Army Improperly Awarded $150 Billion KBR Contract

The Army improperly awarded one of its largest contracts — a 10-year, $150 billion deal to support U.S. troops around the world — and should reconsider its decision, a government agency said Tuesday.

The Government Accountability Office (GAO) ruled the Army didn't give enough weight to Pentagon auditors' concerns about the past performance of KBR, which has been the only company providing troop support for six years under the current contract. It was one of three companies selected to share the new contract, which was awarded in June and was supposed to take effect this month.

The GAO said the Army also gave Fluor Corp. "unequal treatment" when awarding the new contract. The Army approved Fluor's proposal even though the proposal relied on different assumptions than those listed in the contract solicitation — a shortcoming that hurt other bidders' proposals, the GAO said.

Government auditors have repeatedly criticized KBR for overcharging and other mismanagement of its work in Iraq. KBR also is a favorite target of congressional Democrats because it used to be a subsidiary of Halliburton, which Dick Cheney once headed.

The Defense Contract Audit Agency has challenged more than $1.9 billion in KBR's billings in Iraq. The Army had agreed to withhold $465 million of those questioned charges at the beginning of this year, audit agency records show.

The auditors challenged, for example, $212 million in charges for meals that were never served and $54 million in improper charges for shipping containers that had been turned into living quarters. As of February, the Army withheld $55 million in meal costs and had not made a decision on the shipping containers.

Government auditors have repeatedly criticized KBR for overcharging and other mismanagement of its work in Iraq. KBR also is a favorite target of congressional Democrats because it used to be a subsidiary of Halliburton, which Dick Cheney once headed.

The Defense Contract Audit Agency has challenged more than $1.9 billion in KBR's billings in Iraq. The Army had agreed to withhold $465 million of those questioned charges at the beginning of this year, audit agency records show.

The auditors challenged, for example, $212 million in charges for meals that were never served and $54 million in improper charges for shipping containers that had been turned into living quarters. As of February, the Army withheld $55 million in meal costs and had not made a decision on the shipping containers.