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4-02-2004 The Scotsman Accused firm given GBP 350m MoD contract By Gethin Chamberlain Defence Correspondent A COMPANY accused of overcharging the United States army for fuel and food and the US government for reconstruction contracts in Iraq has been awarded a contract worth a potential GBP 50 million a year to supply the British Army. Kellogg Brown & Root (KBR) has been handed a seven-year contract to handle logistic support for the UK's Permanent Joint Headquarters. The contract covers the supply of fuel, meals and a range of other support services for Britain's armed forces. The US-based company is part of the giant Halliburton group, formerly run by the US vice-president, Dick Cheney. In December, KBR was awarded a GBP 127 million contract for the restoration of essential infrastructure of the Iraqi oil industry, bringing to GBP 1.25 billion the value of its contracts obtained so far in Iraq without competitive bidding. But the company has faced a series of embarrassing accusations about overcharging. The latest claim, which surfaced yesterday, was that it had overcharged the US military by more than GBP 8.8 million for meals for troops at one Kuwaiti base last year. An internal Pentagon e-mail sent to US army officials and cited by the Wall Street Journal, revealed that a Saudi sub- contractor hired by Halliburton at the Arifjan base had charged the US army for an average of 42,042 meals a day in July, while serving up only 14,053. This allegedly resulted in an overcharge of GBP 8.7 million over seven months. The overpayment was reported to have come to light as part of a routine Pentagon audit, but it has prompted a review of other catering contracts at 50 other facilities. KBR said it was working with the US government to improve ways of estimating how many meals were needed. Randy Harl, KBR's president and chief executive, said: "This is not about overcharging. This is about finding a good way to estimate the number of meals so soldiers can get fed." The discrepancy, coming after previous revelations, has encouraged the Pentagon to re-examine its contracts with the company. In December, a draft Pentagon audit revealed that the company may have overcharged by GBP 33.21 million for fuel transported into Iraq from Kuwait. The company paid back GBP 3.4 million to the US army after it admitted employees may have received payments from a Kuwaiti contractor. The White House has told KBR it expects answers on the fuel-supply allegations. The US administration has faced questions from Democrats about the award of contracts to companies with ties to the White House. Halliburton has admitted that one or two employees may have accepted improper payments from a Kuwaiti subcontractor as part of the GBP 3.4 million overcharge. Two employees were later fired. But yesterday the Ministry of Defence said it was happy with the contract awarded to KBR, which it said had been clinched after a competitive tendering process. An MoD spokeswoman said there were audit checks and procedures built into the contract to ensure that it received value for money. "They were selected on merit," she said. The contract is worth a minimum of GBP 12 million annually, rising to a potential GBP 50 million a year depending on demand. The MoD, which has faced heavy criticism from the National Audit Office for its failure to prevent costs spiralling out of control on other procurement projects, said the deal to supply the UK's Permanent Joint Headquarters (PJHQ) would deliver "effective infrastructure support for military operations and exercises worldwide". Adam Ingram, the armed forces minister, said: "This new partnering approach between PJHQ and KBR will deliver important benefits to future operations. By bringing all this activity under one umbrella, we will ensure that our front-line forces receive the best logistical and infrastructure support, as and when they require it. "Experience from other nations has already shown that having a single point of contact provides both operational benefits as well as better value for money. I am convinced by involving industry at an early stage in the deployment planning process is the best way forward for our armed forces." Last month it emerged that the MoD had wasted GBP 3 billion on major projects which had also over-run on delivery times. The MoD said defence contractors had to raise their game and improve performance. Lord Bach, the defence procurement minister, said the government would insist on improvements in industrial project management as a condition of doing business.
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................................................................................................................. Copyright ©2004 Gethin Chamberlain. All rights reserved. |
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