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Contractor Protests 'biased' Treatment At Hearing

The Associated Press

WASHINGTON (AP) — KBR Inc., a major military contractor whose fees have generated criticism, says it was subjected to "judgmental and biased" treatment by a special panel investigating waste and fraud in war spending.

The May 4 hearing held by the bipartisan Wartime Contracting Commission was a one-sided affair that unfairly trashed the company's reputation, according to William Bodie, KBR's interim president for government and infrastructure.

"The hallmark of any serious evaluative body should be a rigorous and unbiased commitment to collecting data and perspectives prior to the assemblage of conclusions," Bodie wrote in a May 12 letter to commission leaders.

Formed by Congress last year, the eight-member commission has broad authority to examine military support contracts, reconstruction projects and private security companies. The May 4 hearing was its second public session as it works to complete an interim report next month. A final report is due in 2010.

Houston-based KBR was not invited to testify at the hearing. Nor did company representatives ask to testify, Michael Thibault, co-chair of the commission, said Wednesday. KBR was asked to provide a written statement and did.

The Army, which manages the so-called LOGCAP contract that has paid KBR nearly $32 billion since 2001, had two senior contracting officials at the witness table.

Commission members have met with KBR on multiple occasions before the hearing, in the U.S. and in Iraq and Afghanistan, and will continue to do so, Thibault said.

KBR, along with an extensive network of subcontractors, provides U.S. forces in Afghanistan, Iraq, and Kuwait with dining facilities, transportation, sanitation systems, warehouses and other critical services.

Thibault said if KBR representatives had been asked to speak at the hearing, the panel would also have had to invite several other companies. The hearing format was intended to be a single panel of government witnesses, he said.

"Differences of opinion are inevitable," Thibault said of KBR's objections and the commission's mission.

April Stephenson, director of the Defense Contract Audit Agency, also testified and commissioners used her remarks to criticize KBR.

Since 2004, Stephenson said her office has submitted 32 reports of suspected fraud or improper conduct on contracts to government investigators. The "vast majority" of those referrals stemmed from the KBR contract, she said.

Stephenson called the number of referrals "unprecedented" for a single military contract or program. But she declined to give details on those reports or name the sources of the alleged improprieties.

She also said her agency has conducted dozens of audits on the KBR contract and has challenged about $4.7 billion in costs charged by the company, she said.

Bodie said one commissioner — he doesn't provide a name — said the fraud referrals included "bribery and kickbacks and so forth." Bodie says there was no way for the commissioner to know this because Stephenson provided no specifics.

Bodie said "it is impossible for an observer to determine the gravity of any referral, the strength of the evidence behind it, or even whether any such investigation was or is active."

The commission is styled after the Truman Committee that examined World War II spending.

But the commission is a long way from matching the record of the Truman Committee, which held 432 hearings and issued 51 reports between 1941 and 1948, according to Bodie. By comparison, he said the commission has held two hearings and issued zero reports.

"And given the bias expressed toward KBR, the conclusions made with a slim evidentiary record, and the narrow focus, it is hard to recognize the Truman Committee in this current effort," Bodie wrote.

The commission responded to Bodie's swipe by e-mailing the AP a quote from Harry Truman, who chaired the World War II oversight committee as a Missouri senator.

"I have had considerable experience in letting public contracts," Truman said more than six decades ago, "and I have never yet found a contractor who, if not watched, would not leave the government holding the bag."

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On the Net:

Wartime Contracting Commission: http://www.wartimecontracting.gov/