The Wall Street Journal reported this morning the Army has settled a billing dispute with Halliburton despite
Why, if the private sector is more efficient than the military in force provisions, can Halliburton not seem capable of keeping track of their war expenditures? I understand the instability of the region will create unforeseen problems, but this is not an excuse for not being able to properly bill your client.
$55 million was held back from the $1.2 billion paid out.
To settle the dining bill, which auditors for the Pentagon had initially been concerned was 40% higher than KBR could make sense of
That makes some sense. I still don’t understand why KBR continued to prepare more food than soldiers. A little overprepared is one thing, but 40% over is bogus. And I wonder what they did with all that uneaten food. I hope it wasn’t trashed. Like the trucks left on the side of the road after their tires get blown out.
In another break, the Army agreed to pay a fixed-price for the majority of the dining bills, instead of a reimbursement for actual expenditures. This increased Halliburton’s profit to 3% from 1%, Army officials said, generating an extra $26 million for the company.
Sweeeet. So $55 million minus $26 million equals $29 million. So did the Army hold back $55 million or $29 million? Did they include this in their report?
Of course not. But it seems that Halliburton will not get hit anyway, as spokesperson Beverly Scippa noted that the $55 million
Well, its a win-win situation for Halliburton. The Army cares more about their war than how much its going to cost, because really, we are paying for it. And as far as the subcontractors go, the ones getting stiffed, I do not claim to know, I am curious… I just wonder if they were doing what everyone was doing, and when the music stopped, they didn’t have a chair, or if these contractors actually did something beyond the pale of others and really deserve to get stiffed. Either way, the change to a fixed-payment is a bonus, so who ever screwed up should get a golden toilet.
As a former military member, this is bullshit. Pure, unadulterated bullshit. Ok, time to quit cursing like the sailor I used to be.
This all stems from Dick Cheney’s plans (as SECDEF under Bush 41) to privatise the army. So now, instead of having trained soldiers who happen to be cooks, we have civilians, (making much more money than the soldiers they replaced) that need protection by the soldiers they serve. Instead of soldiers cleaning their own barracks and work spaces we have unarmed civilians that must be protected.
“But now, soldiers can focus on their military role, not administrative tasks,” one might argue, “allowing for a smaller military.” Well it costs more money to have civilians than a larger military (by money, I mean tax payers dollars). How much does a buck private make compared to a halliburton employee and all the overhead costs (Halliburon management must get paid also)?
There is also the advantage of having that ready pool of replacement soldiers, because people do die and get wounded in combat. If the camp gets overrun, will Halliburtan employees pick up an M16 and defend the compound? I think not. Wouldn’t have had that problem 20 years ago.
And what’s more, I read somewhere that 50% of defense appropriations are now going to contractors. The military industrial complex has run amok, and the results are, unfortunately, all too typical of the corruption of this administration (sigh).
Sorry if I hijacked your diary, but this is a subject that just pisses me off.
This subject concerns me too, for many reasons. You are right about Cheney as SECDEF, hiring B&R to form a proposal, then a plan… then they bid on it (as KBR/ Halliburton). To bid on a plan you wrote is, well its akin to insider trading. I will grant that Cheney isn’t all to blame, really. Downsizing the Pentagon was an institutional decision that he carried out, played a large role in, but was certainly not alone.
The Revolution in Military Affairs, led by Cold-War hawk and head of the Office of Net Assessments, Andrew Marshall, is built on the idea of a superior fire-power/ technology which would not need as many troops for active war. Sound familiar? The two together (RMA and PMCs) lessen the impact on the American public. With no draft and companies willing to fill the void, the source of outrage has been diluted.
Think about the number of people in America how are directly effected by someone they know being in Iraq compared to in Vietnam. I would say there is less, yet had we executed this war like Vietnam, there would be more US troops there today, doing the menial work now outsourced. Palatability. If the Pentagon can hire people for force provision, combat and logistics, who in America is really going to care, save the few directly effected? War becomes easier, politically.
It is difficult to judge how much is being appropriated to contractors, however I would suspect it is in 50% range, if not more… And as a former member of the military (I am not), you have every reason to be pissed. I’m glad you haven’t started up your own company which appears to be a viable retirement plan for many. Peace.
[Comment cross-posted at dailykos]
Since I don’t have a WSJ subscription, I can’t read their original article. Did it touch on issues relating to any other of the payment disputes that Halliburton/Kellogg Brown & Root have been having with the Pentagon? I’d posted a couple of diaries on these over at dailykos, all under the general heading “Halliburton Watch”:
It really seems like there’s no end to the company’s mendacity. It’s also staggering to think how Republicans would be reacting if it was a Democratic administration in the White House with the target company’s former CEO serving as Vice President. Let’s just say that it wouldn’t be a pretty sight.
hardy har har reprinted the whole article at dKos. The fuel from Kuwait was not a part of the agreement, only the dining services.
