War has offered the opportunity for profiteering pretty much since the most sophisticated weapons technology at man's disposal was a spear. But the level of that profiteering these days is truly spectacular. This new report from the Center for Public Integrity explains just how your tax dollars are shoveled into the coffers of KBR, the former Halliburton subsidiary that provides things like food to troops overseas. You see, when you start a war, you don't really know everything you're going to need. So the military retained KBR on what's called a Logistics Civil Augmentation Program, or LOGCAP:
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.
It wouldn't be efficient to have soldiers trained for fighting spending their time peeling potatoes like they did in the old days. But when you set up a system that says to contractors "just bill us," no one should be surprised when the bills come in suspiciously high. Our current wars have also seen a proliferation of "cost-plus" contracts, in which the contractor spends whatever it deems necessary, then bills Uncle Sam their costs, plus a percentage. This provides an incentive to jack the "cost" portion of "cost-plus" as high as possible. And as the CPI report notes, right now the government is suing KBR for $100 million in what it says are overcharges -- even as it continues to award it more contracts. Ah, the glory of war.
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