Lawful Approach to Kellogg Brown and Root

Share on Facebook0Share on LinkedIn0Share on Google+0Tweet about this on Twitter0

1. Introduction

Since the beginning of a new beginning in the terrorism industry, more specifically the September 11th attack, our military infrastructure and personnel seemed rested in a since that our national health coverage faired likely to be healthy, secure, and strong. Just as stated, our senses were weakened and our perceptions were fogged by an illusion of invisible/invincible/imaginary formations of control that only the puppeteer could enact. National defense became unreliable and US citizenship bared little to be confident about. But behind the cloud of smoke and cries of sorrow became more pain; pain that didn’t necessarily result physically, but economically. As if we had a global pandemic of an infectious virus that infiltrated our stock markets and even our homes. Newtons Third Law states that “For every action there is an equal and opposite reaction”, and on that day, September 11, 2001, our actions turned one mess into 30, and the state of our nation decreased both in health and in security.

This was a turning point in history for our nation, as well as an opportunity to strategically plan our defense and focus on matters that affected us in countless ways. Our commitment to our nation made it a priority and an obligation to protect and defend our freedom. As a nation we assign these duties to the most respective resource we have at hand. The most influential decision that will be the focus of topic is the affect of the Logistics Civil Augmentation Program III (LOGCAP III). LOGCAP III is controlled by Kellogg Brown & Root (KBR) which is a subsidiary of Halliburton.

Halliburton, founded in 1919, is one of the world’s largest providers of products and services to the energy industry. With over 50,000 employees in approximately 70 countries, the company serves the upstream oil and gas industry throughout the life cycle of the reservoir – from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field (Corporate Profile, 2009).

KBR, Inc has gone through many changes over the years. Morris Kellogg found “The M.W. Kellogg Company” in New York City in 1901. The company initial business was power plant construction and fabrication of power plant components. During the 1930s and 40s the company had grew tremendously and Kellogg built the only complete refinery during World War II. In the 70s Kellogg became the first American contractor to receive a contract from the People’s Republic of China (Kellogg, Brown and Root: Facts, 2009).

In 1919 two brothers founded Brown and Root, George R. Brown and Herman Brown, in Texas. One of the brothers’ biggest projects was during the Depression years building a dam on the Texas Colorado River (Robert A. Caro, The Path to Power). The brothers needed assistance with the funds to build the dam. For these funds they turned to Congressman Lyndon B. Johnson whom they had helped during his campaign and would later help during his first run for the U.S. Senate in 1941. Brown and Root wrote these large sums of campaign contributions donations off as deductible company expenses. This was a violation of IRS rules and Brown and Root were threatened with an investigation of criminal charges of illegal campaign donation. Brown and Root settled with little to nothing when President Franklin D Roosevelt told I R S to back off. Brown and Root later built one of the world’s first offshore oil platforms in 1947.

Herman Brown of Brown and Root died and the company was acquired by Halliburton Energy Services in 1962. During the 60s (in the anti war movement) protestors derided Brown and Root as “Burn & Loot”. Brown and Root were emerged with The M.W. Kellogg Company to form Kellogg Brown and Root. Kellogg Brown and Root (KBR) were awarded the largest contract in 2003 for approximately $200 million to support the war in Iraq. Today, this amount has exceeded over billions. In recent years KBR has been under investigation due to fraud and audited for violations of the contract.

2. Contracts Awarded

KBR has won and been given multiple contracts payed by tax payer dollars. Only certain contracts have been made unclassified because the majority of the contracts are prepared as top secret due to our national defense counsel. The contracts that draw substantial and important matters to our attention are the oil contract of 2003, and the Logistics Civil Augmentation Program III. KBR has had a place in governmental contracts for sometime now, all the while accumulating a reputation. 50% of all contracts that are pursued by KBR are won without any competitive government biding (Ethics at Halliburton & KBR| Ethics in Business, 2009). A no-bid contract is a contract stating that there is only one source (or company) that can provide the services needed. They have a full range of services and resources that stretch across multiple countries, but what exactly do our top leaders and representatives agree too when presented by a highly respected and unquestionable provider.

2.1. March 2003 Oil Contract

During the initial military invasion of Iraq, the 2003 oil contract was awarded to KBR. The no-bid contract was originally awarded for fighting fires in oil installations and fields in Iraq, but was later claimed to have been a “bridge” contract without ever inviting competitive bidding. This contract was a direct path, bypassing the “open door” sequence, straight into the 3rd Logistics Civil Augmentation Program.

