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KBR Tells U.S. Army it will Cost $500 Million and Take 13 Years to Close out Its Iraq Contract

Published: May 15, 2013
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Source: All Gov.

The recipient of the largest government services contract in U.S. history has told military officials it will take another 13 years and half a billion dollars to finish off its work stemming from the Iraq war.

This assessment from KBR Inc., which won the $38 billion deal from the U.S. Army way back in 2001, is at the heart of a legal battle between the two sides.

KBR qas responsible for aiding virtually all American military support operations as part of the Logistics Civil Augmentation Program (pdf) (LOGCAP) III in Iraq.

With the conflict over and the pullout of combat units, the Pentagon sought to alter the terms of payment for the remainder of the contract. U.S. Defense Department officials want to pay KBR a fixed amount for what’s left to do (which could save it hundreds of millions of dollars), while the company wants to be reimbursed for its efforts, which has been the case since the deal was arranged last decade.

The Army’s move to implement the change prompted KBR to sue in court, where its lawyers argued that the remaining duties will cost $500 million and take 13 years to complete.

Emails exchanged between the two sides were presented as part of the litigation, allowing Charles Tiefer, professor of government contracting at the University of Baltimore and a member of the Commission on Wartime Contracting, to review them.

His take on the communications?

“The emails show things have gotten very nasty between KBR and the Defense Department,” Tiefer told the Federal Times.

“The emails show that the Defense Department, in its dealings with KBR, feels like it’s wrestling with a giant python,” he added. “The kind of willingness to work with KBR that you saw for a number of years during the Iraq War has completely gone.”

-Noel Brinkerhoff

To Learn More:

KBR vs. Army: On Largest Services Contract, 'Things Have Gotten Very Nasty' (by Jim McElhatton, Federal Times)

Army Gives KBR No-Bid Contract in Iraq Hours after Justice Dept. Joins Anti-KBR Kickback Suit (by Noel Brinkerhoff, AllGov)    

Pentagon Fines KBR…Then Gives it a $2.8 Billion Contract (by Noel Brinkerhoff, AllGov)

Pentagon Lets $100 Million in Overcharges by KBR Go Uncollected (by Noel Brinkerhoff, AllGov) 

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