Employees of PPI Construction, a sub-contractor for KBR work as part of demilitarization efforts aboard Camp Fallujah, Iraq, on Nov. 30, 2008. Camp Fallujah is being demilitarized to be turned over to the Iraqi government. (LANCE CPL. ADAM ROOT / MARINE CORPS)
The top dog in contracted support services for the military since 2001 has been KBR. As the sole vendor on the LOGCAP III contract, KBR won $37 billion worth of work to provide troops deployed to Iraq, Afghanistan and Kuwait with everything from dining hall and laundry services to recreation and mail delivery.
In the year since the Army awarded a new, follow-on combat-support services contract — called LOGCAP IV — to three vendors, including KBR, the company has not won any work.
All seven task orders awarded so far — for a variety of support service in Kuwait and Afghanistan — went to the other two vendors on the LOGCAP IV contract: DynCorp and Fluor. Fluor won $500 million worth of work; DynCorp won $750 million. Under the contract, all three vendors must compete for all task orders.
Under LOGCAP IV, which was awarded in June 2007, each of the three companies has the potential of performing $5 billion worth of work per year.
Lee Thompson, executive director of LOGCAP, declined to say why KBR has not won any work under the new contract. Those decisions are "source-selection sensitive," he said.
But Thompson pointed out that the Army added two additional vendors to the LOGCAP IV contract to generate innovative solutions at the best prices. According to Army solicitations, the key criteria for LOGCAP IV task order awards, in order of importance, were technical skills, past performance and price.
Also, the Army became aware of limitations in having a sole-source arrangement under LOGCAP III. With three vendors, there is another vendor to provide people and services if one or two of the competitors are fully committed elsewhere, Thompson said.
"That's the whole thing with competition," Thompson said. "You get that flexibility."
Auditors repeatedly criticized LOGCAP III's inflexibility and said the sole-source nature of the contract led to overpricing and shoddy services in some cases.
In a statement, KBR spokeswoman Heather Browne shrugged off the company's LOGCAP IV losses and LOGCAP III criticism. "KBR will work to maximize our service offerings to the military and therefore maximize our chances of success of obtaining work under LOGCAP IV," Browne said in a written statement. "No company is better positioned to provide support on LOGCAP IV than KBR."
In snubbing KBR in the first seven task orders on the contract, the Army apparently sees it differently.
KBR protested three of those decisions before the Government Accountability Office, but was unsuccessful.
In two cases, GAO said KBR lost the competitions because it failed to follow Army instructions.
In one case, the Army's solicitation for work said the military would provide one level of security for contractors, but KBR's proposal dictated its own preferences for worker security.
In another case, KBR was disqualified from two competitions because it refused the Army's request to remove a manager from its LOGCAP team. The Army asked KBR to remove the manager because the Army mistakenly sent that manager proprietary information concerning other competitors as part of an attempt to allow KBR to comment on a poor performance evaluation.
A commission created by Congress to examine past problems in combat support services contracts was sharply critical of KBR. The Wartime Contracting Commission in August held a hearing in which commissioners blasted a KBR executive — senior vice president for compliance William Walter — for refusing to fix problems with the company's accounting system, as directed by the Defense Contract Audit Agency.
KBR has also been the subject of whistleblower complaints claiming the company inflated headcounts at military dining and recreation facilities to boost revenue. Another set of whistleblower complaints alleged KBR's subcontractors performed shoddy wiring at some KBR-managed facilities in Iraq under another contract. That shoddy work is said to have caused the electrocution of 18 service members and civilians.
Industry sources say attention from Congress, the Wartime Contracting Commission and other watchdogs has made contracting officers gun-shy about awarding work to KBR under the new contract.
KBR's competitors, however, chalk up their wins to their own capabilities, rather than KBR's past performance problems.
In winning work in Afghanistan, DynCorp was able to build on past experiences transporting goods into the country through alternative overland routes and using its own air fleet to show it can meet the contract's demands for swift and reliable services, said Spence Wickham, DynCorp's LOGCAP IV program manager. Likewise, Bob Jones, Fluor's LOGCAP IV program manager, said the fact Fluor was able to start transitioning work from KBR in Kuwait within 72 hours of getting final approval from the Army showed the company would be able to move just as quickly in Afghanistan.
Fluor had pre-positioned staff and equipment to take on the job in Kuwait and is doing the same in Afghanistan, he said. In addition, past private- and public-sector work building facilities in remote locations, such as South America and Indonesia, proved the company could operate in austere environments, Jones said.
LOGCAP III will end when the transition to LOGCAP IV is completed next year.