May 11th, 2010
02:55 PM ET
10 years ago

With eye on exit, military awards massive Iraq contract without competition

Washington (CNN) - The U.S. Army is under fire for reversing a decision to have three companies compete for more than $500 million worth of work in Iraq, and instead keeping it under an existing contract without any bidding.

The $568 million contract for support work in Iraq stayed with contracting giant KBR under the existing sole-source contract - known as Logistics Civil Augmentation Program III (LOGCAP III) - after the Army initially requested bids from KBR and its main competitors, Fluor Intercontinental and DynCorp International, under a competitive contract system known as LOGCAP IV.

The contract work, covering everything from cleaning laundry to preparing food and providing fuel for troops and contractors in Iraq, would be done between September 1, 2010 and December 31, 2011, as the U.S. military begins a massive draw down of troops in Iraq.

KBR won the LOGCAP III contract under competitive bidding in 2001 and military commanders worried about the effects of changing an already existing set-up to another company's set-up.

"Theater commanders expressed concern about transitioning the base life support services to LOGCAP IV during the time of massive draw-down operations in Iraq," said Daniel Carlson, a spokesman for the Army's Sustainment Command, which manages the LOGCAP contracts.

"The decision to continue with KBR on LOGCAP III was based on input from theater commanders, the anticipated cost of the transition and contractor performance. We remain proud of our work and we are humbled to support our troops," said Mark Williams, president of KBR Infrastructure, Government and Power.

An industry official who did not want to be named to prevent any recourse against his company by the military said "We were disappointed in the decision and frankly thought the new contracting system made a fair game for all of the companies in this industry."

The bi-partisan heads of the Senate Homeland Security subcommittee, which oversees contracting for the Department of Defense, wrote to Defense Secretary Robert Gates last week about the Army's decision.

"Given the significant progress made in the last year toward increased competition, oversight and accountability... we are dismayed by the prospect of the Defense Department forgoing these potential gains," Sens. Claire McCaskill, D-Missouri, and Scott Brown, R-Massachusetts, said in the letter dated April 30.

Carlson said the Army's Sustainment Command "concluded that continuing LOGCAP III support provided the best solution for our men and women in uniform as well as the U.S. taxpayers.

"Operational requirements, cost, and contractor performance were key to our decision," Carlson said in an email to CNN.

He said the Army briefed members of Congress about the decision last week.

Pentagon press secretary Geoff Morrell said the senators' letter to Gates was forwarded to the Army for a response.

The Army says keeping the contract with KBR would save as much as $77 million that it would not be able to recoup if another company transitioned in and took over the support process.

Contracting industry officials were surprised by the actions.

Keith Stephens of Fluor Intercontinental said his company offered a "competitive bid for the work in Iraq with an achievable transition schedule designed to produce significant savings for taxpayers."

He said the Army has not yet spoken to the company about the decision, but their bidding paperwork was returned to them last week, indicating they did not win the contract.

The other company that put in a bid, DynCorp, declined to comment when asked by CNN.

The senators' letter to Gates also expressed concern about KBR's recent legal problems surrounding its work with the military.

"We are particularly concerned about the Army's continued reliance on LOGCAP III in light of the Justice Department's recent decision to bring a civil action against KBR for improper billing of security services under LOGCAP III," according to the letter.

The Justice Department brought the fraud suit against KBR April 10, alleging the company improperly charged the government for $103.4 million for unauthorized security services in Iraq in 2007 and 2008.

Additionally, the Justice Department announced last week it had joined a lawsuit against KBR alleging that KBR transportation department employees received unlawful kickbacks from two freight forwarders doing business with KBR.

"We are aware of Department of Justice announced actions against KBR. The government and KBR have made significant improvements in operations and oversight of LOGCAP III and we have safeguards in place to protect the government's interest," Carlson said.

Since 2001, the LOGCAP III program has given KBR $35.7 billion worth of work, according to Army statistics.

Fluor and DynCorp beat out KBR under a LOGCAP IV contract in 2007 for other support services in Iraq. That contract has so far been worth $2.4 billion.

Filed under: Iraq • Pentagon
soundoff (40 Responses)
  1. Victim of GOP Taliban

    What difference does it make, it's too late. The taxpayers already got burned for a trillion $ worth of corporate Welfare for Bush/Cheney constituents.

    May 11, 2010 11:58 am at 11:58 am |
  2. Really

    I cant believe President Bush and VP Cheney allowed this to happen. No bidding process and allowing one company getting the government contract. Oh wait, these guys aren't in power anymore. It is President Obama leading the Army. I assume all those that attacked Bush during his Presidency will attack President Obama for doing the same stuff. I am sure you feel it is justified now.

    May 11, 2010 12:05 pm at 12:05 pm |
  3. Tim

    And a proud subsidiary of Halliburton.

    May 11, 2010 12:07 pm at 12:07 pm |
  4. Fair is Fair

    A no-bid (another) contract from the Obama administration? Say it isn't so. Knock me over with a feather.

    May 11, 2010 12:07 pm at 12:07 pm |
  5. Peejay

    KBR is a former subsidiary of Halliburton, and has its own legacy of shame and shoddy work.

    From Wikipedia:

    "Specifically, KBR has been charged by the Army for improper installation of electrical units in bathrooms throughout U.S. bases. CNN reported that an Army Special Forces soldier, Staff Sergeant Ryan Maseth, died by electrocution in his shower stall on January 2, 2008. Army documents showed that KBR inspected the building and found serious electrical problems a full 11 months before his death. KBR noted "several safety issues concerning the improper grounding of electrical devices." But KBR's contract did not cover "fixing potential hazards;" It covered repairing items only after they broke down."

