Windfalls of war: Ex-Halliburton subsidiary KBR, the government's concierge

The rush to war in the months following the terrorist attacks of 9/11 created an urgency in the Pentagon, not just for military operations but also for contracting.

When U.S. forces moved into Afghanistan in 2001, there was little, if any, infrastructure to support and house U.S. troops. The military needed someone to do everything from housing troops to rebuilding airfields. The solution was a contract called the Logistics Civil Augmentation Program, or LOGCAP, a type of umbrella contract the Army had been using to support is military bases overseas. In late 2001, the Army, after a competition, awarded LOGCAP III to KBR. The Houston-based firm , once a subsidiary of Halliburton, began providing everything from showers to dining halls.

Even beyond single-source contracts, the Pentagon has other types of contracts it can use to quickly award work without having to compete specific jobs. They include umbrella-type contracts, like LOGCAP, that allow the government to buy unspecified goods and services over long periods of time. "It's the government's way of saying 'We don't know what we want, and we don't know how much it costs,'" said Laura Peterson, a senior policy analyst with Taxpayers for Common Sense, a watchdog group. "Instead they say, 'we'll put you on retainer and tell you later what we want and when we want it, and you just bill us.' You become the government's concierge, and it's like a gigantic monopoly."

Indeed, that's the way LOGCAP III operated for almost a decade. And while KBR was competitively awarded the umbrella contract in December 2001, it didn't have to compete for any of the subsequent work, which totaled over $37 billion by the end of July this year. For the next 10 years, the company provided water systems, heaters, tents, and dining facilities. The company also provided electricians, cooks and cleaners and other civilian workers needed to run military bases.

When the U.S. went to war in Iraq in 2003, KBR came along too, eventually providing modern dining facilities for military and State Department personnel, featuring everything from made-to-order Caesar salads to a dessert station featuring over a dozen types of pie and cakes. Though costs were supposed to be limited to $20 a person per day, a State Department Inspector General investigation found personnel were being encouraged to scan their attendance at meals and snacks as many times as possible. A notice in an embassy newsletter read, "more scans = more goodies," and the Inspector General found people were scanning multiple times, which hid the true cost of the meals. " One person scanned his card 25 times in two days," the report states. A later Defense Contract Audit Agency report confirmed those findings, saying that headcount inflation could be as high as 36 percent.