Iraq ContractsEssay Preview: Iraq ContractsReport this essayKBR, Halliburtons engineering and construction subsidiary, has been asked to perform nearly $12 billion worth of services in Iraq, where it is the militarys main supplier. The company, which operates over 60 sites throughout Iraq and Kuwait, has shipped and delivered 500 million gallons of fuel and 100 million pounds of mail. KBR employs 50,000 in the region, including 13,000 Americans as well as lower-paid workers from the Philippines, India, Bangladesh and Sri Lanka. Sixty-five KBR employees, including 16 truckers, have been killed since the beginning of the war.
The company has performed most of its nearly $12 billion worth of work in Iraq under two military contracts: the Logistics Civil Augmentation Program (LOGCAP) contract valued at an estimated $8.5 billion so far, and the $2.5 billion Restore Iraqi Oil (RIO) contract.
Under the terms of the 10-year LOGCAP contract, which KBR won in December 2001, KBR provides logistics and infrastructure support for U.S. forces worldwide, including building U.S. Army camps and providing services including food service, laundry, sanitation and utilities.
In July 2004, the non-partisan Government Accountability Office released an audit of the LOGCAP contract which investigated a dispute between KBR and Pentagon auditors regarding $88 million in charges for food in KBR dining facilities that was never served. A Halliburton spokesperson says the dispute was due to “interpretive differences in billing approaches,” and that KBR was contractually required to be ready to feed a specified minimum number of soldiers. In April 2005, Halliburton announced that it had reached an agreement with the Army over the billing charges: The Army would pay KBR $1.176 billion while retaining $55.1 million of the $200 million it had withheld during the dispute. KBR agreed to negotiate adjustments to its contracts with subcontractors, and the Army changed portions of KBRs contracts to “firm fixed price,” as opposed to the previous “cost-plus”
”. KBR says it has asked the government to pay the $200 million in the contract back, but it now concedes that the Army did not properly pay back the $200 million in the disputed provisions. To date, KBR has only paid KBR about $22.6 million in claims against the contractors. Halliburton says the agreement with the Army was supposed to take pay back from DOD, $200 million, but that if KBR had made any real changes to its contract or accepted the “change,” KBR could not keep the $200 million in its actual dollars. The Defense Contract Audit (DCA) shows that the contracting was “unintended at that time.” The DCA shows that, during the period between July 2004 and July 2005, KBR was only notified of the problems it was aware of and that there were not enough funds in the contract to correct the problem. According to Bresnik, “The contract and the DCA were never completed, and none of the auditors knew of any issues, including KBR’s claim that KBR requested payment, so the auditor didn’t even attempt to evaluate or document the problems in the audit. It was an unacceptably high price paid for a contract that had such glaring omissions, which allowed contractors who had only paid KBR about $15 or $20 million to exploit the problem.” Bresnik adds, “If Halliburton doesn’t do much better or improve its practices and processes, why are they charging a large base for this contract despite the fact that they’re doing better here?”
- Some people are questioning whether KBR was being paid a fair share of the $8.5 billion KBR issue that was settled in 2004, when the auditors didn’t bother to address the problem. Some sources have suggested the issue was the problem before it got a lot of attention.
In fact, KBR has admitted to paying some of the $8.5 billion in KBR issue directly back to the contractor. Halliburton claims that it took the issue off the record because it didn’t know there were not enough funds in the contract to address the $8 billion in KBR problems. The DCA also indicates that KBR made mistakes in its claims and audits and so is now making it clear that Halliburton is not making money off of this issue.”
- Some folks are questioning whether KBR was being paid a fair share of the $8.5 billion issue that was settled in 2004, when the auditors didn’t bother to address the problem. Some sources have suggested the issue was the problem before it got a lot of attention.
- Some people are questioning whether KBR was being paid a fair share of the $8.5 billion issue that was settled in 2004, when the auditors didn’t bother to address the problem. Some sources have suggested the issue was the issue before it got a lot of attention.
- Some people are being critical of Halliburton over the failure to release information regarding what KBR is doing with its contractors.
Some people are concerned about the way in which Halliburton’s behavior has caused some of the major companies — including Coca-Cola and Nike — to close (or to re-open) their own facilities at such