LOGCAP, Halliburton and working on saving the gov’t money? Not exactly…

David Phinney has an interesting post on a Blanket Insurance Waiver for Iraq reconstruction:

I have a curious memo, “Blanket Insurance Waiver,” which apparently allows Halliburton/KBR to waive insurance requirements — read cut the “costs” — to potential subcontractors working under Halliburton’s sweeping military logistics contract, known as LOGCAP.

It was approved November 26, 2002, by four top-level KRR managers. It apparently grants sweeping discretion to KBR contract officers in the field, i.e., Iraq, to disregard Defense Base Act insurance requirements when subcontractors claim they can’t find a suitable insurance carrier.

One contracting insider believes that KBR’s contracting officers routinely used the waiver to help non-US businesses land multi-million-dollar contracts under the logistics deal.

This insider notes that because insurance coverage for workers is mandatory on Pentagon contracts, the waiver grants great liberties to a contracting officer who waives the requirement.

“In 2004-2005, coverage was running from $27 to $35 per $100 of wages. Essentially, providing a waiver to foreign firms gives them an automatic 27-35% price advantage on Labor Contracts over honest American entities,” the insider says.

A prominent attorney working on Iraq contract fraud tells me that this memorandum may be cause for crying foul on every contract that received the waiver.

“There is a potential False Claims Act claim here. It’s would be a little difficult to pin down the Government’s damages, but clearly, if KBR must require subcontractors to obtain insurance, and it’s not doing so, then every invoice certifying contract compliance is a false claim.” (See qualifying analysis below.)

Another prominent government attorney tells me he’s not so sure, but regardless of the blanket legal interpretations, allowing a private contract officer the personal discretion to waive insurance requirements opens the door to some handy favoritism that could potentially be rewarded with generous kickbacks.

That’s one reason why numerous sources tell me the special inspector general charged with investigating Iraq contracting is looking hard at the hidden layers of subcontractors working underneath Halliburton/KBR.

Halliburton/KBR has now billed $16 billion since the war on terror began largely from its business in coordinating camp construction and maintenance, food services and supply convoys in Iraq and Afghanistan. (That’s my rough estimate on the Pentagon’s tab.)

Much of that work has been handed out to subcontractors, while KBR tacks on a percentage surcharge for awarding and coordinating the contracts. (Imagine a pyramid of contractors with Houston-based KBR sitting at the top.)

The four KBR managers who signed the memo are:
— Tod E. Nickels, senior procurement and materials manager
— John Downey, project general manager (LOGCAP) project
— Bob Herndon, vice president, operations maintenance and logistics
— Tom Crum, chief operating officer.

David’s post includes, besides the above, a response from an attorney regarding the waiver that’s worth reading. The plot thickens on the fiasco known as reconstruction that contributed more to the insurgency than most have yet to acknowledge.

More on Fortress Baghdad, er, the New American Embassy

060414_embassy_hmed_3phlarge The wisdom of the Bush Administration hits the news yet again. While Condi is admiting, perhaps unwittingly, to the mistakes of the Administration in Iraq (by mostly pointing the finger at Rumsfeld by the way), comes more news in the mainstream media about what will become a legendary debacle of US Public Diplomacy. The American embassy in Iraq, as  reported by MSNBC (picture of all the construction cranes at right should be warning itself), will be massive and the largest in the world at 21 buildings and 104 acres.

The fortress-like compound rising beside the Tigris River here will be the largest of its kind in the world, the size of Vatican City, with the population of a small town, its own defense force, self-contained power and water, and a precarious perch at the heart of Iraq’s turbulent future.

Interestingly, the MSNBC report parroted the names of the security
measures built into the compound. So-called "no-go areas" used to be
called "killing zones", "no-man’s land", or similar clearly named
places to avoid.

The over 5,000 (!!) American and Iraqis who will work in the embassy will be isolated from interaction with the unwashed masses of the public to carry out the new ‘special’ brand of diplomacy, whatever that is. Should we ask how many of the 5k+ will be DoD reports with Rumsfeld taking more of a role in public diplomacy?

Iraq_jobsDavid Phinney’s story on the embassy back in February goes deeper into the impact of this embassy on our worldwide relations. Not only are we building a structure that will intimidate the state it is in (and dominate the skyline of the capital city we are guests in with our sovereign territory), but we are importing labor from other countries with lies, deceit and low-pay. How do think that plays back in their home countries?

Well, at least we’re continuing to give our friends the Kuwaitis financial assistence. It’s good to help friends, right?

More than a few U.S. contractors competing for the $592-million Baghdad
project express bewilderment over why the U.S. State Department gave
the work to First Kuwaiti General Trading & Contracting (FKTC).
They claim that some competing contractors possessed far stronger
experience in such work and that at least one award-winning company
offered to perform the all but the most classified work for $60 million
to $70 million less than FKTC….

Mohammad I. H. Marafie, chairman and co-owner of FKTC, is a member of one of the most powerful mercantile families in Kuwait….

American contractors witnessing the plight of some of these migrants at
military camps around Iraq have openly complained that the Asians
endure abysmal working conditions, live in cramped housing, eat poor
food, and lack satisfactory medical care and safety gear.

these migrants work 12 hours a day, often seven days a week, and earn
as little as $500 a month performing tasks considered unsuitable for US
war fighters. They work construction, drive trucks, run laundries,
clean latrines, pick up rubbish and operate stores, dining facilities
and warehouses. Without them, and the "body shop" subcontractors that
provide such laborers, the US and coalition military camps — virtually
small cities — would shut down.

I listened to a CorpWatch interview with Phinney when this first came out. I suggest you do the same if you don’t want to read the entire article.

What do you think this will do to our image? Probably not much since it will only reinforce the perceptions of America. Tell me how this embassy, and its construction, symbolizes the United States?

Is a place that looks like a "remote crusader castle" or a "maximum security prison"? Both of which were used to describe our $83m Istanbul Consulate. What again does this tell the local population?