On July 9th, the Democratic Policy Committee held a hearing on waste in a major contract with, unsurprisingly, KBR. Charles Smith, formerly a top civilian contracting official for the Army, testified about his previous public claims that KBR billed the government for more than $1 billion in unnecessary costs on a contract marred by questionable Army oversight.
The contract, LOGCAP III, called for KBR to provide combat support services. In 2004, the Defense Contract Auditing Agency found that KBR had submitted about $1.8 billion in insufficiently documented costs, which may have stemmed from insufficient oversight of subcontracting and poor cost accounting as Mr. Smith mentioned. When Mr. Smith prepared to withhold a percentage of payment until these costs were agreed upon, Brig. Gen. Jerome Johnson ordered him not to do so, and hastily transferred him to another position. In a highly unusual move, a private contractor was put in charge of reviewing contract costs.
KBR claimed that the withheld payments would have impaired its ability to pay subcontractors and resulted in a scaling back of operations. However, the company had raised no such concerns when Mr. Smith previously requested an assessment of the impact of withholding payments. Mr. Smith pointed out that while KBR did meet its obligations on the contract, the money it never had to account for could have been used for other badly needed resources for troops.
Sadly, Mr. Smith is not the only top contracting official who has been retaliated against after voicing concerns about contracts. Bunnatine Greenhouse, a former contracting head for the Army Corps of Engineers who raised concerns about a KBR contract, was demoted. Mr. Smith said that treatment of people like himself and Ms. Greenhouse may be harming government contracting across the board. Older government employees who cannot afford to be fired may be less likely to raise concerns about contracts, he said, while younger workers may be driven away from working in the contracting field.
Interestingly, Mr. Smith's complaint is not the first time that Gen. Johnson has been mentioned in a negative light; Sen. Byron Dorgan (D-ND), chairman of the Democratic Policy Committee, has requested an investigation into whether Gen. Johnson lied in his testimony to the Senate Armed Forces Committee about problems with KBR's water treatment operations in Iraq.
-- John Cappel