06 May 2010 - Bloomberg
KBR, the Army's largest contractor in Iraq, was picked for a no-bid contract worth as much as $568 million through 2011 for military support services in Iraq, according to Army officials.
The Army announced the new work order only hours after the Justice Department said it will pursue a lawsuit accusing the Houston-based company of taking kickbacks from two subcontractors on Iraq-related work. The Army also awarded the work to KBR over objections from members of Congress, who have pushed the Pentagon to seek bids for further logistics contracts.
The Justice Department said the government will join a lawsuit filed by whistle- blowers alleging that two freight- forwarding firms gave KBR transportation department employees kickbacks in the form of meals, sports tickets and golf outings.
“Defense contractors cannot take advantage of the ongoing war effort by accepting unlawful kickbacks,” Assistant Attorney General Tony West said in a statement.
KBR will review the litigation when it is received and “will continue to cooperate with the government,” company spokeswoman Heather Browne said in an e-mail. “Gifts of dinners, baseball tickets and similar items would violate KBR policies, and KBR was not aware of these violations.”
KBR will continue to provide services such as housing, meals, laundry, showers, water purification and bathroom cleaning under the new order, which was placed under a military contract KBR won in late 2001, shortly after the U.S. invaded Afghanistan.
The Army has “reviewed the government's notice to intervene” in the whistle-blower lawsuit, Army spokesman Dan Carlson said. “We feel we have appropriate safeguards in place” to protect the government's interests.
The no-bid work order is unusual because the Army, at the insistence of Congress, has since April 2008 put all logistics orders to bid, pitting KBR against Falls Church, Va.-based DynCorp International and Irving-based Fluor Corp.
The Army didn't put the work out for bids because U.S. commanders in Iraq advised against it, saying that enlisting a new company would be too disruptive, Army program director Lee Thompson said in an interview before the Justice Department action was announced. The Army, in a statement, said putting to bid an order for 18 months' work, and making the transition to a new contractor, would cost at least $77 million.