This morning, the Senate Democratic Policy Committee (DPC) held a hearing to examine why KBR, the U.S. Army's largest contractor in Iraq and Afghanistan, got paid $83.3 million in bonuses on a task order for grossly substandard electrical wiring work that has been linked to the electrocution deaths of several U.S. soldiers and contractors in Iraq and continues to pose a life-threatening risk. The hearing, entitled "Rewarding Failure: Contractor Bonuses for Faulty Work in Iraq," was the nineteenth the DPC has held on contracting abuses and corruption in Iraq.
Today's hearing about shoddy work and the payment of millions of dollars in award fees follows a hearing in early May highlighting "unprecedented" levels of fraud involving KBR's LOGCAP III contract. Most of those cases are still under investigation.
Fraud was suspected many years ago when it was estimated that $1.8 billion in KBR contract costs were unsupported. Simply stated, KBR couldn't prove how it spent taxpayer dollars. At that time, Defense Contract Audit Agency (DCAA) officials strongly encouraged the Army to withhold 15% of KBR's future contract payments until the company cleaned up its act. According to recent testimony before the Commission on Wartime Contracting by a DCAA official, the decision to not withhold future dollars to KBR was made by Ms. Deidre “Dee” Lee (p. 8 of 67 in the testimony), the former DoD Director of Defense Procurement and Acquisition Policy. Meanwhile, according to the DPC's hearing press release, Charles Smith, “who managed the LOGCAP III contract for the Pentagon, was forced out of his job in 2004 when he refused to approve paying KBR more than $1 billion in questionable charges.”
All of this news comes at the same time that the Professional Services Council, an association representing contractors, announced that Dee Lee is joining its ranks as an Executive VP of Federal Affairs and Operations. Although Ms. Lee might still be operating under a 2-year restriction for projects pending under her watch at FEMA, any 1-year lobbying restrictions expired in March, thereby placing her in a position to curry favor “with agency acquisition and operational components across the government.”
These types of revolving door cases and misadventures in contract accountability are some of the reasons why the public has a minimal level of trust in the federal procurement system. I wouldn't doubt that it's also a reason why morale at certain agencies remains low.
-- Scott Amey and Neil Gordon
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