The Ugly End to the Largest Service Contract in U.S History

May 13, 2013

Dealings between KBR and the Army have gotten “very nasty” as the two try to close out the largest government services contract in U.S. history, according to an article in Federal Times.

The dispute is over whether the remaining work in the $38 billion Logistics Civil Augmentation Program (LOGCAP) III should be completed on a fixed price basis, which the Army wants, or a cost-reimbursable basis, which is what KBR wants. The LOGCAP III contract provides everything from food to housing for the U.S. military in Iraq.

From the article:

By its own estimates, KBR says the closeout work on the contract will cost more than $500 million and take up to 13 years. The final decision on the closeout, as well as years of still-unresolved audits, could cost or save the government hundreds of million of dollars in additional costs.

The dispute has led to a badly damaged relationship between the Army and one of its largest contractors. Army officials sent KBR an ultimatum on the fixed-price issue, and KBR has responded with a lawsuit.

Read more at Federal Times.

Topics: Contract Oversight

Related Content: Defense

Authors: Andre Francisco

Submitted by microsrfr at: May 20, 2013

Any attempt to use a for-profit corporation as a single source, cost-reimbursable means of providing government services is destined to rip off the taxpayers. In the case of military support in a war zone, it also endangers our troops.

Submitted by Nik Nikkel at: May 13, 2013

I don't need no stinkin' nickname. The Army should fire this company and bring in another on fixed price and payment on complete performance only.

Submitted by vj at: May 13, 2013

I was in Iraq in the Green Zone in 2004-2006 and KBR ran the housing services, mostly trailers. One way to drastically increase profits in contracts is to create multiple departments with overhead and work flowing through them. Thus when civilian contractors and newbies arrived in the US Embassy, they had to go through three different buildings, each with their own staff and overshead, just to get a place to sleep. One for the place to sleep, one for bedding, and one for a phone. KBR had multiple department billing down to a science.

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