Monday, July 23, 2007
Eagle Global Logistics 2nd guilty plea in Iraq cargo fraud case
Crime
(AP) -- A former executive of a company that shipped military cargo to Iraq has pleaded guilty to lying about a fraud scheme that bilked the government out of more than a million dollars. Kevin Andre Smoot, 43, pleaded guilty Friday to making a false statement and violation of the Anti-Kickback Act in U.S. District Court.
Smoot, who had been the managing director of Eagle Global Logistics's freight forwarding station in Houston, faces up to 15 years in prison and $500,000 in fines.
Another former executive, Christopher Cahill, pleaded guilty in February 2006 to inflating invoices for military shipments to Baghdad through EGL's subcontract with the Haliburton subsidiary Kellogg, Brown and Root. Cahill had been the company's former regional vice president for the Middle East and India.
Smoot admitted that he lied to federal investigators who questioned him about Cahill's scheme to inflate invoices by adding a "war risk surcharge" of 50 cents for each kilogram of freight transported to Baghdad. Smoot said he also gave more than $33,000 worth of entertainment to five Houston-based KBR transportation department employees for favorable treatment in getting subcontracts.
The gratuities included food, drinks, golf outings, tickets to rodeo events, baseball and football games. From Nov. 22, 2003, through July 20, 2004, EGL flew 379 shipments of military goods from Dubai to Baghdad under EGL's subcontract with KBR. The total amount of the EGL invoices was about $13.26 million, including $1.14 million in fraudulent charges.
Smoot, who had been the managing director of Eagle Global Logistics's freight forwarding station in Houston, faces up to 15 years in prison and $500,000 in fines.
Another former executive, Christopher Cahill, pleaded guilty in February 2006 to inflating invoices for military shipments to Baghdad through EGL's subcontract with the Haliburton subsidiary Kellogg, Brown and Root. Cahill had been the company's former regional vice president for the Middle East and India.
Smoot admitted that he lied to federal investigators who questioned him about Cahill's scheme to inflate invoices by adding a "war risk surcharge" of 50 cents for each kilogram of freight transported to Baghdad. Smoot said he also gave more than $33,000 worth of entertainment to five Houston-based KBR transportation department employees for favorable treatment in getting subcontracts.
The gratuities included food, drinks, golf outings, tickets to rodeo events, baseball and football games. From Nov. 22, 2003, through July 20, 2004, EGL flew 379 shipments of military goods from Dubai to Baghdad under EGL's subcontract with KBR. The total amount of the EGL invoices was about $13.26 million, including $1.14 million in fraudulent charges.
Labels: Anti-Kickback Act, cargo, Christopher Cahill, court case, Eagle Global Logistics, EGL, fraud, Halliburton, Iraq, KBR, Kevin Andre Smoot
Thursday, July 19, 2007
Defense contractors challenge LOGCAP IV award, seek stay from GAO
Contracts
(Government Executive) - Faced with the prospect of missing out on the Army's most lucrative logistics contract in Iraq, a pair of teams of defense contractors is challenging the service's decision to award the work to three rival companies. Last week, Contingency Management Group LLC, a team composed of AECOM Government Services, Shaw Group and PAE Government Services, filed a protest with the Government Accountability Office, claiming that the Army's Sustainment Command improperly evaluated the group's proposal for the Logistics Civil Augmentation Program (LOGCAP) IV contract. The team is seeking a stay of the new contract until GAO can review the July 11 protest.
Two days later, IAP Worldwide Services Inc., a Cape Canaveral, Fla., contractor, filed its own protest, also citing improper technical or price evaluations, according to Michael Golden, GAO's chief procurement attorney. IAP led a team of contractors that included industry giants Lockheed Martin, CACI and Blackwater. Officials with Contingency Management Group and IAP both declined to discuss the reasons for the protest.
The Army awarded its mammoth 10-year LOGCAP IV contract last month to three firms: the incumbent contractor, Kellogg, Brown and Root Services of Houston; former contract holder DynCorp International LLC of Fort Worth, Texas; and Fluor Intercontinental Inc. of Greenville, S.C. The three companies are each capped at $5 billion per year, although the Army does not expect the firms to reach the maximum value in any given year.
A fourth contractor, Serco Inc. of Vienna, Va., was awarded a $225 million support contract last February. The Army says Serco will assist in its planning and provide independent cost estimates, but will not play any oversight role or conduct any inherently governmental work.
In an e-mailed statement, KBR deferred questions about the protests to the Army, stating only that the company is "proud to have been chosen as one of three logistics support providers under the LOGCAP IV contract. We look forward to continuing our service to the U.S. forces deployed in the Middle East."