    Unfortunately, KBR could not "repair" SSGT Masland. Our troops deserve better.

    May 11, 2010 12:10 pm at 12:10 pm |
  6. jim

    Another Obama broken campaign promise. Can we believe anything the man says?

    May 11, 2010 12:11 pm at 12:11 pm |
  7. Michael

    Did it occur to anyone to hire Iraqis to do laundry?
    KBR is probably charging US taxpayers $1100 to wash a set of cammies.

    May 11, 2010 12:14 pm at 12:14 pm |
  8. Susan

    Doesn't the military every learn? No bid contracts are sure to lead to corruption. And isn't KBR related to Halliburton? The arrogance of the military wasting our tax dollars when things are so tough at home just blows me away.

    May 11, 2010 12:19 pm at 12:19 pm |
  9. Dean

    Wonder who the liberals will blame now that Cheney is gone?

    May 11, 2010 12:19 pm at 12:19 pm |
  10. Larry

    Our military is corrupt. We're throwing $600 billion a year just so people can get wealthy.

    Meanwhile our young soldiers are dying in useless wars.

    KBR is part of Halliburton. Halliburton was awarded billions in contracts during the Iraq for work they never performed. It's no secret. Now what's up with this contract? Who in the military is getting paid off again?

    May 11, 2010 12:28 pm at 12:28 pm |
  11. Randolph Carter, I'm no expert but...

    Explain to me again how Obama is a liberal socialist. Because there are so many examples of his policies that fit that description. Wait 'till he starts dismantling social security. Have a nice day, consumerbots!

    May 11, 2010 12:29 pm at 12:29 pm |
  12. Larry

    I believe you forgot to Mention, that these are Cheneys boys at it again

    I sure would love to know the backroom deals that have now been going on for these 8 years

    We sheep, again shard by Wolves

    May 11, 2010 12:32 pm at 12:32 pm |
  13. Rickster

    lol...oh, this is rich. Now that the evil George Bush and Dick Cheney are gone I guess it's now the evil Barack Hussein Obama and Joe Biden. C'mon dems, let's hear it! And a Haliburton link, no, how does anybody still support this imposter of a president?

    May 11, 2010 12:33 pm at 12:33 pm |
  14. Anonymous

    This has to stop! KBR and Haliburton continue to benefit finacially from a war they supported and the taxpayers get to pay extra as a result of a no bid contract. You would think that once you recognize a theft, that you would do something about it. I thought we got rid of Bush/Cheney!!!!

    May 11, 2010 12:33 pm at 12:33 pm |
  15. Joe in PA

    This has to stop! KBR and Haliburton continue to benefit finacially from a war they supported and the taxpayers get to pay extra as a result of a no bid contract. You would think that once you recognize a theft, that you would do something about it. I thought we got rid of Bush/Cheney!!!!

    May 11, 2010 12:35 pm at 12:35 pm |
  16. ThinkAgain

    Somewhere out there an Army procurement officer just made a bundle of money ... scumbag!

    May 11, 2010 12:38 pm at 12:38 pm |
  17. Brac

    No-bid contracts. Do it with your own money but not with ours.

    May 11, 2010 12:39 pm at 12:39 pm |
  18. Liberalism is a mental disorder

    The liberal fools are STILL blaming Bush for the BHO admin sad! Libs ARE mentally deranged.

    May 11, 2010 12:46 pm at 12:46 pm |
  19. Steve from California

    I firmly believe the majority of American voters thought the Obama Administration would do something about this process. I also believe the Obama Administration is a criminal syndicate. Same old song, folks!

    May 11, 2010 12:47 pm at 12:47 pm |
  20. Lets expose Rush Limbaughs staff.

    Looks like Ike was right.We now see whos really running the show.Obama is just a figurehead Just like Bush,and every president since him.JFK must have bucked against the big boys in the pentagon.

    May 11, 2010 12:48 pm at 12:48 pm |
  21. gt

    they need to cover the insurance giants,, the hege fund mangers and all the other jerks

    May 11, 2010 01:09 pm at 1:09 pm |
  22. Pam

    President Obama needs to remove everyone at the Pentagon and replace them. Everyone!! No pension or pay either!

    May 11, 2010 01:10 pm at 1:10 pm |
  23. billy

    Do you want change, do you want the old ways of doing business to change, do you want to believe everything I say is gospel? Then, vote for me, Barack Obama, I come from Chicago land of honesty, integrity and I will NOT go back on any promises! Bwwwaaaaaahhhaaaaaa! SUCKERS!!!

    May 11, 2010 01:14 pm at 1:14 pm |
  24. Dominican mama 4 Obama

    Here's a thought: IF the contract was in fact awarded ILLEGALLY, as in without the prerequisite THREE bidding companies, then the awarded contract should be NULL and VOID. Pull them out, and start from scratch folks!

    We just experienced this same type of, umm, err, irregularity with Halliburton. Somebody needs to put their foot down and tell those awarding military contracts that they WILL play by the rules of the game.

    And yes, I would like to very much know who owns the company that was awaded the contract. Who is on their board? Who are they tied into at the Pentagon.....Yes, even if it turns out to be our President. I want to know.

    May 11, 2010 01:21 pm at 1:21 pm |
  25. Gary

    I know Tricky Dicky Cheney must be tickled pink with his old company being awarded more contracts without the bidding process. Stick it to the taxpayer again! I do hope the other two companies file a bid protest and tie this one up for ages!

    May 11, 2010 01:24 pm at 1:24 pm |
1 2