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In this shocking expose, two government fraud experts share real-life experiences of soldiers that are sure to inspire outrage. Drawing on exclusive sources within contracting firms and the military, this book shows how the pursuit of profit has undermined the effectiveness of our fighting forces and threatened our country's security.
About the Author:
Dina Rasor is an investigative journalist who founded and ran the Project on Government Oversight (POGO)
THE PRIVATE SIDE OF WAR
Camp Arifjan, Kuwait, March 7, 2003.
On a windy, cool day, Rick Lamberth emerged from his plane at the modern international airport that serves the bustling, Persian Gulf port city of Kuwait City. He immediately noticed the excellent highway and road system that serves the region and marveled at how westernized it all looked. KBR officials met him and the 20-30 other new KBR employees he was traveling with. With the three regal tower spheres—the three pillars of Islam that define Kuwait City—prominent in the background, they traveled in a minibus on a southwesterly route for about 25 miles to Camp Arifjan, a $200 million state-of-the-art facility near the coast, built courtesy of the Kuwaiti government to provide permanent support facilities for American troops in Kuwait. Eventually, it would be Lamberth's new home base as an employee of KBR.
Initially, Lamberth and his fellow employees were housed in luxurious villas leased by KBR at the Hilton Hotel south of Kuwait City, and bused to Camp Arifjan each day for work. The villas were elaborate and ornate, with jogging trails and all the trappings of luxury. It wasn't long before he and the others were moved further south to the luxurious villas at the Khalifa Resort along the Royal Golden Coast overlooking the Persian Gulf, only about 10 miles from Camp Arifjan. The resort, comprising 84 luxurious villas, overlooks a private white-sand beach and offers guest activities such as windsurfing, banana boat rides, and deep-sea fishing. KBR, which took up residence at the resort in late 2002, pays a hotel tab of at least $1.5 million a month for its employees.
As a newly hired employee, Lamberth was there to work for KBR by providing logistics support for the troops. Having just survived a messy divorce and custody battle that drained his finances and caused him to lose his trucking business, he found himself alone in the late fall of 2002. He needed to find a decent job that would allow him to escape his financial predicament and make enough money to provide support for his children. An opportunity presented itself when he heard that KBR was hiring employees with logistics experience to support the Army in Kuwait. The pay was good and it was also a chance for a new start. A 23-year Army veteran and a Major in an Army reserve unit in Memphis, Tennessee, he was torn: If he had to serve in Iraq, it would be on the delivery end of the supply chain, and his loyalty was naturally with the troops. Straight laced, somewhat headstrong, Lamberth lives by the Army value system of integrity, honor, and loyalty. Integrity, especially, is the foundation of his life.
Before Lamberth arrived in Kuwait, the Army had decided to use the Logistics Civil Augmentation Program contract, known as LOGCAP, to underwrite its combat support mission during the invasion of Iraq. The Army developed a task order under LOGCAP in February 2003 giving KBR the responsibility of setting up a transportation system, called the Theater Transportation Mission and based at Camp Arifjan in Kuwait, to move supplies for military operations to a staging point near the Iraqi border. Along with this responsibility, KBR was also given the task of setting up supply-line operations as a prelude to the invasion of Iraq.
Lamberth arrived in Kuwait having learned nothing of the LOGCAP contract or his duties. He was just told to do whatever he was directed to do by his supervisor. Neither LOGCAP, nor his duties, were included during his two-week KBR orientation in Houston, the headquarters of KBR and its parent company, Halliburton,. The orientation, held at a very nice hotel in the northern part of Houston, included classes on such subjects as the history of KBR, how to use chemical and biological suits and masks, and the Geneva Convention. Although supporting the troops was mentioned, making money was the biggest motivational factor pointed out by some of the instructors for the new employees who were going to risk their lives in Kuwait and Iraq,. During a class on KBR's purpose and mission statement, the speaker provided stories of life overseas and then pulled out his KBR pay stub and waved it to everyone, saying, "Whenever it gets bad and I get pissed off and I want to go home or it gets hot or windy, I just pull this out and look at it." The money was a big motivator. He would say, "Just remember the money." The new employees were told it would be easy to earn $100,000 a year, and that it would be the easiest money they would ever make.
From the moment Lamberth arrived at Camp Arifjan, he felt that supporting the Army took a backseat to KBR's profit margin. Managers drilled into his head, mostly at the daily pre-work meetings, that KBR employees get paid to be there and that KBR was a for-profit organization. They were there to make money for the company.
