Sun Editorial:

How not to contract

No-bid, open-ended war contracts with KBR provide, the hard way, lessons for Pentagon

Monday, May 11, 2009 | 2:07 a.m.

Among the many mistakes the Bush administration made in prosecuting the wars in Afghanistan and Iraq were giving Kellogg Brown & Root open-ended contracts, and awarding the contracts outright, with no competitive bidding.

Given that kind of preference, one that virtually guaranteed the company job security, the problems that developed were almost inevitable.

The preferential contracts were awarded even though there was a conflict of interest. Then-Vice President Dick Cheney had served as CEO of Halliburton from 1995 to 2000, years that Kellog Brown & Root functioned as a Halliburton subsidiary.

Critics who questioned whether the Cheney-KBR connection had something to do with the company’s kid-gloves treatment by the government were waved off by the Bush administration as if they were somehow being unpatriotic.

The critics’ concerns were well founded, however, as several KBR officials were subsequently convicted on charges of corruption that cost taxpayers millions of dollars. Additionally, the company’s workmanship and billing practices came under heavy criticism, not surprising for a company with a lock on government contracts.

Last week KBR, which split from Halliburton in 2007, was blistered by the Pentagon’s top auditor in testimony before the Wartime Contracting Commission, created last year by Congress.

April Stephenson, who heads the Defense Contract Audit Agency, picked apart a $31.7 billion KBR contract to provide support services for combat operations. Having gone through the company’s invoices, she said it was common for the company to charge premium prices without providing documentation showing the prices were justified.

On Friday KBR took another hit when Sen. Claire McCaskill, D-Mo., and Sen. Susan Collins, R-Maine, wrote to the Pentagon, urging it to be more aggressive in collecting at least $100 million in known overcharges by KBR. They also chastised the Pentagon for treating KBR as if it were still a sole contractor, when in 2007 two other contractors, in a bidding process, earned a portion of the combat-support work.

The lessons emanating from the KBR contracts are plentiful and we hope the Pentagon will learn all of them.

Discussion: 3 comments so far…

By Flash1967

5/11/09 at 10:03 a.m.

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I am confident that the Obama administration will put an end to this kind of contracting.
By boftx

5/11/09 at 4:09 p.m.

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This kind of contracting is nothing new, many of us remember the stories from decades past about toilet seats and hammers.

As for Obama putting and end to it, yeah, right. I'm sure he'll get on it just as soon as ACORN finishes with the 2010 census.
By transplanted

5/11/09 at 7:01 p.m.

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Just because this type of thievery is "nothing new" doesn't make it right or tolerable. As a taxpayer, I would like to see refunds given to every taxpayer for every dollar stolen by anyone that has been found guilty of stealing from any type of taxpayer-funded contract, employment, etc.

Just as the IRS auditors are quick to look into an individual's taxes, so should auditors be watching expenses at every level in every department of the government.

The bottom line of this particular situation is the obvious thievery of cheney...he should be made to pay back every cent himself for doing this, and charged with racketeering at the very least.