The consequences of questioning dubious Halliburton contracts

June 17, 2008

As a rule, you’d think that military officials who question dubious contracts and protect the interests of taxpayers would be rewarded. Not in this administration.

The Army official who managed the Pentagon’s largest contract in Iraq says he was ousted from his job when he refused to approve paying more than $1 billion in questionable charges to KBR, the Houston-based company that has provided food, housing and other services to American troops.

The official, Charles M. Smith, was the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the war. Speaking out for the first time, Mr. Smith said 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.

Army auditors had determined that KBR lacked credible data or records for more than $1 billion in spending, so Mr. Smith refused to sign off on the payments to the company. “They had a gigantic amount of costs they couldn’t justify,” he said in an interview. “Ultimately, the money that was going to KBR was money being taken away from the troops, and I wasn’t going to do that.”

Smith wasn’t, but his successors were. Army officials not only quickly removed Smith from his position, they also went outside the Army to consider KBR’s claims and then approved the payments with which Smith was uncomfortable.

Army officials told the NYT that they did reverse Smith’s decision, but they felt it was necessary to provide basic services to U.S. troops. “You have to understand the circumstances at the time,” Jeffrey Parsons, executive director of the Army Contracting Command, said. “We could not let operational support suffer because of some other things.”

So, the only way to provide services to the troops was to approve $1 billion in payments for a Halliburton subsidiary that the company couldn’t substantiate? Really?

Worse, the pressure Smith felt went beyond just this one dubious contract.

Mr. Smith, a civilian employee of the Army for 31 years, spent his entire career at the Rock Island Arsenal, the Army’s headquarters for much of its contracting work, near Davenport, Iowa. He said he had waited to speak out until after he retired in February.

As chief of the Field Support Contracting Division of the Army Field Support Command, he was in charge of the KBR contract from the start. Mr. Smith soon came to believe that KBR’s business operations in Iraq were a mess. By the end of 2003, the Defense Contract Audit Agency told him that about $1 billion in cost estimates were not credible and should not be used as the basis for Army payments to the contractor.

“KBR didn’t move proper business systems into Iraq,” Mr. Smith said.

Along with the auditors, he said, he pushed for months to get KBR to provide data to justify the spending, including approximately $200 million for food services. Mr. Smith soon felt under pressure to ease up on KBR, he said.

Told of Smith’s account, House Oversight and Government Reform Committee Chairman Henry Waxman said it “is startling, and it confirms the committee’s worst fears. KBR has repeatedly gouged the taxpayer, and the Bush administration has looked the other way every time.”

Raise your hand if you’re surprised.

…what? No hands?

  • Come on down, John McCain. You’re Sistah Souljah moment has arrived. Senator? Hello-o-o-o!

  • And is it any wonder that the TV show “Jericho”, the villians were the corporate vultures J & R
    ( not to be confused with a great store in NYC ). Heh, they even parroted Blackwater ( Ravenwood) as trigger-happy mercenaries. Art imitates life.
    just 1/300th of the fraud waste and abused, paid for by the American Taxpayers.

  • This cannot surprise anyone with basic math skills. The “conflict” is costing us 300 million dollars a day. If you take basic pay to 130,000 soldiers you come up with roughly 1.5 million. Take benefits and upkeep maybe 5 million dollars tops. Do not include equipment as GW decided to have the National Guard bring their own. Who is getting the other 295 million dollars a day? Do you really think they will give up this kind of income ( most likely going thru the Cayman Islands so no income tax) without a fight?

  • What ever happened to war profiteering being viewed as treason by our nations leaders?

    But where’s the outrage? Where is the leader with the courage to say, as Franklin Roosevelt did during World War II, “I don’t want to see a single war millionaire created in the United States as a result of this world disaster”? Democrats in Congress–and Republicans who have not placed their conscience in a blind trust for the duration of the Bush/Cheney years, a group we hope still includes Arizona’s John McCain in the Senate and Iowa’s Jim Leach in the House–should borrow a page from past wars, when the nation’s elected leaders knew what to call businessmen who used hostilities abroad as an excuse to raid the federal treasury. Senator Robert La Follette tagged them as “enemies of democracy in the homeland.” During World War II Harry Truman referred to some forms of war profiteering as “treason.”

    The full article can be found here: http://www.thenation.com/doc/20030512/editors.

  • Billing dispute? Government payments too slow? Well, then, just cut off the flow of food and supplies to the troops. Gotta love those patriotic, Cheney-backing, all-American guys at KBR Haliburton. Here’s to the free market.

  • So What. What is Waxman going to do about it? Subpoena for W.H. Records? That’s a laugh. He’d have better luck if the Pentagon was caught downloading child porn. Now that’s something you can get arrested for. Or not paying their income taxes. That’ll place you in a world of shit. But milk the government out of Billions with Darth Cheney taking a cut? Forget it…

    This “exercise in futility” (Waxman trying to hold these bastards accountable) is nauseating. Bushit and his democratic pals(Pelosi and Ried) in the Congress and senate will just thumb their noses at his week kneed efforts. He’s such a bore to them. When’s the last time you saw/heard outrage from Pelosi? She’s in on it to the hilt. So is Ried. Follow the money.It most definity doesn’t lead to Kucinich…

  • No surprise here–same thing happened to me when I worked for the Corps of Engineers in Germany. After I refused to authorize spending $2,000,000 on a building at Ramstein without having a description of how it was to be spent, I was offered a tour in Baghdad or at headquarters where nits were kings. Having done two tours in Vietnam, and knowing that (IMHO) HQ was like bedlam, I declined the offer. Suddently, there was no money for my position and I wound up in Cheyenne, Wyoming in short order.

