Halliburton Subsidiary Faulted For Hurricane Work
"Washington Watchdogs," a periodic feature of the Post's Investigations blog, looks at the findings of the federal government's official investigators.
Reports of problems with defense contractor KBR Inc. just keep piling up.
The Houston-based company's efforts to repair Navy facilities following Hurricanes Ivan and Katrina were deemed shoddy and substandard, auditors say, prompting one technical adviser to claim that the federal government "certainly paid twice" for many KBR projects because of "design and workmanship deficiencies," according to a report (see PDF here) released today by the Defense Department's inspector general.
The report, released following a Freedom of Information Act request, says the U.S. Navy hired KBR, Inc., then known as Kellogg, Brown and Root, in July 2004 to repair Defense Department facilities after Hurricanes Ivan and Katrina. The federal government agreed to pay the company $500 million over five years.
At the time, the company was a subsidiary of Halliburton, the Texas oil company, whose former chief executive is Vice President Dick Cheney.
As part of the Navy project, KBR was tasked with removing water-damaged carpet and drywall; applying temporary roofing; removing debris; and building trailer parks for displaced Navy families at the Naval air stations in Pensacola, Fla.; Gulfport, Miss.; the Stennis Space Center in Hancock County, Miss.; and other Navy facilities in the Gulf Coast region.
Among the inspector general's findings:
-- KBR awarded sole-source or limited competition subcontracts that overpaid hourly rates to roofers and paid $4.1 million worth of services and meals that should have cost only $1.7 million
-- The Navy entered into an illegal "cost-plus-percentage-of-cost" contract with KBR, the audit found. As a result, higher costs meant higher profit and KBR was rewarded for "inefficiency and non-economical performance."
-- KBR was paid nearly all of the contract amounts despite "marginal-to-average performance," the audit found.
The audit recommended the Navy try to recoup about $8.4 million in "excessive" equipment lease payments and material profits and noted several over-the-top costs, including employees getting $540 per month for cell phone charges during roof repairs; $720 per month in gas charges despite existing payment of work site fuel expenses; and expensive meals, including steak and eggs (full meal prices were redacted from the report).
Investigators also found that as part of the recovery effort, KBR was hired to build trailer parks for Navy personnel displaced by Hurricane Katrina. Each trailer was supposed to have 200 amps of electricity and water piping.
But the subcontractors hired by KBR gave each trailer 100-amp outlets and failed to lay piping at proper building code levels. As a result, a second contractor was paid $200,000 to fix the problems in the KBR construction, the audit said.
KBR officials responded to the mounting criticism, saying they worked in conditions where "surrounding infrastructure and the local labor pool were decimated."
The company was also featured in a New York Times story today about Charles M. Smith, the former senior civilian who oversaw a multibillion-dollar contract with KBR during the first two years of the war. Smith told The Times that he was forced from his job in 2004 after informing KBR officials that the Army would impose escalating financial penalties if they failed to improve their chaotic Iraqi operations.
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