31 October 2007Matt Kelley
The Army improperly awarded one of its largest contracts — a 10-year, $150 billion deal to support U.S. troops around the world — and should reconsider its decision, a government agency said Tuesday.
The Government Accountability Office (GAO) ruled the Army didn't give enough weight to Pentagon auditors' concerns about the past performance of KBR, which has been the only company providing troop support for six years under the current contract. It was one of three companies selected to share the new contract, which was awarded in June and was supposed to take effect this month.
The GAO said the Army also gave Fluor Corp. "unequal treatment" when awarding the new contract. The Army approved Fluor's proposal even though the proposal relied on different assumptions than those listed in the contract solicitation — a shortcoming that hurt other bidders' proposals, the GAO said.
Dan Gordon, a GAO attorney, released a summary of the decision Tuesday in response to questions from USA TODAY. The ruling, issued under seal Oct. 5, recommends that the Army Sustainment Command reassess its award of the contract.
KBR spokeswoman Heather Browne said in an e-mail to USA TODAY that the company is "disappointed" with the GAO's decision. KBR asked the GAO to reconsider its ruling. The GAO has set no deadline to rule on that request, Gordon said.
Fluor spokesman Keith Stephens said in an e-mail that the company will "determine an appropriate response" to the ruling once theArmy decides what to do.
The Army has not decided on its response and will extend KBR's current contract "while we work through this issue," Army Sustainment Command spokesman Daniel Carlson.
Under the current contract, KBR provides services such as food, housing, laundry and mail to U.S. troops in Iraq and Afghanistan. That work would be split among KBR, Fluor and DynCorp under the new contract. The GAO did not challenge the DynCorp contract.
Government auditors have repeatedly criticized KBR for overcharging and other mismanagement of its work in Iraq. KBR also is a favorite target of congressional Democrats because it used to be a subsidiary of Halliburton, which Dick Cheney once headed.
The Defense Contract Audit Agency has challenged more than $1.9 billion in KBR's billings in Iraq. The Army had agreed to withhold $465 million of those questioned charges at the beginning of this year, audit agency records show.
The auditors challenged, for example, $212 million in charges for meals that were never served and $54 million in improper charges for shipping containers that had been turned into living quarters. As of February, the Army withheld $55 million in meal costs and had not made a decision on the shipping containers.
The GAO ruling is a victory for the two bidders that challenged the contract award: A group led by IAP Worldwide Services and a consortium called Contingency Management Group, which includes AECOM Government Services, the Shaw Group and PAE Government Services.
http://www.usatoday.com/news/washington/2007-10-30-gao-contract_N.htm