Once settled at Camp Arifjan, Lamberth dove into his work with abundant energy. He was to help with coordinating the transportation of supplies to staging areas in Kuwait with KBR's trucks and tractor-trailers. In doing his work, he knew only one speed—fast and efficient. But Lamberth felt that his work ethic did not sit well with one KBR project manager in Kuwait. He called Lamberth into his office two or three times and told him he had heard rumors that Lamberth was getting results too quickly, that he was doing too much for the military, and that he needed to slow down and drag his work out. Lamberth would be told when to step up his work effort. It was obvious to Lamberth that someone had said he had been working too fast. The project manager also told Lamberth to hold on to status and completion reports for the Army. This would have the effect of limiting the flow of information given to Army officials and make it appear to the Army that tasks were harder to complete, and more time consuming, than they actually were. Lamberth was to hold back giving them verbal or written information about work efforts. He felt that limiting the flow of work-effort information to the Army was a way for KBR to justify excessive hours. Lamberth believed KBR didn't want to provide any information that would show its actual billable hours.
Such tactics by contractors to limit or even deny information to government contracting or auditing officials are not uncommon in the world of defense procurement. Defense auditors sometimes have to fight long and hard to obtain vital information supporting contractor costs. Also, it is often an unwritten rule with contractor employees that they are not to talk to Defense contracting or auditing officials, referring them instead to a designated company spokesman. When a government auditor does get to talk to a contractor employee, it is common for a number of contractor managers and company legal representatives to be present to limit the questions and answers. These tactics make it difficult for the government to get the spontaneous answers it needs to determine whether costs incurred by a contractor are reasonable or appropriate.
LOGCAP is a cost reimbursable type of contract (cost reimbursable contracts are jokingly referred to around Washington as "defraud me contracts") that provides the contractor a 1 percent fee and a potential award fee of 2 percent, in addition to reimbursement of its incurred costs. In the past, cost reimbursable contracts were not widely used by the Pentagon because of the significant risk to the government of having to reimburse out-of-control costs incurred by a contractor. Usually, they are used when uncertainties involved in contract performance preclude accurate cost estimations, such as in research and development efforts. But, when used, they require a higher level of government oversight to monitor contractor performance. In Kuwait, the Army had very little oversight over KBR performance and costs. And, with little experience or knowledge of what costs were reasonable or appropriate, the Army was operating almost blind in its oversight efforts.
Lamberth began to find this out quickly after observing the way that KBR conducted business. He learned from co-workers that 105 hours a week could be charged on his time cards. He also heard from some co-workers they once could charge 120 hours a week, and eventually to 84 hours only after the Army started to complain about such a high level of incurred labor costs. According to Lamberth, while attending orientation in Houston, he was informed that KBR's goal was to charge 84 hours a week, that is, 12 hours per day, 7 days a week. Not long after arriving in Kuwait, he quickly learned that many of the employees could not have put in this number of hours unless shopping, swimming, and other recreational efforts were counted as work. He felt that some managers considered the Army foolish for its limited oversight.
Even though Lamberth felt KBR was churning time on the contract, he still wanted to do his job as efficiently as he could. This was his work ethic, and he feared personally failing the troops if he didn't get his job done.
By the time Lamberth arrived in Kuwait, he found that KBR had been in the process of buying cargo trucks, tractor-trailers, and fuel tankers from a Saudi company. Because the Saudi businessmen would not cross the border into Kuwait, KBR had to send truck drivers to the Saudi border to receive the vehicles and conduct a "technical inspection" for acceptance by KBR, and then drive them back to Camp Arifjan. The trucks and tractor-trailers, along with KBR drivers, were to be used to supplement the Army's supply vehicles and drivers—the Army didn't have enough vehicles and drivers to haul supplies after the start of the war in Iraq. There was supposed to be a clear delineation between Army vehicles and drivers and contractor vehicles and drivers: Contractor drivers were not going to drive Army vehicles. The Army was thus planning to save the mission by having the capability to supply the troops on the battlefield using both Army and contractor personnel and equipment.
But back in Washington, Secretary of Defense Donald Rumsfeld decided to scrub the Army's traditional comprehensive deployment plan for combat and logistics units, the "Time-Phased Force and Deployment List," known within the Army bureaucracy as TPFDL (pronounced "tip-fiddle," or "tipfid" for short) for a new type of deployment plan called "Request for Forces." Under this new plan, combat units would be the first to move into the theater, while logistics unit commanders would have to justify the flow of their units and equipment into the theater.
Thus, the plan caused an imbalance of combat and logistics units arriving in the theater and a delay in establishing the Army's Theater Support Command, which was supposed to manage the logistics for the combat units moving into Iraq. As a result, the role of the Army's primary logistics command, the Army Materiel Command, was diminished, causing a lack of coordination during important planning meetings for the mission. Furthermore, the Army excluded the most experienced LOGCAP and contractor personnel during the planning process because of "security concerns." The Army Central Command had raised the security classification beyond the clearance level of the planners, a problem that took some time to resolve. Because of this, neither logistics planning nor contractor personnel were able to take part in the critical planning process, diminishing their effectiveness during preparation for the invasion and subsequent Operation Iraqi Freedom. This lack of planning contributed to many conflicts between the Army and KBR over who was responsible for what.