    At least I kept my conscience clear and my self-respect.

  • The Democrats — and the American people — need to be reminded that Senator Harry Truman made his bones investigating fraud and overcharges in military contractors during World War II.

    http://www.commondreams.org/views06/0302-24.htm

    George Marshall said something along the lines of the work Truman did there was the same as giving him another division in the field. Investigating this kind of fraud and abuse is the very essence of wartime patriotism.

  • From what i understand, KBR was threatening to stop feeding the troops unless they got paid. (At one time armies were expected to ‘live off the land’ — basically subsisting on what they could ‘requisition’ — read ‘steal’ — from the territory they were occupying, but those days are long gone. Besides, the troops in Iraq aren’t engaged in a true war — we did win that — but in trying to establishing a peace and supporting a new government, so this wouldn’t apply.)

    I agree that a Truman Commission is needed, and that it may result in some major action but the attitude of the country is not the same now. In WWII the whole country was mobilized, so the war profiteers were directly hurting all of us.

    This is a little muddled — where’s my caffeine — so please don’t think I am doing anything but condemning KBR.

  • Sadly ironic that serving food to those who serve our country shows what we all must eat when more and more government functions are privatized. The shame is how late any of this becomes public, too late, if at all.

  • Halliburton is going to pay through the nose for the rest of the century, whether they are in the Caymans or not. And KBR and its mercenary gang of southern pirates (rapists, thieves, murderers) are going to “walk the plank”

  • KBR has repeatedly gouged the taxpayer, and the Bush administration has looked the other way every time.

    I’ll raise my hand for this. The Bush administration “did not” look the other way every time, and they didn’t look the other way at all; they looked on with gleeful approval at each and every opportunity.

    Bring on the trials!

  • Tom Cleaver & Steve:

    I hate to write this but it doesn’t seem as though KBR will “walk the plank”. With all the rampant corruption so evident within this government now and in the past, no real action ever seems to be taken. How long can we wait and who can we count on to see that these thieves get their day in court? I want to see it happen but will it?

  • I agree with SHI. What can us ordinary citizens do, except write to our Congressmen and women?? That seems pretty futile. The corruption is so inherent in our political system. Who will ever have the power to hold these KBR crooks accountable? Part of me blames the ignorant people who voted for Bush in the first place and supported his so-called “war” in Iraq. Until the American way of life changes even more drastically (for example, no more cookouts, NASCAR or gas for our cars), the war profiteers will continue to make millions from a conflict that taxpayers have no choice but to fund, and young men and women will continue to be killed and maimed every day.

  • “Army officials told the NYT that they did reverse Smith’s decision, but they felt it was necessary to provide basic services to U.S. troops. ‘You have to understand the circumstances at the time,’ Jeffrey Parsons, executive director of the Army Contracting Command, said. ‘We could not let operational support suffer because of some other things.'”

    “Operational support”? You mean, like body armor and armored vehicles, stuff like that?

  • Eisenhower’s warning about the military-industrial-government complex is more right today than when he said it. All the billions wasted in Iraq, though, have nothing to do with the falling American economy, they’d like you to believe.

  • Unfortunately SOTBS, Jim Leach (R-IA, and who really was great on these issues) is no longer there – he was beaten by an unknown, which, since I am a Democrat, was nice since it added to our numbers, but I still hated to see Leach go.

    I want this to be brought up every time a Republican claims that they are a party of “fiscal conservatives” or “fiscal responsibility.” This is further proof against the existence of god. If s/he existed, every time a Republican claimed to be fiscally responsible they’d be struck down by lightning where they stood.

  • Man, i’m in the wrong business. Pharmaceuticals are huge, but you have to prove effectiveness and safety to the FDA.

    Defense contracting seems to be the way to go. If some douchebag 20 something year old can supply crappy ammo to the afghan army, I can do it. I’d LOVE to become an international arms dealer, cause guns are fun. Although making drugs is fun, you can’t blow shit up with drugs.

  • KBR has gouged the American taxpayer? How about Cheney has gouged the American tax payer.When will Congress hold Bush/cheney cabal accountable?

  • That’s what I mean ml johnston….nothing ever comes of any of this…The list goes on and on and on. With all the countless instances of greed and corruption, what’s Waxman waiting for. Could someone explain the process(es) involved in prosecuting these parties?

  • It’s easy, although quite displeasing, to assume that inaction by Congress in any capacity equals complicity of some sort…scared of their own corruptions being discovered. They all seem to have their hands in the honey jar. I feel angry and helpless too.

  • “You have to understand the circumstances at the time,” Jeffrey Parsons, executive director of the Army Contracting Command, said. “We could not let operational support suffer because of some other things.”

    I read that sentence and the first thing that popped into my mind was blackmail / extortion. How else could holding up a payment effect operational support unless Haliburton was threatening to withhold services if the money was not provided?

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