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Charges Stack Up, Like KBR's Bankroll

Editorial

There's waste, fraud and abuse of spending in every war, and the latest controversy in Iraq points once again at a politically well-connected Texas company, KBR Inc., based in Houston. Congress should press the Army hard for explanations.

A former Army civilian official, Charles M. Smith, has told The New York Times that in 2004 he refused to sign off on more than $1 billion in questionable charges from KBR. The charges had been questioned by the Defense Contract Audit Agency, which said they weren't credible.

But, Smith charged, KBR went over his head; he was suddenly replaced, and after a review by another outside contractor, the billings were approved.

Jeffrey Parsons, executive director of the Army Contracting Command, told the Times that Smith was not replaced because of pressure from KBR, but the issue was "discussed all the way up to the office of the secretary of defense."

Parsons said: "You have to understand the circumstances at the time (2003 and 2004). We could not let operational support suffer because of some other things."

That sounds like KBR had the Army over a barrel -- the Army needed the services KBR provided, such as feeding troops, providing them housing and other services, and if bogged down in a dispute over the $1 billion, KBR would start cutting back on its services. And apparently there was no other company that could take up the slack, at least not soon enough. The Army's solution appears to have been: "Just pay the bill and get on with it."

KBR denies doing anything wrong, and the controversy has not hurt its ability to keep contracting for the government -- it recently signed on for part of a $150 billion, 10-year contract with the Army for its services in Iraq.

KBR is no stranger to controversy, and it has friends in high places. The company used to be owned by Halliburton, another Texas company, whose chief executive from 1995 to 2000 was Dick Cheney, the vice president.

The unfamiliar letters in its name may give KBR a certain anonymity, but it is the direct corporate descendant of another Texas company that grew large and wealthy off political contacts and government contracts -- the old Brown & Root Inc.

Brown & Root prospered thanks, in part, to a close relationship with a young congressman representing Central Texas, Lyndon B. Johnson. It built highways, dams on the Colorado River, military bases in World War II and, later, took on major construction projects in Vietnam.

Brown & Root was eventually acquired by another large firm, Halliburton, and then merged with the engineering subsidiary of another acquisition to become Kellogg Brown & Root. Last year, Halliburton spun the company off and it became KBR -- still a huge company, with more than 50,000 employees and billions of dollars in contracts paid for by taxpayers.

According to U.S. Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, KBR "has repeatedly gouged the taxpayer, and the Bush administration has looked the other way every time."

Smith's claims sound credible, and Congress -- more than a few members of whom ran on ringing promises to root out "waste, fraud and abuse" in government spending -- ought to get to the bottom of them.

Copyright 2008 The Austin American-Statesman

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