Army awards KBR more work in Iraq

By Robert Brodsky March 3, 2010

Days after the Army announced that KBR Inc. would not receive $20 million in award fee bonuses because of poor performance in Iraq, the Defense Department contractor has won a multimillion-dollar task order to care for U.S troops as they begin the process of exiting the war-torn country.

The Army Sustainment Command and Rock Island Contracting Center in Illinois confirmed this week that KBR had won the first task order for work in Iraq under the new Logistics Civil Augmentation Program IV contract. The contractor will provide logistics support services such as warehousing, vehicle maintenance and air terminal operations, in-theater transportation and postal operations for U.S. troops.

KBR was informed on Feb. 26 of the award, just one day after executives told shareholders about the lost award fees. Work on the task order began on March 1.

Unlike the LOGCAP IV task orders in Afghanistan, which are divided by region, the Iraq contract covers the entire country. The task order is for one base year at $571 million and four option years. If all options are exercised, the contract could be worth $2.8 billion.

"This award demonstrates the U.S. government's recognition of KBR's ability to deliver high-quality logistics services in challenging contingency environments," said Bill Bodie, president of KBR North American Government and Defense. "We look forward to providing the U.S. military with a critical force enabler as we enter into a new phase of our mission in Iraq."

The award is KBR's first major task order under the revamped LOGCAP IV contract. After relying on the former Halliburton subsidiary as the exclusive provider under the LOGCAP III contract, the Army moved in 2007 to split the work among three firms: KBR, DynCorp and Fluor Intercontinental Inc. Under LOGCAP IV, the three contractors compete for individual task orders.

KBR was shut out of task orders for Kuwait and Afghanistan, but according to the Army, submitted the best proposal to continue working in Iraq.

"The competitive award was made on a best value selection," said Daniel Carlson, a spokesman for the Army Sustainment Command. "Criteria used to make the selection include price, technical approach and past performance."

But questions about KBR's performance in Iraq under the LOGCAP III contract continue to raise questions and cause controversy.

Lawmakers and watchdogs repeatedly have criticized KBR for poor contract performance, failure to manage subcontractors and questionable bookkeeping.

In January 2008, Staff Sgt. Ryan Maseth, a Green Beret from Pittsburgh, died after he was electrocuted while taking a shower in his barracks in Baghdad. KBR was responsible for maintaining those showers. The Army Criminal Investigation Command ruled in 2009 that there was "insufficient evidence" to hold the company criminally responsible for Maseth's death. The soldier's family has sued KBR.

The Army announced last week that KBR had failed to meet a level of performance during the first four months of 2008 under the LOGCAP III contract necessary to earn $20 million in potential incentive bonuses.

Sen. Byron Dorgan, D-N.D., a frequent critic of KBR, said the Army's decision "will send a long overdue message to military contractors that they will be held accountable for their performance. But the Army needs to send that message much more powerfully. Not awarding a bonus for widespread sloppy contracting work that killed soldiers is just the beginning, not the end point, of accountability."

KBR still holds two task orders under LOGCAP III for base camp operation support in Iraq, Carlson said. The Army is examining ways to transition that work to LOGCAP IV, he said.

"We continue to work closely with theater commanders to assure our contractor workforce is appropriately sized to support drawdown operations in Iraq," Carlson said.