The three prime contractors will compete to deliver fuel, water and food, as well as field operations such as postal services, laundry and sanitation, to troops stationed in Iraq and Afghanistan. The indefinite quantity/indefinite delivery contract has a one-year base with nine option years and could be worth as much as $150 billion.
The use of multiple contractors is a departure from the sole-source strategy the Army has employed since the first LOGCAP contract was awarded in 1992. The change is "designed to enhance competition and reduce overall risk," said Daniel Carlson, a spokesman for the Army.
Previous incarnations of the logistics contract relied primarily on cost-plus task orders in which the Army and the contractor negotiated a price based on an estimate and adjusted the cost as needed. The government then paid the contractor a base reimbursement fee -- typically 1 percent -- on every task order and an additional 2 percent award fee if the work was done efficiently and honestly.
But watchdogs say the contract has been prone to abuse. KBR, which until recently was a subsidiary of Halliburton, was roundly criticized for its work on the 2001 LOGCAP III contract. Reports by GAO, the Defense Department inspector general and the Defense Contract Audit Agency found KBR overbilled the government for fuel and failed to justify $1.8 billion worth of work in Iraq and Kuwait.
And just days after the Army awarded the LOGCAP IV contract, the Special Inspector General for Iraq Reconstruction released a report alleging that KBR provided its employees with better housing than U.S. soldiers, overspent on food by $4.5 million and failed to provide accurate measurements of the fuel services it provided. KBR is in the process of reviewing the report, company spokeswoman Heather Browne said.
DynCorp, meanwhile, has been rapped for providing vague invoices on a State Department contract in Iraq, while Fluor was heavily criticized for its work on a temporary housing contract for Gulf Coast residents in the wake of Hurricane Katrina.
The Army plans to begin using its new LOGCAP IV contract in October, although the protests could delay its implementation. KBR's current LOGCAP contract expires in December, but the Army could exercise an option and extend it if needed.
Two days later, IAP Worldwide Services Inc., a Cape Canaveral, Fla., contractor, filed its own protest, also citing improper technical or price evaluations, according to Michael Golden, GAO's chief procurement attorney. IAP led a team of contractors that included industry giants Lockheed Martin, CACI and Blackwater. Officials with Contingency Management Group and IAP both declined to discuss the reasons for the protest.
The Army awarded its mammoth 10-year LOGCAP IV contract last month to three firms: the incumbent contractor, Kellogg, Brown and Root Services of Houston; former contract holder DynCorp International LLC of Fort Worth, Texas; and Fluor Intercontinental Inc. of Greenville, S.C. The three companies are each capped at $5 billion per year, although the Army does not expect the firms to reach the maximum value in any given year.
A fourth contractor, Serco Inc. of Vienna, Va., was awarded a $225 million support contract last February. The Army says Serco will assist in its planning and provide independent cost estimates, but will not play any oversight role or conduct any inherently governmental work.
In an e-mailed statement, KBR deferred questions about the protests to the Army, stating only that the company is "proud to have been chosen as one of three logistics support providers under the LOGCAP IV contract. We look forward to continuing our service to the U.S. forces deployed in the Middle East."
The three prime contractors will compete to deliver fuel, water and food, as well as field operations such as postal services, laundry and sanitation, to troops stationed in Iraq and Afghanistan. The indefinite quantity/indefinite delivery contract has a one-year base with nine option years and could be worth as much as $150 billion.
The use of multiple contractors is a departure from the sole-source strategy the Army has employed since the first LOGCAP contract was awarded in 1992. The change is "designed to enhance competition and reduce overall risk," said Daniel Carlson, a spokesman for the Army.
Previous incarnations of the logistics contract relied primarily on cost-plus task orders in which the Army and the contractor negotiated a price based on an estimate and adjusted the cost as needed. The government then paid the contractor a base reimbursement fee -- typically 1 percent -- on every task order and an additional 2 percent award fee if the work was done efficiently and honestly.
But watchdogs say the contract has been prone to abuse. KBR, which until recently was a subsidiary of Halliburton, was roundly criticized for its work on the 2001 LOGCAP III contract. Reports by GAO, the Defense Department inspector general and the Defense Contract Audit Agency found KBR overbilled the government for fuel and failed to justify $1.8 billion worth of work in Iraq and Kuwait.
