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Where Has All the Money Gone?
Posted on May 15, 2013
By David Vine, TomDispatch
Later, while Cheney was vice president, Halliburton and its KBR subsidiary (formed after acquiring Kellogg Industries) won by far the largest wartime contracts in Iraq and Afghanistan. It’s difficult to overstate KBR’s role in the two conflicts. Without its work, there might have been no wars. In a 2005 interview, Paul Cerjan, a former Halliburton vice president, explained that KBR was supporting more than 200,000 coalition forces in Iraq, providing “anything they need to conduct the war.” That meant “base support services, which includes all the billeting, the feeding, water supplies, sewage—anything it would take to run a city.” It also meant Army “logistics functions, which include transportation, movement of POL [petroleum, oil, and lubricants] supplies, gas… spare parts, ammunition.”
Most of KBR’s contracts to support bases and troops overseas have come under the multi-billion dollar Logistics Civilian Augmentation Program (LOGCAP). In 2001, KBR won a one-year LOGCAP contract to provide an undefined quantity and an undefined value of “selected services in wartime.” The company subsequently enjoyed nearly eight years of work without facing a competitor’s bid, thanks to a series of one-year contract extensions. By July 2011, KBR had received more than $37 billion in LOGCAP funds. Its experience reflected the near tripling of Pentagon contracts issued without competitive bidding between 2001 and 2010. “It’s like a gigantic monopoly,” a representative from Taxpayers for Common Sense said of LOGCAP.
The work KBR performed under LOGCAP also reflected the Pentagon’s frequent use of “cost-plus” contracts. These reimburse a company for its expenses and then add a fee that’s usually fixed contractually or determined by a performance evaluation board. The Congressional Research Service explained that because “increased costs mean increased fees to the contractor,” there is “no incentive for the contractor to limit the government’s costs.” As one Halliburton official told a congressional committee bluntly, the company’s unofficial mantra in Iraq became “Don’t worry about price. It’s ‘cost-plus.’”
Not surprisingly, in 2009, the Pentagon’s top auditor testified that KBR accounted for “the vast majority” of wartime fraud. The company has also faced accusations of overcharging for everything from delivering food and fuel and supplying housing for troops to providing base security services.
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2. Supreme Group: Next on the list is the company that’s been described as the KBR for the Afghan War. Supreme Group has won more than $9 billion in contracts for transporting and serving meals to troops in Afghanistan and at other bases worldwide. Its growth perfectly symbolizes the soldiers-to-contractors shift in who peels the potatoes.
Supreme was founded in 1957 by an Army veteran who saw an opportunity to provide food for the hundreds of U.S. bases in Germany. After expanding over several decades into the Middle East, Africa, and the Balkans, the company won multi-billion-dollar “sole source contracts” that gave it a virtual monopoly over wartime food services in Afghanistan.
Today, in a prime example of the revolving door between the Pentagon and its contractors, Supreme’s chief commercial officer is former Lieutenant General Robert Dail. From August 2006 to November 2008, Dail headed the Pentagon’s Defense Logistics Agency (DLA), which awards food contracts. In 2007, Dail presented Supreme with DLA’s “New Contractor of the Year Award.” Four months after leaving the Pentagon, he became the president of Supreme Group USA.
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