2.2. Logistics Civil Augmentaion Program III

The Logistics Civil Augmentation Program (LOGCAP) consisted of civilian contractors who served US soldiers in support of military forces and in the Department of Defense (DoD) missions. LOGCAP is a Department of the Army Program which includes all pre-planned logistics and engineering/construction oriented contingency contracts actually awarded and peacetime contracts which include contingency clauses (Logistics Civil Augmentation Program LOGCAP, 2009). KBR has been a major influence in the LOGCAP process, holding both LOGCAP I and LOGCAP III contracts.

3. Fraud and Violiations of the Contract

3.1. Fraud

KBR is known for being one of the largest contractors in Iraq and Afghanistan, which is a good business title to hold. But, on the down side, KBR is also known for fraud; $13 billion is being questioned on the cost or charges that KBR has made to the government. There are 32 cases of suspected overbilling, bribery and other violations since 2004 (Nakashima, 2009). The cost of housing, feeding soldiers, washing their clothes, and recreational services soared from $55million in 2001 to $5.7 billion in 2008. A questionable amount of $553 million in payments have been stopped or suspended because of invalidity.

Former employees of KBR have been charged with defrauding the government and receiving illegal payments. Glenn Allen Powell pleaded guilty of receiving up to more than $110,000 in bribes. He would award contracts to subcontracts and receive an instant 20 percent off top of the amount. Investigators found $8,000 worth of $100 bills on top of the refrigerator in Iraqi dinars at Powell’s residents. Another employee, Jeff Alex Mazon, was indicted in defrauding the U.S. government of approximately $4 million. Both employees were fired from KBR (Nakashima, 2009).

3.2. Violation

KBR is also being audited for $10.7 billion in reference to violations of contract in reference to a recycling program. The U.S. Army has a recycling campaign. KBR’s part in this campaign is to recycle the food and trash that leaves from the dining facility. The dining facility is set up for soldiers to exit the dining facility and put trash in recycling containers. After this process is done KBR should continue the process and recycle the trash. Instead of recycling KBR is taking all of the trash to one big burn pit and burning all the trash together (Peter, 2009).

4. Ethics at Kellogg Brown and Root

KBR has many allegations and speculative questions in response to the multiple contracts awarded to them. Their credibility deteriorates every time they enter into a new project, and overall satisfaction falls terribly in the eyes of America. Countless concerns of unreliable, disorganized and untrustworthiness flow the hearts and instincts of many a US citizen. Problems such as financial, environmental, and even humanitarian issues have raised the concerns of people all over the world.

4.1. The Corruption

In one case, the government’s contracting officials reported that KBR attempted to inflate its cost estimates by paying a supplier more than it was due. In another, KBR cut its cost estimates in half after it was pressed on its true expenses. In a third, KBR billed for work performed by the Iraqi oil ministry, and these are just to name a few (Documents Trace KBR Billing Problems, 2006). Financially this raises a concern to both the government and tax payers in general. With the radical spending being done by KBR, ethical behaviour could be far from the truth when signing any agreement with the company.

The dilemma is in the pudding, but the contracts that are being prepared take more than one ingredient to fulfil; and you can thank political payoffs. This may be considered speculation, but I’m not going to say any names, “Dick Cheney”. KBR was awarded the Iraq /Afghanistan contract under the Bush administration. Dick Cheney was once the CEO of KBR. Many people questioned if KBR was awarded the contract in Iraq/Afghanistan or shown favouritism because of Dick Cheney (then Vice President of the United States). Dick Cheney has said many times that he had no role in the selection process of the contract. The contract can be beneficial to Dick Cheney because he receives deferred compensations from the company. On the September 14, 2003 edition of NBC’s Meet the Press, Vice President Dick Cheney said, “And since I left Halliburton to become George Bush’s vice president, I’ve severed all my ties with the company, gotten rid of all my financial interest. I have no financial interest in Halliburton of any kind and haven’t had, now for over three years.” The only thing I hear is, “out of three years of nothing but pure profits from one of the leading government contractors, I have managed to spend all of the money I took (I mean earned) to completely disassociate my self with them”. They say that pudding consists of more than one ingredient to make it taste good, but unfortunately too much of something can turn it sour.