Army logistics officials were often on site at Camp Arifjan to explain KBR's responsibilities, as they understood them. The contractor learned it would be part of the supply chain, providing direct logistics support with trucks, tractor-trailers, and fuel and other liquid tankers to the Army's Third Corps Support Command, which was responsible for combat service support for the military combat units. In past wars, the Army relied on its own logistics units to keep the supplies moving from arrival in the theater to the soldiers on the battlefield. Thus, for this invasion, contractors would be integrated into the logistics mission of the Army—a fact unknown to the soldiers on the ground.
Part of Rick Lamberth's job as a logistics coordinator was to make certain that the truck drivers conducted daily preventative maintenance checks and service inspections of the vehicles prior to taking them out on their daily runs. He would often be at the motor pool early in the morning to accompany the drivers on their inspections.
While on his morning checks of the trucks and tractor-trailers, Lamberth discovered what he believed to be a major impediment to providing transportation support to the Army. He felt that more than 80 percent of the vehicles were overused and defective. The Army wanted the vehicles up to Department of Transportation standards, and they were not. There were trucks that did not have gas caps—they had rags stuck in the hole instead; seats that were not mounted—they were loose or would slide; transmission problems—some trucks would not go into reverse; speedometers and other gauges that did not work; serious engine problems; oil leaks; bald tires; defective brakes; fifth-wheels that would not release; exhausts leaks; and the list went on. Many trucks simply could not be used. Some of those that had broken down on their way back to Arifjan had to be towed, while others had to be worked on by the drivers in the desert where they broke down. It was obvious to Lamberth that these vehicles would not last in the harsh environment of the desert with its heat, rough roads, and blowing sand. The drivers would be sitting ducks in a war zone, and the supplies would not get to the troops. The Army was counting on them to support the supply mission on the battlefield, but how could they do that with trucks that barely worked?
The drivers themselves were upset at the conditions of the trucks. They complained to Lamberth that KBR managers had told them the trucks would be up to DOT standards. Despite their complaints, however, some of these drivers bragged to Lamberth that the Saudi businessmen had given them three hundred Kuwaiti dinars (equivalent to about $1,000) per truck to accept the vehicles as they were, no questions asked. All they had to do was sign off on proof of delivery so the Saudi company could bill KBR. Hundreds of trucks and tractor-trailers were bought in this manner, Lamberth learned. The drivers also bragged to Lamberth about how they were going downtown to the gold markets or the malls to spend their newly obtained dinars.
Bribery allegations surfaced involving former KBR employees during the contractor's operations in Kuwait in 2003–2004. A former contracting official for KBR, Jeff Mazon, was arrested in March 2005 on an Illinois grand jury indictment related to a kickback scheme in which Mazon was alleged to have received a $1 million payment from a Kuwaiti subcontractor who overcharged the government by approximately $3.5 million. Another former KBR employee, Glenn Powell, pled guilty in August 2005 to accepting $110,000 in kickbacks from an Iraqi subcontractor. Also, former KBR employee Stephen Seamans was charged with accepting $124,000 in kickbacks from Tamimi Global Company in exchange for awarding a dining hall contract in Kuwait. In December 2003, Halliburton publicly announced it had returned $6.3 million to the Army and acknowledged that two of its employees may have taken kickbacks in return for awarding lucrative contracts to a Kuwaiti company.
Lamberth reported the defective vehicle problem to a manager, and his deputy. He told the manager that the trucks and tractor-trailers were substandard and that the Army would reject them. The Army wasn't going to tolerate expenditures on substandard vehicles, and would not allow those vehicles to roll out on convoys in the condition they were in. The manager replied that he wanted Lamberth to keep quiet about it and not to submit any type of written report to the Army on vehicle problems. Lamberth was upset that anyone would try to cover up the problem and potentially risk American lives, but he felt pressure to keep his six-figure job. He felt bad about it, but it was out of his control. Internally, he was in turmoil and found himself eating Rolaids and Tums constantly in order to calm the acids churning in his stomach.
Lamberth also felt that, in addition to the problems with defective trucks and tractor-trailers, KBR managers didn't seem concerned about controlling costs. An example was the leasing of SUVs by KBR from a Kuwaiti company. The SUVs were to be used by the contractor as part of their infrastructure in Kuwait and later in Iraq. During testimony before the House Committee on Government Reform, in 2004, a former KBR buyer said that KBR managers told buyers not to worry about price because they were working on a cost-plus contract. They paid as much as $3,000 to $3,500 a month to lease SUVs; one SUV was leased for $7,500 a month. Such costs, Lamberth learned, would take the Army years to sort out, and by then the contractor could have made its money and the chances of having to pay it back were slim. Without Army oversight to catch such alleged fleecing, nobody could stop what was going on. Lamberth couldn't believe it.
Excerpted from Betraying Our Troops by Dina Rasor, Robert Bauman. Copyright © 2007 Dina Rasor, Robert Bauman. Excerpted by permission of Palgrave Macmillan.
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