Army Official Fired For Daring To Question Bogus KBR Contract

SAINT PAUL [06/18/08] - As Chairman of the Permanent Subcommittee on Investigations, Norm Coleman failed to hold a single hearing on the waste, fraud, and abuse that sabotaged the reconstruction of Iraq. This week, the New York Times reported on another Tale from the Oversight-Free Zone.

According to Army auditors, Kellogg, Brown, & Root - a subsidiary of Halliburton - “lacked credible data or records for more than $1 billion in spending.”

Therefore, Charles M. Smith, the Army official in charge of managing that contract, refused to approve payment. “Ultimately,” the Times quotes him as saying, “the money that was going to KBR was money being taken away from the troops, and I wasn’t going to do that.”

At this point, Smith was “suddenly replaced,” and KBR got paid.

This, like so many other Tales from the Oversight-Free Zone, took place while Chairman Coleman, who took thousands of dollars from Halliburton during his 2002 campaign, sat idly by.

Al Franken:

“Norm Coleman refused to hold anyone accountable for the failed reconstruction of Iraq - and now he needs to be held accountable for that.”

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• Pentagon Official Managing Contract With Halliburton Subsidiary KBR Was Removed From His Job After “He Refused To Approve More Than $1 Billion In Questionable Charges To KBR. According to the New York Times, “The Army official who managed the Pentagon’s largest contract in Iraq says he was ousted from his job when he refused to approve paying more than $1 billion in questionable charges to KBR, the Houston-based company that has provided food, housing and other services to American troops. The official, Charles M. Smith, was the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the war. Speaking out for the first time, Mr. Smith said that he was forced from his job in 2004 after informing KBR officials that the Army would impose escalating financial penalties if they failed to improve their chaotic Iraqi operations.” [New York Times, 6/17/08]
• New York Times: “Army Auditors Had Determined That KBR Lacked Credible Data Or Records For More Than $1 Billion In Spending.” According to the New York Times, “Army auditors had determined that KBR lacked credible data or records for more than $1 billion in spending, so Mr. Smith refused to sign off on the payments to the company. ‘They had a gigantic amount of costs they couldn’t justify,’ he said in an interview. ‘Ultimately, the money that was going to KBR was money being taken away from the troops, and I wasn’t going to do that.’” [New York Times, 6/17/08]
• Smith “Was Suddenly Replaced” And His Successors Approved The Payments. According to the New York Times, “But he was suddenly replaced, he said, and his successors — after taking the unusual step of hiring an outside contractor to consider KBR’s claims — approved most of the payments he had tried to block. Army officials denied that Mr. Smith had been removed because of the dispute, but confirmed that they had reversed his decision, arguing that blocking the payments to KBR would have eroded basic services to troops.” [New York Times, 6/17/08]
• Once Smith Was Replaced The Army Hired A Second Contractor To Review KBR’s Costs; New Estimates Ignored Defense Department Auditors; Former Pentagon Fraud Investigator Called The Move “Unusual.” According to the New York Times, “Soon after Mr. Smith was replaced, the Army hired a contractor, RCI Holding Corporation, to review KBR’s costs. ‘They came up with estimates, using very weak data from KBR,’ Mr. Smith said. ‘They ignored D.C.A.A.’s auditors,’ he said, referring to the Defense Contract Audit Agency … Bob Bauman, a former Pentagon fraud investigator and contracting expert, said that was unusual. ‘I have never seen a contractor given that position, of estimating costs and scrubbing D.C.A.A.’s numbers,’ he said. ‘I believe they are treading on dangerous ground.’” [New York Times, 6/17/08]
• Smith: “In The End … KBR Got What It Wanted.” According to the New York Times, “The Army also convened boards that awarded KBR high performance bonuses, according to Mr. Smith. High grades on its work in Iraq also allowed KBR to win more work from the Pentagon, and this spring, KBR was awarded a share in the new 10-year contract. The Army also announced that Serco, RCI’s parent, will help oversee the Army’s new contract with KBR. ‘In the end,’ Mr. Smith said, ‘KBR got what it wanted.’” [New York Times, 6/17/08]
• Coleman Took $4,000 From Halliburton’s PAC. According to the Center for Responsive Politics, in 2001 and 2002, Coleman’s US Senate campaign accepted 4 $1,000 contributions from Halliburton’s political action committee. [Center for Responsive Politics, Accessed 6/18/08]

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This entry was posted on Wednesday, June 18th, 2008 at 15:04 and is filed under Press Releases. You can follow any responses to this entry through the RSS 2.0 feed.