There’s a $400 million question facing the Pentagon’s largest contractor, KBR, the former Halliburton subsidiary responsible for more than 50,000 personnel in Iraq and billions in government contracts: Will the mammoth corporation be forced to repay the government nearly half a billion dollars because it hired private security forces in Iraq, including Blackwater USA, when the Army itself was supposed to be providing it with protection?
It’s a scandal that has been brewing for more than two years, kept alive largely through the efforts of Representative Henry Waxman. The California Democrat has been on a warpath against Halliburton and KBR almost since the Bush Administration took power in 2000. But it was actually an incident involving the private military company Blackwater USA that sparked the current controversy, which could result in the hefty KBR repayment to the government.
It began with one of the most iconic incidents of the Iraq War: the March 31, 2004, ambush of four Blackwater contractors in the Sunni city of Falluja. The men were burned, dragged through the streets and strung from a bridge. For many in Congress–and the broader population–it was the first they had heard of private soldiers operating in the war zone. Finding out who exactly they were working for in Falluja that day would take nearly three years.
As Waxman investigated the circumstances surrounding the ambush, one fact in particular bothered him: The contract the Blackwater men were working under indicated that they were ultimately servicing KBR. For its part, KBR initially denied this, and Waxman became increasingly frustrated that for eighteen months he could not get the military, KBR or any of the companies involved to explain whom taxpayers were ultimately paying for the Blackwater security services, and how much.
That question was finally answered in early February, when Waxman convened a heated hearing of the House Government Reform and Oversight Committee to investigate the Falluja incident: The contract was indeed traceable to KBR.
This was a complete about-face. Tina Ballard, the Army’s head contracting officer, had assured the same committee six months earlier that Blackwater had not been hired under a KBR subcontract.
But during the February hearing, Ballard said that “after extensive research” it turned out her earlier statements had been wrong. Further, she said that if KBR “knowingly or unknowingly incurred costs for private security subcontractors…the US Army will take appropriate steps under the contract terms to recoup any funds paid for those services.” At the end of the hearing, Ballard announced that the Army would dock KBR $20 million now that it was clear that–under several layers of subcontracts–Blackwater had in fact been hired.
But this is not just a matter of secretive markups, tacked on through the subcontracting maze and passed on to the taxpayers. KBR may have knowingly violated military policy, which effectively bans its contractors from engaging any security other than official US forces.
Under the terms of KBR’s master contract, the Army is specifically tasked with providing force protection for KBR’s thousands of employees. Since 2002 KBR has held what is known as the LOGCAP III contract, which stands for Logistics Civil Augmentation Program. Under that contract it provides support services for the Army ranging from serving meals to delivering fuel, washing laundry and delivering mail, duties that used to be handled by the Army itself.