Audit Faults KBR's Prices

Team Infidel

Forum Spin Doctor
Houston Chronicle
June 17, 2008 Pentagon report alleges cases of post-hurricane overcharging
By Bloomberg News
KBR overcharged the U.S. Navy for providing meals to workers and service personnel in the aftermath of Hurricane Katrina, according to a Pentagon audit.
The Pentagon Inspector General said he could find no documentation in Navy contracting files to back up KBR claims it paid fair and reasonable prices to subcontractors that served meals in New Orleans.
"The prices KBR agreed to pay were greatly inflated," the 86-page audit said.
"The Navy paid approximately $4.1 million for meals and services we calculate should have cost $1.7 million, more than a $2.3 million difference," said the audit, signed by Assistant Inspector General for Acquisition Management Richard Jolliffe.
KBR paid for 227,500 meals over a 34-day period, yet the subcontractors served only 113,654, fewer than half, and the remaining meals were discarded, the audit said. It recommended the Navy demand a refund from KBR of at least $1.4 million.
The overcharges were one element of mismanagement by Houston-based KBR, of three Navy contracts valued at $229 million for cleanup and restoration of Navy facilities damaged after Hurricane Ivan in 2004 and Katrina in 2005, the audit said.
Altogether, the audit requested that the Navy seek refunds of at least $8.5 million for "inappropriate" payments to KBR.
KBR spokeswoman Heather Browne said "KBR does not agree with many of the conclusions contained in the report."
"We fully cooperated with the inspector general in its review and provided our comments, including exceptions, to the inspector general," she said in an e-mailed statement. "We will continue to work with the Navy to resolve any items associated with the contract that are unresolved."
KBR was put on contract by the Naval Facilities Engineering Command's Southeast division in Jacksonville, Fla., to provide post-hurricane recovery to damaged government buildings, including removing sodden carpet and drywall and debris, repairing roofs and providing trailer parks for displaced Navy families.
KBR is the largest contractor in Iraq, providing support services for the Army as well as repairing oil infrastructure.
The complaints in this audit echo previous charges about the company's contracting practices for work in Iraq and Kuwait, including poor oversight of subcontractors and passing on inflated prices to the U.S. military.