Kellogg Brown and Root

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Kellogg Brown and Root, also known as KBR Engineering & Construction, is a unit of the Halliburton Company which provides military support services. The Federal Contractor Misconduct Database has ranked KBR as the 29th largest government contractor whose contracts total to a value of $2277 million.[1]

  • Formerly known as Brown and Root Services, KBR was scrutinized in 2000 by the GAO for overcharging and providing unnecessary services in the Balkans.
  • Balkans Support Contract is the largest contract for services to U. S. forces, representing about $2 billion in contract costs spent in the Balkans since December 1995.[1]

Brown & Root's open-ended logistics contracts from the Army and Navy --indeed much of the military privatization campaign -- are grounded in a 1992 study the company did for the Defense Department that several analysts said formed the template for privatization of logistics for a downsized U.S. military. Soon after the company delivered the classified study, which reportedly concluded that the Pentagon could save hundreds of billions of dollars by outsourcing, Brown & Root won its first competitively bid logistics contract.

Vice President Dick Cheney was defense secretary when the first Brown & Root study was done, and he became chief executive of its parent company, Halliburton, when he retired.

Source: Los Angeles Times; January 24, 2003 Pg. 1;"Privatized Army In Harm's Way" By Mark Fineman, Times Staff Writer

Largest receiver of non-competitive defense contracts

Kellogg Brown and Root (KBR), formed as an offshoot of parent company Halliburton in 2007, is the largest recipient of defense contract funding as of March, 2013. KBR privately provides military support services which were once operated by the U.S. military. Over the past ten years KBR has received $39.5 billion in Iraq-related contracts much of which came without having to bid against competing firms. A $568 million contract to provide housing and food services for soldiers led to a Justice Department lawsuit filed in 2010 by whistle-blowers for never being put up to bid by the Army and under suspicion of kickbacks. As stated by Business Insider:[2]

"Even without the graft, the costs of paying for these services are higher than paying governement employees or soldiers to do them because of the profit motive involved. No-bid contracting -- when companies get to name their price with no competing bid -- didn’t lower legitimate expenses. (Despite promises by President Barack Obama to reel in this habit, the trend toward granting favored companies federal contracts without considering competing bids continued to grow, by 9 percent last year, according to the Washington Post.)"

Instances of misconduct

The Federal Contractor Misconduct Database (FCMD) has ranked KBR as the 29th largest federal contractor with 30 filed instances of misconduct and an additional 20 pending cases. FCMD reports the total misconduct dollar amount at $213.7 million. The range of misconducts include but are not limited to: [1]

  • Overcharging the Government
  • Violating the Anti-Kickback Act
  • Fraud
  • Exposing troops to unsafe water conditions
  • Bribery
  • Overpricing
  • Breaching contract
  • Sexual assault
  • False claims
  • Conspiracy
  • Sexual harassment

See the FCMP page for a description of each case.

Spin Off?

The New York Times reports on 24 Sept. 2004 that KBR has become more trouble than it's worth to Halliburton, and that a spin-off is being considered, citing "investigations into its activities in Nigeria and Iran and by sizable asbestos claims."

  • Among Halliburton's most pressing concerns are investigations by French, American and Nigerian officials into KBR's role in an illegal payments scheme for its work on a liquid natural gas project in Nigeria in the 1990's at a time when Mr. Cheney was Halliburton's chief executive.
  • The Department of Justice is also investigating Halliburton's activities in Iran, where it operates through a loophole allowing it to remain there despite American sanctions limiting business in that country.
  • cost overruns at a project for Brazil's national oil company
  • Halliburton's accounting practices on contracts were the focus of an inquiry by the Securities and Exchange Commission. The company settled the case earlier this year, neither admitting nor denying wrongdoing, but agreeing to pay $7.5 million.
  • Pentagon auditors questioned possible overcharges in Iraq by KBR

Damage Control for "Iraq for Sale"

In October 2006, filmmaker Robert Greenwald and his production studio, "Brave New Films" (BNF), released a new documentary that was highly critical of Halliburton's work in Iraq. The movie was titled, "Iraq for Sale: The War Profiteers."

In late September, O'Dwyer's reported that "Halliburton's KBR engineering and services unit has launched a strike against the documentary. ... Halliburton posted a statement on its website, claiming the movie is 'nothing more than a theory in search of a conspiracy.'" [2]

O'Dwyer's wrote: [3]

BNF tried to interview Halliburton CEO Dave Lesar for the film. It sent four emails and made four phone calls to Cathy Mann, Halliburton's director of communications, attempting to arrange a meeting. She did not respond to any of those contacts, according to BNF. Melissa Norcross, KBR PR supervisor, did return an email to say that Lesar was not available for an interview.
This website emailed Mann, asking why she did not respond to BNF. She referred the site to Halliburton's statement. Norcross could be reached about whether any Halliburton or KBR execs have viewed the movie.

Contracts

  • The Army has hired Kellogg, Brown and Root to provide housing accommodations for approximately 100,000 soldiers in Iraq ($200M) through a long-term contract of December 2001 called the Logistics Civil Augmentation Program (LOGCAP).
  • Brown and Root won the first five-year LOGCAP contract in 1992, but lost the second to rival DynCorp in 1997 after the GAO criticized the Army for not adequately controlling contracting costs in Bosnia. [4]
  • Other LOGCAP orders have included pre-invasion order to repair oil facilities in Iraq; $28.2 million to build enemyprisoner-of-war camps; and $40.8 million to accommodate the Iraqi Survey Group, which was deployed this spring to find hidden weapons of mass destruction.
  • Los Alamos National Laboratory announced Aug. 9, 2002, the award of a site services support contract to a team led by Kellog Brown and Root, Inc. The laboratory's largest contract, LANL reported the 5-year deal to be worth $700M.
  • KBR wins new Iraq contract ... a new US army contract to help repair Iraq's dilapidated oil industry, BBC/UK, January 16, 2004: "Parsons Iraqi Joint Venture and Worley Group also will share in the $2bn (£1.1bn; 1.6bn euros) worth of work. ... KBR will develop Iraq's southern oil fields, while Parsons and Worley will work together in the north of the country."
  • KBR is a joint venture partner along with MPRI, Wackenhut and AGS in the civilian police training company Civilian Police International, LLC which is under a State Department contract for $1.6 billion to work with the Civilian Police and Rule of Law office in coordination with the United Nations training emerging police forces around the world. [5]
  • January 24, 2006, KBR was awarded a contract by U.S. Immigration and Customs Enforcement in the Department of Homeland Security worth "a maximum total value of $385 million over a five-year term" to provide "for establishing temporary detention and processing capabilities to augment existing ICE Detention and Removal Operations (DRO) Program facilities in the event of an emergency influx of immigrants into the U.S., or to support the rapid development of new programs." [6]

Related Sourcewatch Resources

External links

References

  1. 1.0 1.1 Federal Contractor Misconduct Database - KBR, Federal Contractor Misconduct Database, accessed June 3rd, 2013.
  2. Angelo Young,Former Halliburton Subsidiary Received $39.5 Billion in Iraq-Related Contracts Over The Past Decade, Business Insider, March 19, 2013.