And just days after the Army awarded the LOGCAP IV contract, the Special Inspector General for Iraq Reconstruction released a report alleging that KBR provided its employees with better housing than U.S. soldiers, overspent on food by $4.5 million and failed to provide accurate measurements of the fuel services it provided. KBR is in the process of reviewing the report, company spokeswoman Heather Browne said.
DynCorp, meanwhile, has been rapped for providing vague invoices on a State Department contract in Iraq, while Fluor was heavily criticized for its work on a temporary housing contract for Gulf Coast residents in the wake of Hurricane Katrina.
The Army plans to begin using its new LOGCAP IV contract in October, although the protests could delay its implementation. KBR's current LOGCAP contract expires in December, but the Army could exercise an option and extend it if needed.
Labels: Blackwater, CACI, Contingency Management Group LLC, DynCorp, Fluor, GAO, Halliburton, IAP Worldwide Services Inc., KBR, Lockheed Martin, LOGCAP IV, PAE Government Services, Shaw Group
Friday, July 13, 2007
KBR awarded $8.5 mn. Basrah oil platforms contract
Reconstruction
(AP) - The U.S. Navy on Wednesday awarded an $8.5 million contract boost to KBR Inc. for additional services for personnel at two Iraqi oil platforms. The company, formerly a division of Halliburton Co. (nyse: HAL - news - people ), which was once headed by Vice President Dick Cheney, will provide upgrades for personnel at two oil platforms: the Al Bas Basra Oil Terminal and the Khawr Al Amaya Oil Terminal.
Additional funds for this phase of the contract brings the total value to $13.5 million. The entire contract is worth up to $500 million, which includes four-year extension options, the Navy said. The Houston-based company will perform the work in waters off the coast of Iraq through November 2007. Shares of KBR (nyse: KBR - news - people ) rose 25 cents to $31.60 in after-hours trading, after shares rose 42 cents to $31.35.
Additional funds for this phase of the contract brings the total value to $13.5 million. The entire contract is worth up to $500 million, which includes four-year extension options, the Navy said. The Houston-based company will perform the work in waters off the coast of Iraq through November 2007. Shares of KBR (nyse: KBR - news - people ) rose 25 cents to $31.60 in after-hours trading, after shares rose 42 cents to $31.35.
Labels: Al Bas Basra Oil Terminal, Halliburton, KBR, Khawr Al Amaya Oil Terminal
Thursday, June 28, 2007
LOGCAP IV awarded to Fluor, DynCorp and KBR
Contracts
(Washington Post) - The Army awarded a contract worth up to $150 billion to feed, house and provide other services to U.S. troops in Iraq, Afghanistan and Kuwait, spreading among three companies work that recently had been linked to a single, controversial contractor: Halliburton.
Fluor Intercontinental of Greenville, S.C., DynCorp International of Fort Worth and KBR of Houston were chosen from among a half-dozen competitors. Each company's part of the contract is worth up to $5 billion a year and can be extended for up to nine more years. The contract award was a particular victory for KBR, Halliburton's former contracting arm, after the firm was accused of misdeeds under the past contract, one contracting expert said.
"This is potentially the biggest battlefield services contract that any company is going to win for the remainder of this decade," Loren Thompson, chief operating officer of the Lexington Institute, a defense research organization in Arlington.
Known as the Logistics Civil Augmentation Program, or LOGCAP IV, the contract is considered one of the biggest deals in the contracting services industry. It has ballooned in value from $2 billion when it was first awarded in 1992 to $23 billion under the most recent LOGCAP III contract.
Two of the new winners have a history with the contract. KBR won the initial LOGCAP contract when support services were needed mainly in Bosnia. DynCorp won it in 1997 to do work in East Timor and the Philippines. And in 2001, it was again awarded to KBR to provide services in Afghanistan, Kuwait and, after the 2003 invasion, Iraq. Since then, the contract has come under scrutiny by members of Congress, and critics have alleged that KBR had an advantage in winning the 2001 contract because Vice President Cheney had been Halliburton's chief executive.
There have been other allegations of overcharging and poor record-keeping by KBR and lax oversight by the government. Government auditors turned up more than $1 billion in questionable costs. As of the end of May, KBR -- the largest single contractor in Iraq -- had been paid $19.7 billion for its work under the contract.
About 50,000 contractors work for KBR directly or as subcontractors to deliver services, and 500 government employees provide oversight of the logistics contract, according to Army officials.
Fluor Intercontinental of Greenville, S.C., DynCorp International of Fort Worth and KBR of Houston were chosen from among a half-dozen competitors. Each company's part of the contract is worth up to $5 billion a year and can be extended for up to nine more years. The contract award was a particular victory for KBR, Halliburton's former contracting arm, after the firm was accused of misdeeds under the past contract, one contracting expert said.