4.2. The Treatment

America has made it self known for its human rights laws, but has had many issues and facing issues dealing with the violations with these laws. Ethically we can all agree that mistreatment of any one person is wrong, but now it’s resulted as to how wrong it actually is. A Washington law firm filed a lawsuit against KBR, alleging that the company and its Jordanian subcontractor engaged in the human trafficking of Nepali workers (Partner in Iraq Contract Sued in Human Trafficking Case, 2008). Insurgents, hired by KBR and a subcontractor, kidnapped 13 kitchen workers in Iraq and used the only one remaining victim for warehouse work, against his will. Only one survived. This is another good representation of a United States governmental contract being misrepresented in foreign countries unethically.

4.3. Negligent Homicide

KBR signed a contract with the United States Army in December 2001 under the LOGCAP for approximately $270 million. This contract was for KBR to provide housing for the Soldiers, build POW camps and accommodate the Iraqi Survey Group (teams to find weapons of mass destruction). KBR provided housing for the Soldiers and have been criticized because of the electrical work that they performed. KBR was charged by the U.S. Army for improper installation of electrical units in bathrooms throughout U.S. military bases. KBR’s charge came from the death of two Soldiers being electrocuted on the military bases overseas. KBR knew that there was a potential hazard in the building 11 months before one of the incidents, but failed to fix the problem because the contract was only to fix problems after they have been broken (Associated Press, 2009). Ethics should have played a role in KBR’s decision making process. Any supervisor or person(s) who sees a potential problem that may harm or either kill a person should make a decision based on values. If this wasn’t outlined in the contract and knowing the severity of the problem KBR should have gone to the U.S. Army and explained the seriousness of the electrical problem. One of the soldier’s deaths was ruled as accidental but investigators asked that it be changed to negligent homicide. Just as in the 1940s, KBR was basically slapped on the hand and given another contract in the amount of $35 million for major electrical work just months after a Level III Corrective Action Request was issued. There are 18 other cases under review for electrical related deaths. (Associated Press, 2009)

5. Conclusion

Listed above are only a few cases that KBR is or have been faced with. Despite all that KBR has gone through, KBR is still a very competitive company with the federal government contracting services. KBR has been recently asked to downsize on its people in Iraq due to the downsizing that is occurring in Iraq. As of yet they have not downsize and are currently charging the government on services that are not needed. The government can ban companies in cases of fraud, antitrust violations, bribery, and tax evasion or for action that reflects a lack of business integrity or business honestly. KBR have not been debarred, suspended, nor have they been proposed for department from government contracting. The United States has spent $270 billion in overall defense acquisitions and contracts between September 11, 2001 and 2005 (Ethics at Halliburton & KBR| Ethics in Business, 2009). The obvious pain in financial instability is effortless to find. KBR has proven itself to be unethical, inhumane, unreliable, and incredulous when it comes to developing governmental contracts. KBR was a part of Halliburton for 44 years and on April 5, 2007 Halliburton announced that it had broken ties with KBR.

References

“KBR Gets Pentagon Electrical Contract — Despite Link to Electrocutions in Iraq.” KBR

Gets Pentagon Electrical Contract — Despite Link to Electrocutions in Iraq. Associated Press, 28 Feb. 2009. Web. 11 Nov. 2009.

“KBR Got Bonuses for Work that Killed Soldiers.” The Nation | Unconventional Wisdom Since 1865. 20 May 2009. Web. 24 Nov. 2009. <http://www.thenation.com/doc/20090601/scahill?rel=hp_picks>

Nakashima, Ellen. “KBR Connected to Alleged Fraud, Pentagon Auditor Says.”
Washington Post Staff Writer, 5 May 2009. Web. 20 Nov. 2009.

Peter, Tom A. “Iraq: US military contractor burns recyclables, violating contract.” Iraq: US military contractor burns recyclables, violating contract. Correspondent of The Christian Science Monitor, 30 Oct. 2009. Web. 15 Nov. 2009.

““Safeguarding Taxpayer Dollars in Iraq: An Insider’s View of Questionable Contracting Practices by KBR and the Pentagon”.” Senate Democratic Policy Committee Hearing. 9 July 2008. Web. 24 Nov. 2009.

“Windfalls of War.” The Center for Public Integrity. Web. 24 Nov. 2009. <http://projects.publicintegrity.org/wow/bio.aspx?act=pro&ddlC=31>.

Related Posts