Halliburton – KBR and their no-bid cost-plus contracts

The Rip Off report From The Sun Herald:

A Pentagon investigative report alleges the firm KBR Inc. held an illegal contract, overcharged millions to the Navy and produced shoddy workmanship on its South Mississippi jobs after Katrina.

A report released by the Department of Defense’s Office of the Inspector General says KBR worked on Navy facilities in Gulfport, Pascagoula, at Stennis Space Center and in Pensacola, among other Gulf Coast sites after hurricanes Ivan and Katrina. The group holds a $500 million disaster-recovery contract with the Naval Facilities Engineering Command Atlantic based in Norfolk, Va., which was struck in 2004.

KBR received the deal from the federal government while it was a subsidiary of Haliburton, for which Vice President Dick Cheney is a former chairman of the board and chief executive officer. Cheney resigned from his Haliburton post to be President Bush’s running mate in 2000.

According to the Inspector General’s probe, the company was hired to set up trailer parks for displaced Navy personnel, make roof repairs on the Naval Construction Battalion Center in Gulfport and remove debris, among other jobs.

The Houston-based firm allegedly used a type of contract for some of the jobs known as “cost plus percentage of cost,” which the report says is a violation of federal law. Its premise is the higher the costs, the more profit the contractor turns, and the deal actually rewards wastefulness and inefficiency, inspectors concluded.

KBR Corporate Communications Director Heather Browne said Wednesday in a statement to the Sun Herald the company takes exception to the findings.

“KBR does not agree with many of the conclusions contained in the report,” Browne said. “We fully cooperated with the Inspector General in its review and provided our comments, including exceptions, to the Inspector General. We will continue to work with the Navy to resolve any items associated with the CONCAP contract that are unresolved.”

In one instance, the company failed to get competitive bids for subcontracts and it could have actually cost taxpayers $2 million more than it should have, the report said.

The company also allegedly charged representatives twice in some cases for work on the trailers, as shoddy workmanship had to be completely replaced. One laundry facility was unusable, and structures were wired with plugs that had only about half of the power-handling capacity they needed. The plugs had to be replaced.

The work at the trailer parks drew the suspicions of one technical evaluator. read more

Read the inspector general’s report

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