"This is potentially the biggest battlefield services contract that any company is going to win for the remainder of this decade," Loren Thompson, chief operating officer of the Lexington Institute, a defense research organization in Arlington.
Known as the Logistics Civil Augmentation Program, or LOGCAP IV, the contract is considered one of the biggest deals in the contracting services industry. It has ballooned in value from $2 billion when it was first awarded in 1992 to $23 billion under the most recent LOGCAP III contract.
Two of the new winners have a history with the contract. KBR won the initial LOGCAP contract when support services were needed mainly in Bosnia. DynCorp won it in 1997 to do work in East Timor and the Philippines. And in 2001, it was again awarded to KBR to provide services in Afghanistan, Kuwait and, after the 2003 invasion, Iraq. Since then, the contract has come under scrutiny by members of Congress, and critics have alleged that KBR had an advantage in winning the 2001 contract because Vice President Cheney had been Halliburton's chief executive.
There have been other allegations of overcharging and poor record-keeping by KBR and lax oversight by the government. Government auditors turned up more than $1 billion in questionable costs. As of the end of May, KBR -- the largest single contractor in Iraq -- had been paid $19.7 billion for its work under the contract.
About 50,000 contractors work for KBR directly or as subcontractors to deliver services, and 500 government employees provide oversight of the logistics contract, according to Army officials.
Last year, the Army decided to award the logistics contract to more than one company after concerns were raised about a lack of competition in giving such a large contract to one company. Under the new contract, the three companies will have to compete for each individual task order.
Labels: DynCorp International, Fluor Intercontinental, Halliburton, KBR, LOGCAP IV, Logistics Civil Augmentation Program
Wednesday, June 20, 2007
Army to rebid Halliburton multi-billion dollar contract
Contracts
(Associated Press) - The Army will rebid the multibillion-dollar contract under which a Halliburton Co. subsidiary has been providing services to troops around the world after years of complaints over how the deal has worked in Iraq. Critics of the contract said the move was overdue and that hundreds of millions of dollars had probably been wasted.
Halliburton subsidiary KBR, also known as Kellogg Brown & Root, provides food, water, shelter, laundry service and other logistical support for troops under a 2001 contract that has been extended several times. Halliburton is a Texas-based oil services conglomerate once led by Vice President Dick Cheney. Bush administration officials have come under fire since the beginning of the war in Iraq for awarding more than $10 billion to the company and its subsidiaries in 2003 and 2004, some of it in no-bid contracts. There have been allegations of fraud, poor work, overpricing and other abuse, which the company has denied.
Army spokesman Dave Foster said Wednesday that although the service will rebid the contract, it has not decided yet how that will be done. KBR would be allowed to bid in the new competition, but one option Army officials are considering is to divide the work among three companies. Asked why the contract was being discontinued, Foster said it was part of the Army's "lessons learned" process.
Halliburton subsidiary KBR, also known as Kellogg Brown & Root, provides food, water, shelter, laundry service and other logistical support for troops under a 2001 contract that has been extended several times. Halliburton is a Texas-based oil services conglomerate once led by Vice President Dick Cheney. Bush administration officials have come under fire since the beginning of the war in Iraq for awarding more than $10 billion to the company and its subsidiaries in 2003 and 2004, some of it in no-bid contracts. There have been allegations of fraud, poor work, overpricing and other abuse, which the company has denied.
Army spokesman Dave Foster said Wednesday that although the service will rebid the contract, it has not decided yet how that will be done. KBR would be allowed to bid in the new competition, but one option Army officials are considering is to divide the work among three companies. Asked why the contract was being discontinued, Foster said it was part of the Army's "lessons learned" process.
Labels: Halliburton, KBR, Kellogg Brown and Root, U.S. army contract
Monday, March 12, 2007
Halliburton relocates HQ to Dubai
Business
(The Times) Halliburton, the global oil services group once headed by Dick Cheney, America’s Vice-President, is to shift its headquarters from Texas to Dubai in a move redolent of the changing balance of power in the world’s oil industry. Dave Lesar, chief executive, said that Halliburton would retain an office in Houston but open a new corporate headquarters in the fast-growing Gulf financial centre. The chairman, president and chief executive will all be based there.
Speaking at an energy conference in Bahrain, Mr Lesar said that the move reflected Halliburton’s increased concentration on the Middle East, the main centre of expansion in world oil production, and in Asia, where rapid economic growth is demanding vast expansion of energy infrastructure. The move is a coup for Dubai, which has developed an ambitious new financial centre virtually from scratch.
