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KBR vs. Army: On largest services contract, ‘things have gotten very nasty’

Jim McElhatton – (Federal Times) – May 5, 2013 – Army contracting officer Robert Egan gave contractor KBR Inc. a rare ultimatum: Provide a firm, fixed price on remaining work to close out the largest government services contract in U.S. history. Or else, he added, he was finished talking.

“Until I see that FFP deliverable, I cannot enter further communication exchanges with your contracts team,” Egan told the company in a Feb. 26 email.

At issue is the final stage of the Army’s $38 billion Logistics Civil Augmentation Program (LOGCAP) III, the 12-year-old logistics contract that has supported virtually all U.S. military logistics operations in Iraq. The Army seeks to revise the pricing terms on the final work to be done on the contract to be firm, fixed price instead of cost-reimbursable. In response, KBR has filed a lawsuit seeking to keep to the existing cost-reimbursable terms.

At stake in the dispute is far more than varying interpretations of contracting procedures. By its own estimates, KBR says the closeout work on the contract will cost more than $500 Read the remainder of this entry »

“Where is the Peace Dividend? Examining the Final Report to Congress of the Commission on Wartime Contracting”

Committee On Oversight & Government Reform

Chairman Darrell Issa – Preview Statement – October 4, 2011 – Today we welcome Congressman Christopher Shays – a former member of this committee, Mr. Michael Thibault, who co-chaired the commission’s work with Congressman Shays, and other members of the Commission on Wartime Contracting. In August, they released a final report with alarming findings about waste and abuse that occurred in Iraq and Afghanistan.

Over the course of 2 years, the Commission has conducted 25 hearings, issued 5 Special Reports and 2 Interim reports. Its Final Report presents a sobering view of waste and fraud in the War on Terror. An estimated $1.25 trillion has been spent on operations in Iraq and Afghanistan. The report estimates that since 2002, the Defense Department has spent $206 billion of this in contract obligations to support wars in Iraq and Afghanistan.

At least $31 billion, and possibly as much as $60 billion, has been lost to contract waste and fraud. It is appropriate for the commission and congress to assess these costs and the reasons so much taxpayer money has been squandered to waste and fraud.

The waste and fraud associated with these expenditures is mind numbing. With the coming transition of operations from DoD to the State Department in Iraq, as well as the continuing surge of the civilian federal workforce in Afghanistan, costs associated with contractors are set to increase. For example, the State Department will increase its manpower from about 8,000 to 17,000 — the great majority of whom will be contractors for security, medical, maintenance, aviation, and other functions.

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“Are contractors overcharging the government?” You have to ask, REALLY?


Ad Hoc Subcommittee on Contracting Oversight

The federal government spends billions of dollars every year on contracts for food service management at military installations and bases, hospitals, and government buildings and through the federal school lunch program. The purpose of the hearing was to examine whether food service management contractors are withholding rebates, discounts, and credits which should be passed through to the federal government. The hearing reviewed examples of this practice and assess steps taken by agencies to ensure that contractors are in compliance with rebate requirements. The hearing also addressed the need for increased transparency, oversight, and accountability. ~Senate Committee on Homeland Security & Goverment Affairs

Click HERE to view the Hearing

Testimony by Charles Tiefer, Professor of Law, University of Baltimore School of Law and Former Commissioner, Commission on Wartime Contracting in Iraq and Afghanistan

October 06, 2011 –   Thank you for the opportunity to testify today on the subject of improper food service contracting with the United States government for our forces in Iraq and Afghanistan. I am Professor of Law at the University of Baltimore Law School since 1995, and the author of a casebook on federal government contracting. n1 In 2008-2011, I have been a Commissioner on the statutorily chartered, federal Commission on Wartime Contracting in Iraq and Afghanistan, which held twenty-five hearings on problems in government contracting. I note that the chair, Senator Claire McCaskill, was a key sponsor of the legislation creating the Commission. My Commission could never have performed its work of looking into waste, fraud, and abuse in contracting without her absolutely crucial support and leadership.

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Wartime Contracting Commission releases final report to Congress

  • Pegs waste, fraud in Iraq, Afghanistan at >$30 billion
  • Sees threat of more waste in unsustainable projects
  • Faults both government officials and contractors
  • Offers 15 recommendations for contracting reform

Commissioners hear testimony at the May 4, 2009, hearing. Left to right: Dov Zakheim, Linda Gustitus, Robert Henke, Grant Green, Co-Chairman Michael Thibault, Charles Tiefer, Co-Chairman Christopher Shays, Clark Kent Ervin

(CWC Website) – ARLINGTON, VA, Aug. 31, 2011–The final report of the congressionally chartered Commission on Wartime Contracting in Iraq and Afghanistan says at least $31 billion has been lost to contract waste and fraud, and that major reforms are required.

Commission reform objectives include improving federal planning for use of contracts, strengthening contract management and oversight, expanding competition, improving interagency coordination, and modifying or cancelling U.S.-funded projects that host nations cannot sustain. The reforms are described in 15 strategic recommendations.

The eight-member, bipartisan Commission filed its 240-page final report, “Transforming Wartime Contracting: Controlling Costs, Reducing Risks,” with U.S. Senate and House officials this morning. A briefing in the Capitol followed.

The Commission report notes that a consequence of 1990s reductions in the federal acquisition workforce and in support units within the military, the United States cannot conduct large or sustained contingency operations without heavy support from contractors. “Contingency” operations, as defined in federal law for the Department of Defense, are those involving military forces in actual or imminent hostilities, or in response to declared national emergencies. Civilian agencies use a similar definition.

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Windfalls of war: KBR, the government’s concierge

KBR’s umbrella contract to provide everything from showers to rebuilding airfields tops $37 billion. “It’s like a gigantic monopoly,” says one critic.

Secretary of Defense Donald Rumsfeld talks with troops in Iraq. KBR has been paid $37 billion to build infrastructure like this dining hall. Jim Watson/AP

After a decade of war, KBR’s umbrella contract tops $37 billion

Sharon Weinberger – (The Center for Public Integrity – iWatch News) – August 30, 2011 – The rush to war in the months following the terrorist attacks of 9/11 created an urgency in the Pentagon, not just for military operations but also for contracting.

When U.S. forces moved into Afghanistan in 2001, there was little, if any, infrastructure to support and house U.S. troops. The military needed someone to do everything from housing troops to rebuilding airfields. The solution was a contract called the Logistics Civil Augmentation Program, or LOGCAP, a type of umbrella contract the Army had been using to support is military bases overseas. In late 2001, the Army, after a competition, awarded LOGCAP III to KBR. The Houston-based firm [3], once a subsidiary of Halliburton, began providing everything from showers to dining halls.

Even beyond single-source contracts, the Pentagon has other types of contracts it can use to quickly award work without having to compete specific jobs. They include umbrella-type contracts, like LOGCAP, that allow the government to buy unspecified goods and services over long periods of time. “It’s the government’s way of saying ‘We don’t know what we want, and we don’t know how much it costs,’” said Laura Peterson, a senior policy analyst with Taxpayers for Common Sense, a watchdog group. “Instead they say, ‘we’ll put you on retainer and tell you later what we want and when we want it, and you just bill us.’ You become the government’s concierge, and it’s like a gigantic monopoly.”

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