KBR Gets Cut Out of LOGCAP Work in Afghanistan

It looks like the extensive misconduct history of Kellogg, Brown and Root (KBR) may finally be catching up with it.

This week, the Army awarded task orders under the Logistics Civil Augmentation Program (LOGCAP IV) military support contract to DynCorp International and Fluor worth over $7 billion each. Under the task orders, DynCorp and two partners, CH2M Hill and Taos Industries, will provide logistics support at Army installations in the southern region of Afghanistan, and Fluor will do the same in the north. The companies will provide a top-to-bottom range of support services, including electrical power, water, sewage and waste management, construction services, laundry operations, food services, and motor pool operations.

Missing out on the action is KBR, the third prime LOGCAP IV contractor. KBR, which currently provides services in Afghanistan under the prior LOGCAP contract and will remain in the country until the transition to LOGCAP IV is complete, will not provide any further work in Afghanistan, according to the Army.

Rumor has it that KBR got the brush-off because of its past performance history. Sen. Byron Dorgan (D-ND), chairman of the Senate Democratic Policy Committee, said in a press release on Wednesday the Pentagon told him that past performance was one of the reasons. Dorgan is quite familiar with KBR. Since 2003, he has chaired 19 oversight hearings on waste, fraud and corruption in Iraq and Afghanistan, and KBR's poor performance has repeatedly come up during those hearings.

"KBR's poor performance became the issue so frequently at our hearings that I came to wonder why the Pentagon keeps awarding it contracts," Dorgan said in the press release.

Dorgan welcomes the Pentagon's decision to award the LOGCAP IV task orders to other companies, but he still has concerns. "This decision suggests that the Pentagon is finally beginning to give a contractor's past performance the consideration it deserves when awarding contracts," he said. "But we need more evidence of that. Time will tell whether this is a serious change in policy that sends a strong message that a Pentagon contract is not a blank check and that contractors will be held accountable.”

-- Neil Gordon

Comments

[CPT Reginald Guillet / CGSC-ILE 12-003 / SG:D]

The lack of oversight on contracts awarded by the U.S. Army LOGCAP to KBR is attributed to the lack of knowledgeable personnel overseeing that process. According to Senator Frank R. Lautenberg on a Senate Democratic Policy Committee Hearing, Halliburton’s multi-billion dollar contracts with the federal government for work in Iraq may go down in history as the most scandal-plagued in U.S. history.

Despite several negative audit reports and contractor performance evaluations, KBR was awarded the sole-source Restore Iraqi Oil (RIO) contract in secret in March 2003 after all other companies were excluded from bidding. Under this contract, the Army issued ten task orders worth approximately $2.5 billion. Again in January 2004, KBR was awarded the southern RIO 2 contract which is worth up to $1.2 billion.

The War on Terror has shown serious issues with the U.S. Army LOGCAP contract administration, to include contract management and contract oversight. It has also shown that not enough appropriately-trained professionals are available to award and manage contracts. A study headed by former Deputy Secretary of Defense Jacques Gansler to analyze “structural weaknesses and organizational deficiencies in the Army’s acquisition and contracting system used to support expeditionary operations” recommended that the Army makes systemic and fundamental changes in the way it conducts business by:
- increasing the stature, quantity, and career development of military and civilian contracting personnel (especially for expeditionary operations);
- restructuring the organization and restoring responsibility to facilitate contracting and contract management in expeditionary and CONUS operations;
- providing training and tools for overall contracting activities in expeditionary operations;
- and obtaining legislative, regulatory, and policy assistance to enable contracting effectiveness in expeditionary operations.

The government in its reform with LOGCAP IV instituted the Gansler Commission’s recommendations to improve its contracting procedures, policies, training and officials’ awareness. Nonetheless, more studies are needed in the post award phase of the U.S. Army LOGCAP contract management process. The Army’s contract administration activities are not effective in monitoring compliance with contract terms and conditions, practicing effective communication and control, managing contract changes, invoicing and payment and resolving claims and disputes. The analysts comparing the actual performance goals of the U.S. Army LOGCAP contracts are not yet competent, realistic, honest, and are still allowing poor performance to deteriorate further.

The government is continuously victims of unpleasant surprises regarding requirements or costs when dealing with KBR. With regards to the LOGCAP contract, the U.S. Army officials and KBR, without proper accountability of the taxpayers’ money, will continue to be the favored punching bag for critics for the Defense Contract Audit Agency (DCAA), the Defense Contract Management Agency (DCMA), the Army Audit Agency (AAA), and the DOD Inspector General. DCAA has continually examined KBR’s estimating, cost accounting, labor hours reporting and procurement systems and found them deficient. Consequently, the U.S. Army LOGCAP needs to implement and enforce a Quality Assurance Surveillance Plan (QASP) to define what must be done to ensure that the contractor has performed in accordance with the Performance Statement of Work (PSW) performance standards. They need to ensure their contracting officers are properly trained to control cost and schedule performance as well as report progress against contracts. Additionally, the contracting officers need to be able to receive and understand the contract performance reports, approve changes to the system, and generally ensure that the system requirements are being met. The U.S. Army LOGCAP needs to ensure that each project is assigned a project manager to have overall responsibility for executing the project, and a contract manager to oversee the contractual aspects of the project. Lastly, they should continue to develop and adopt an automated contract management tool, Decision Support Systems (DSS), and Expert Systems (ES) to improve business communication, enforce contract control, accelerate the contract management lifecycle, facilitate and improve the quality of decision making.

The Army’s love affair with KBR can only be judged in Congress and the court system. With the reluctance of the Army to admit mistakes, the American People through the audits and congressional commotion can identify the perception that KBR and the Army are allies against a common enemy, Congress!