contractor that has had this number of suspensions or referrals,” she testified .
Some criminal charges have already resulted regarding the LOGCAP contract, including a former employee who pleaded guilty to receiving kickbacks on a subcontract to a Kuwaiti company.
The U.S. government is also now in the middle of a $100 million lawsuit against KBR, alleging breach of contract and false claims related to providing private security under the LOGCAP contract. A federal judge in August rejected the company’s bid to have the suit thrown out.
Facing mounting criticism of the LOGCAP contract, the Army eventually held a new LOGCAP competition, and in 2007 awarded contracts to three companies — KBR, DynCorp, and Fluor Corporation — under what was called LOGCAP IV. Unlike the previous LOGCAP III, the three companies under LOGCAP IV would compete for individual task orders, creating an incentive for lower price and better services, and quelling the major criticism of the previous contract structure.