Windfalls of war: KBR, the government’s concierge
In 2010, however, the Army announced that rather than moving to the competitively awarded LOGCAP IV for base services, it would extend the LOGCAP III for work in Iraq. “Theater commanders have raised concerns that a transition from LOGCAP III to LOGCAP IV would strain logistics and transportation assets in Iraq at the same time that a massive withdrawal of U.S. forces, weapons and equipment is under way,” according to an Army release  about the decision.
As of July 2011, just $5.7 billion had been spent on LOGCAP IV, compared to over $37 billion on LOGCAP III.
LOGCAP may have been the largest of the limited competition wartime services contracts, but it was by no means the only one. Another contract that drew criticism was a five-year contract to Supreme Services to deliver food supplies to Afghanistan. That contract, awarded in 2004, was already worth over $5 billion when the Defense Logistics Agency chose to extend it in 2010, without competition, for another two years and an additional $4 billion. A DOD Inspector General investigation released shortly after the extension found numerous lapses of oversight of the contract.
Among other problems, the Inspector General determined the company had overbilled the Army, and identified potential overpayments totaling nearly $100 million for transportation costs to Afghanistan, and another $26 million in overpayments related to shipping perishables. The report also found the Army had paid a staggering $455 million for transporting fresh fruits and vegetables to Afghanistan from the United Arab Emirates without ever determining whether the prices were “fair and reasonable.” The transportation rate, it turns out, had been the same rate negotiated with a prior vendor, a Kuwaiti company which was subsequently indicted by the Department of Justice on criminal charges.
Such contracts, like LOGCAP, which are counted as “competitive” in database figures, likely hide a much worse picture, according to Charles Tiefer , a member of the Wartime Contracting Commission. KBR did win the initial contract competitively, he said, but “for the next 10 years there were task orders without further competition that went to KBR.”
Tiefer said that during commission hearings, it came out that contracts that use indefinite delivery, indefinite quantity task orders, like LOGCAP, were counted as “competitive” in federal data figures, even though subsequent work under it wasn’t competed — over $30 billion in the case of LOGCAP III.
“It’s not at all an obscure example,” he said. “It shows that the rate of real competition may be less than the claimed rate of competition.” (Click HERE for original article) (Click HERE to read Part I of this series “Windfalls of war: Pentagon’s no-bid contracts triple in 10 years of war”)