Audit: U.S. let Iraq contractor waste millions

WASHINGTON – KBR, the government contracting firm formerly under Halliburton, did not keep accurate records of gasoline distribution, put its employees in living spaces that may be larger than warranted and served meals costing $4.5 million more than necessary under a contract to perform work in Iraq, according to an audit by a government oversight agency.

The report, to be released today by the special inspector general for Iraq reconstruction, addresses a sliver of a $22.5 billion contract that KBR won to provide services for the U.S. military. The inspector general’s office focused on four services that KBR was paid to provide in Baghdad’s heavily fortified Green Zone: gasoline, food services, housing and various morale and recreation services.

The inspector general faulted the U.S. government for not closely monitoring KBR. Government inspectors in Iraq missed shortcomings and in numerous cases allowed the contractor to essentially police itself, according to the report. The report said, “KBR’s operations may have resulted in excessive government costs and high risk that government resources could have been used improperly.”

A KBR spokeswoman said in an e-mail that the company had not seen the audit and that “it would be inappropriate for us to comment at this time.”

As part of its contract, KBR provides gasoline in the Green Zone. In today’s report, auditors wrote, “we found weaknesses in KBR’s fuel receiving, distributing and accountability processes of such magnitude that we were unable to determine an accurate measurement of the fuel services provided.”

More fuel had been sent out than generators could hold, for example. When auditors looked at the database in September 2006, it showed that 12,622 liters had been issued for December 2006 — “a future date and an obvious impossibility,” the audit said.

KBR managed its housing at its Camp Hope inside the Green Zone, resulting in most of its employees living in more spacious quarters than those they support, according to the report. Ninety percent of KBR employees were assigned to single living areas without roommates, meaning KBR employees appeared to have better housing than Army captains.

In response to the audit, the U.S. Embassy in Baghdad said more representatives of contracting officers are arriving to increase oversight. It also said it wouldn’t allow backpacks and large bags into dining halls to keep people from taking extra food.

Bowen said his office will look at the other services KBR was to provide in the Green Zone under the $243 million task order. He would not say whether he was concerned about other KBR services. “I can’t speak to those yet,” he said. He expects to release another report on those services in October.