More than 38 per cent of Halliburton’s $13 billion (£6.7 billion) oilfield services revenue last year stemmed from sources in the eastern hemisphere, where the firm has 16,000 of its 45,000 employees. Mr Cheney was Halliburton’s chief executive from 1995 to 2000, and the Bush Administration has been criticised for giving it lucrative contracts in Iraq that made its name synonymous with US influence. Halliburton and its rivals are, however, outgrowing their traditional role serving oil multinationals. National oil companies now prefer to deal direct with them rather than with the multinationals.
Speaking at an energy conference in Bahrain, Mr Lesar said that the move reflected Halliburton’s increased concentration on the Middle East, the main centre of expansion in world oil production, and in Asia, where rapid economic growth is demanding vast expansion of energy infrastructure. The move is a coup for Dubai, which has developed an ambitious new financial centre virtually from scratch.
More than 38 per cent of Halliburton’s $13 billion (£6.7 billion) oilfield services revenue last year stemmed from sources in the eastern hemisphere, where the firm has 16,000 of its 45,000 employees. Mr Cheney was Halliburton’s chief executive from 1995 to 2000, and the Bush Administration has been criticised for giving it lucrative contracts in Iraq that made its name synonymous with US influence. Halliburton and its rivals are, however, outgrowing their traditional role serving oil multinationals. National oil companies now prefer to deal direct with them rather than with the multinationals.
Labels: Dave Lesar, Dubai, Halliburton, HQ
Thursday, March 01, 2007
Halliburton expects extension on LOGCAP contract
Business
(Reuters) Halliburton Co., whose KBR unit is the largest private contractor in Iraq, said on Wednesday it expected the U.S. Department of Defense would announce awards for new Iraq contracts in the second quarter, later than the company expected. The Houston company, which will complete its split off of the engineering and construction business KBR in the coming months, said last month it expected the Pentagon would announce the LogCAP IV contracts by the end of the first quarter.
KBR has so far booked more than $20 billion in revenues from its work in Iraq and has been the target of several investigations into the company's billing practices. It has also faced complaints from some U.S. lawmakers about the company's close ties to the Bush administration. Vice President Dick Cheney formerly served as Halliburton's CEO before taking up his current office.
In its annual 10-K filing to the Securities and Exchange Commission, Halliburton said its awards under a new LogCAP contract would reduce its revenues from the Pentagon."We expect our overall volume of work to decline as our customer scales back the amount of services we provide. However, as a result of the recently announced surge of additional troops in Iraq, we expect the decline to occur more slowly than previously expected," Halliburton said in the filing. The LogCAP contract includes logistical services for U.S. troops stationed in Iraq, including transportation, laundry, entertainment and dining services. KBR had also previously held contracts to help rebuild Iraq's damaged oil producing infrastructure.
Labels: contracts, Halliburton, KBR, LogCAP, U.S. Department of Defense
Friday, February 16, 2007
Audit - $10 billion squandered on reconstruction
Reconstruction
(AP) About $10 billion has been squandered by the U.S. government on Iraq reconstruction aid because of contractor overcharges and unsupported expenses, and federal investigators warned Thursday that significantly more taxpayer money is at risk.
The three top auditors overseeing work in Iraq told a House committee their review of $57 billion in Iraq contracts found that Defense and State department officials condoned or allowed repeated work delays, bloated expenses and payments for shoddy work or work never done. More than one in six dollars charged by U.S. contractors were questionable or unsupported, nearly triple the amount of waste the Government Accountability Office estimated last fall.
The three top auditors overseeing work in Iraq told a House committee their review of $57 billion in Iraq contracts found that Defense and State department officials condoned or allowed repeated work delays, bloated expenses and payments for shoddy work or work never done. More than one in six dollars charged by U.S. contractors were questionable or unsupported, nearly triple the amount of waste the Government Accountability Office estimated last fall.
The Defense Contract Audit Agency (DCAA) identified over $90 million in questioned and unsupported costs when auditing Parsons, who hold contracts to the value of over $2.2 billion for reconstruction. An additional $2.7 billion was questioned under Halliburton's Logistics Civil Augmentation Program (LOGCAP) and Restore Iraqi Oil (RIO). Halliburton hold contracts to the approximate value of $25.7 billion.
So far, the Bush administration has spent more than $350 billion on the Iraq war and reconstruction effort.
Labels: audit, Halliburton, parsons, reconstruction
