KBR Receives Exclusive $568 Million Contract Despite Controversy

A U.S Army decision to continue an exclusive contract with KBR Inc. rather than solicit bids from other military service providers has many Washington lawmakers shaking their heads. KBR, a leading American engineering and construction company headquartered in Houston, holds the current contract with the U.S Army for provision of services in Iraq. These services include equipment maintenance, facility operations, dining, cleaning, laundry, sewage and trash pickup. KBR employs approximately 14,000 U.S. employees in Iraq to provide logistical support to U.S forces. Under the latest contract, KBR will receive $568 million to provide support services in Iraq until full troop withdrawal in December 2011.

In January 2010, the U.S Army responded to Congressional pressure for increased competition between private service providers and opened solicitation for competitive bids. Two rival companies, DynCorp International Inc and Fluor Corp submitted bids. While a spokesman for DynCorp stated their proposal was “designed to produce significant savings for taxpayers,” an Army spokesperson defended the decision to retain KBR, citing KBR’s satisfactory performance and the operational and financial costs associated with switching providers. According to Army officials, switching contractors would cost taxpayers $77 million and would result in an inevitably inefficient transitory period. The May 16 decision to retain KBR came despite two pending lawsuits filed by the U.S Justice Department against KBR as well as continued controversy over KBR’s prices, politics, production quality, payroll size, and financial honesty. A civil fraud suit filed in April alleges KBR charged the government for unauthorized security services in Iraq while a separate lawsuit alleges KBR transportation department employees received unlawful kickbacks.

Both Democrats and Republican lawmakers on the U.S Senate Homeland Security and Governmental Affairs Subcommittee expressed their disappointment with the single-source contract, addressing concerns for fair competition and service oversight to Defense Secretary Robert Gates.

While KBR will remain the sole provider of services in Iraq, DynCorp and Fluor each received contracts to provide services to U.S troops in Afghanistan last July. According to Army officials, the Army remains open to contractual competition and is determined to “provide the best solution for our men and women in uniform as well as the U.S. taxpayers.”

Army Awards Lucrative Iraq Contract to KBR

KBR warned to cut number of employees in Iraq

Staffing concerns, over-billing gov’t, troop withdrawal/employee withdrawal

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