Army's largest contractor in Iraq under renewed attack

Kellogg Brown & Root, the Army's largest contractor in Iraq and frequent target of critics for its alleged wasteful management of a $31.7 billion logistics contract, came under renewed fire Monday from a special bipartisan oversight panel and the Pentagon's top auditor of defense contracts.

In testimony before the Commission on Wartime Contracting, Defense Contract Audit Agency director April Stephenson said KBR, working under a wartime logistics services contract called LOGCAP III, continually failed to seek out and track cost-efficient subcontractors, costing taxpayers millions of dollars. It also became the focus of the "vast majority" of 32 cases that have been referred to prosecutors for possible fraud charges, she said.

Commissioner Linda Gustitus asked a group of military contracting officials why the Army continued to contract with KBR despite the firm's failure to overhaul monitoring of subcontractors that administer the vast majority of its war-zone services.

"The history of KBR is delay, delay, delay in fixing up these systems," Gustitus said. "How could you possibly assume that they were going to do what they said that they would do on these business systems, and go ahead and award them a contract?"

The critique came in the wake of a letter sent Friday to Defense Secretary Robert Gates by Sens. Claire McCaskill, D-Mo., and Susan Collins, R-Maine, who slammed "the Army's continued reliance on KBR's monopoly contract." The lawmakers said the Defense Department has failed to transition expeditiously to LOGCAP IV, a new incarnation of the wartime logistics contract that splits the workload between KBR and two other companies charged with providing dining, laundry, housing, and other services for military personnel on the battlefield. McCaskill and Collins, the chairman and acting ranking member of a new Senate Subcommittee on Contracting Oversight, charged that the Pentagon has failed to recover at least $100 million in overpayments to tainted KBR subcontractors.

During Monday's commission hearing, the panel's eight members -- including its newest member, former Rep. Christopher Shays, R-Conn., -- expressed concern about the dearth of contract oversight officials in Iraq and Afghanistan, where hundreds of oversight positions remain vacant.

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