It’s also staggering to think how Republicans would be reacting if it was a Democratic administration in the White House with the target company’s former CEO serving as Vice President.
Under a different scenario, as I’m sure you know (I have glanced over your diaries – intend to read them fully) Rumsfeld as a member of Congress pushed LBJ hard on his connections to Brown&Root.
The WSJ updated the article with
<snip>
In its press release Tuesday, Halliburton said it had reached definitive agreements on $10.5 billion in Army troop support contracts in addition to reaching the agreement with the Army on the dining services issues.
“This milestone allows us to continue to satisfy federal regulations while providing the quality support on which the soldiers on the ground in Iraq and elsewhere depend,” Halliburton Chief Operating Officer Andy Lane said in a statement.
Halliburton’s press release:
“KBR and our customer have been working to definitize these task orders for more than a year. Achieving this, especially given the challenges of definitizing services provided in a constantly changing war zone, took an outstanding team effort,” said Andy Lane, chief operating officer, Halliburton. “We salute the efforts and diligence of the AFSC and our other government partners. This milestone allows us to continue to satisfy federal regulations while providing the quality support on which the soldiers on the ground in Iraq and elsewhere depend.”
Among the definitized task orders were: life support provided to the U.S. and Coalition troops and Coalition Provisional Authority; logistics support; and the theater transportation mission.
Dining Facility (DFAC) Billing Issue Resolved
Included in the 27 definitized task orders are 14 related to dining facility services the company provided U.S. and Coalition troops in Iraq and Kuwait. Under the terms of the agreement, AFSC will pay KBR $1.176 billion while retaining $55.1 million of approximately $200 million in payments that had been withheld while these issues were resolved. KBR stated it will negotiate payment adjustments with its subcontractors as a result. Additionally, portions of the 14 affected task orders were converted from Cost Plus Award Fee to Firm Fixed Price in order to streamline contract administration.
This negotiated agreement resolves a payment withholding issue that has been pending since February 2004.
“This is clearly good news for the company,” added Bruce Stanski, senior vice president of KBR’s government and infrastructure division. “As we have said before, we have withheld amounts from our subcontractors based on the government’s actions and we do not expect any negative financial impact from this settlement as a result.”
The dining facilities issue stemmed from interpretive differences in billing approaches for services provided at several sites during the first nine months of the war. The U.S. Army specified minimum numbers of troops that every facility should be prepared to serve on any given day. When KBR’s subcontractors billed for those minimum numbers, however, the Defense Contract Audit Agency (DCAA) suggested the bills should be based on the actual number of troops served each day – rather than the minimum numbers of soldiers the subcontractors were directed to be prepared to serve.
KBR is a global engineering, construction, technology and services company. Whether designing an LNG facility, serving as a defense industry contractor, or providing small capital construction, KBR delivers world-class service and performance. KBR employs more than 60,000 people in 43 countries around the world.
Halliburton, founded in 1919, is one of the world’s largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services and Engineering and Construction Groups. The company’s World Wide Web site can be accessed at http://www.halliburton.com.
I hadn’t seen the reprint of the article over at dKos until after I’d posted my reply. (You’re right, though, that hardy shouldn’t wantonly violate the WSJ copyright, especially since they’re a pay service website.) Thanks for the update.
The Halliburton press release contains some of the best language I’ve seen in a long time, particularly “interpretive differences in billing approaches.” Such differences would presumably be large enough to drive a fuel-supply truck through.
Without digging around too deeply, it does seem that this new agreement regarding “definitization of 27 outstanding task orders” does relate to the billing dispute I’d covered back on Feb. 3. This is clearly an attempt to resolve at least a portion of the task orders at issue there. It’ll be interesting to see where all this leads next. I remain hopeful that maybe, just maybe, there will be further government investigations and audits of the company’s billing and subcontracting practices. Being a realist, however, I’m not holding my breath.
I thought you might appreciate that line. It stuck out for me also. Let'[s see how they handle the fuel charges from Kuwait. They seemed to slip through this one; the decision didn’t make me hopeful. They were able to pass the buck onto subcontractors (and this may be warranted, I don’t know, I’m not just ready yet to believe it), and they didn’t really lose any money. They just will not pay the contractors. In addition, they contract change actually made them some money, and they earned bonuses in some places as well (which, again, may be warranted and seperate from these other charges). For now, it seems, they have dodged another accusation.