KATRINA: Audit Faults KBR's Repairs of Hurricane Damage

Efforts by defense contractor KBR to repair hurricane-damaged Navy
facilities were deemed shoddy and substandard, and one technical
adviser alleged that the federal government "certainly paid twice" for
many KBR projects because of "design and workmanship deficiencies," the Pentagon's inspector general reported in an audit released yesterday.

The Naval Facilities Engineering Command gave KBR, then known as Kellogg,
Brown and Root, three repair contracts worth $229 million over five
years in July 2004, according to the report. At the time, KBR was a
subsidiary of Halliburton, the Texas energy company whose former chief executive is Vice President Cheney.

After
Hurricane Ivan struck the Gulf Coast that September, and Hurricane
Katrina a year later, KBR was given a number of tasks. They included
removing water-damaged carpet and drywall; applying temporary roofing;
removing debris; and building trailer parks for displaced families at
naval air stations in Pensacola, Fla., and Gulfport, Miss., the Stennis
Space Center in southern Mississippi and other facilities in the region.

The inspector general reported that its audit of KBR's work found:

·
The Navy entered into an illegal "cost-plus-percentage-of-cost"
contract with the company. Higher costs meant more profit for KBR,
which rewarded the company for "inefficiency and non-economical
performance," the report said.

· KBR paid $4.1 million for
services and meals that should have cost $1.7 million, and it awarded
sole-source or limited-competition subcontracts that overpaid hourly
rates to roofers.

· The company was paid nearly all contract amounts despite "marginal-to-average performance."

The
inspector general recommended that the Navy try to recoup about $8.4
million in "excessive" equipment lease payments and material profits,
and another $1.4 million for more than 110,000 meals that were paid for
and thrown away over a 34-day period.

The audit report noted
several unusual costs, including monthly employee cellphone charges of
$540 during roof repairs, $720 per month in gas charges -- even as the
Navy was already paying for work-site fuel expenses -- and expensive
meals, including steak and eggs (full meal prices were redacted from
the report).

As part of the Hurricane Katrina recovery effort,
KBR was hired to build trailer parks for displaced Navy personnel. Each
trailer was supposed to have 200-ampere electrical service and water
piping, but the subcontractors hired by KBR gave each trailer
100-ampere service and did not lay piping at proper building-code
levels. As a result, a second contractor was paid $200,000 to fix the
problems, the audit said.

KBR "does not agree with many of the
conclusions contained in the report," spokeswoman Heather Browne said
in an e-mail. She said KBR will continue to work with the Navy to
resolve any problems with the three contracts.

The inspector general's report was released after a Freedom of Information Act request.

• 15 Halliburton
• 21 Reconstruction
• 106 Money & Politics