Lucrative KBR Contracts Unaffected by Troop Drawdown

WASHINGTON - Only one in nine
hours billed by a contractor for running the giant military bases that
house U.S. soldiers in Iraq in the first half of 2009 was for actual
physical labor, according to new testimony by the Pentagon's auditors.

The company - KBR, a
former subsidiary of Halliburton - is tasked with military logistics
such as menial tasks like cleaning toilets, cooking food and driving
trucks.

Between
January and July 2009 "over 1.1 million hours (including overtime) had
been charged to the government, yet only 116,000 hours of documented
repair work had been conducted," Patrick J. Fitzgerald, the director of
the Defense Contract Audit Agency (DCAA), told a hearing on Capitol
Hill.

Starting in September 2002, tens of thousands of KBR
workers - mostly from South and Southeast Asia - were kept busy
building bases initially in the Kuwaiti desert and then eventually in
Iraq. At its peak, in August 2007, the U.S. military had some 162,000
soldiers stationed in Iraq and an equal number of contractors to
support them from KBR as well as from a variety of other companies like
Blackwater and Dyncorp.

Over the last year, troops have been
slowly leaving Iraq as part of a withdrawal plan created by the Barack
Obama administration. The number of troops is now roughly 98,000 but by
the time U.S. combat missions in Iraq end in August, the U.S. plans to
draw down to between 35,000 to 50,000 troops in that country.

Given
the planned drawdown, the Pentagon told KBR to reduce its staffing
levels all across Iraq last year. KBR came up with a proposal
implemented in August that was ineffective because the positions that
the contractor eliminated were vacant.

KBR was "eliminating
spaces without faces", Commissioner Charles Tiefer remarked during a
hearing of the bipartisan Commission on Wartime Contracting held in the
U.S Senate on Mar. 29. The commission was created early 2008 to
investigate waste, fraud and abuse in military contracting services in
Iraq and Afghanistan.

Instead, the Houston-based company
maintained a steady staff level 20 months after the military reduced
the number of soldiers on the ground from 160,000 in January 2008 to
130,000 in September 2009, the DCAA audit said.

While the
Pentagon allows contractors to have extra staff on hand, it recommends
that the "labor utilization" rate should be 85 percent.

Altogether
KBR has 48,998 employees in Iraq, including direct hires and
subcontractors, according to company spokesperson Heather Browne. It
reported revenues of 4.8 billion dollars from its Iraq military
contracts last year.

All told the company has billed the
Pentagon in excess of 30 billion dollars under a global contract called
the Logistical Contingency Augmentation Program that was awarded in
December 2001 for work in war zones from Afghanistan in Central Asia to
Djibouti in Africa and the former Soviet republic of Georgia.

This
year, defence auditors said, KBR could save the government 193 million
dollars from January through August by aligning its labor drawdown
with the military drawdown.

But KBR's own labor reduction plan
during the period will save only about 27 million dollars over the same
period, Fitzgerald told the commission.

KBR says it will cut its
staff in July of this year. Doug Horn, vice president of operations at
KBR, told the lawmakers that the military's changing needs and
requirements make working in war zones difficult. "This lack of
predictability of logistical needs in a war zone is simply a fact of
life," he said.

He maintains that the company was forced to keep
an idle work force on hand to handle the ongoing process of troop
drawdown and in the absence of detailed guidelines from the military.

"There
is probably some degree of idleness that they need to handle the
fluidity of the situation," Fitzgerald said. "But clearly, the
percentages we are talking about well exceeds that."

"Taxpayers
need assurance that contractors don't have unnecessary staff hanging
around - accidentally or by design - without work, but still drawing
pay," said Christopher Shays, a former Republican Congressman from
Connecticut, who is co-chair of the commission.

"The point of
the audit is that savings are going, going, gone," said Commissioner
Robert Henke. "Since the Army or Department of Defense hasn't
responded, the savings are effectively gone."

The hearing revealed just the latest vignette of the contractual work in war zones. Since 2003, there has been a steady stream of reports from agencies like the DCAA questioning billions of dollars in KBR bills for work done in Iraq.

While several KBR officials as well as U.S. military officials and their family members have been charged with bribery and money-laundering in Iraq contracts, the bulk of the
allegations have involved wasteful spending, attributed to both bad decision-making by the Pentagon as well an unnecessary work by KBR.

As recently as last year, KBR built a 30-million-dollar dining facility a year before U.S. troops were required to leave Iraq, immediately after it had upgraded a nearby dining facility for 3.36 million dollars.

Despite numerous hearings in Congress, KBR has continued to win contracts in Iraq from the Pentagon. On Mar. 2, KBR was awarded a brand-new contract that is potentially worth 2.8 billion dollars.

*With additional reporting by Pratap Chatterjee.