Unpaid Bills May Halt Food Service for Troops in Iraq

Cold Chow: Defense News, Federal Times, Army Times and Gannett (March 22, 2004). Unpaid KBR subcontractor threatens to stop serving troops. This is a recurring theme to the multibillion-dollar LOGCap contract.

 

By DAVID PHINNEY

Halliburton celebrates serving hot meals to U.S. troops in Iraq in its television commercials, but one subcontractor responsible for preparing the food says soldiers there soon may be eating cold sandwiches because Halliburton subsidiary Kellogg, Brown and Root isn’t paying its bills.

A Utah-based caterer, Event Source, claims KBR has racked up an unpaid $87 million tab for meals it has served to soldiers in Baghdad and Mosul since November. The company plans to continue serving food at dining facilities it helped build, but it needs either to get paid or cut expenses, said Phil Morrell, who founded Event Source to serve security troops during the 2002 Winter Olympics in Salt Lake City .

“It’s not something I want to do, but I just want to get paid,” Morrell said. “My company is getting ripped apart.”

Other subcontractors in Iraq working for KBR share similar complaints, he said, although he declined to name any.

“I’m just the squeaky wheel,” he said. “I don’t know what else to do to get paid.”

Halliburton spokeswoman Wendy Hall confirmed that some subcontractors remain unpaid for their invoices, but declined to say how many or how much money is at issue.

“As soon as an invoice is validated, it is paid, but this process is time-consuming due to the volume of invoices associated with over 60 dining facilities in the area of operations,” she said. “We understand the hardship this places on our subcontractors and are doing everything we can, given the circumstances, to speed the process along while still continuing our due diligence.”

Hall said special circumstances in a war zone have placed an added burden on doing business, and KBR had to ramp up from serving 50,000 soldiers in June to more than 130,000 in July.

The company holds a multibillion-dollar contract signed in 2000 with the Army Materiel Command for “just-in-time” troop support, provisioning and installation construction around the world.

KBR has said previous food billings were based on meals ordered, not meals served, and it is withholding bills totaling $141 million as negotiations continue with the Pentagon over costs. KBR is conducting a detailed internal audit of all dining-facility subcontracts in Iraq and Kuwait to ensure charges are consistent with the number of meals served or prepared, said Halliburton’s Hall.

KBR has been under scrutiny from Pentagon auditors looking into whether the company overcharged for fuel and food services provided to troops in Iraq , as well as the possibility that two Halliburton executives received kickbacks from a Kuwaiti subcontractor.

According to a report in the March 11 edition of The Wall Street Journal, the Defense Department inspector general’s office has asked the Justice Department to join the investigation, indicating there may be grounds for possible criminal charges.

The inquiry into possible price gouging for fuel stems from KBR’s work to deliver fuel to Iraq from Kuwait and Turkey under a separate contract with the Army Corps of Engineers. That contract expired. The Corps last week awarded a fuel-supply contract to Refinery Associates of Texas Inc. and six Turkey-based companies for an estimated $300 million or more.

Besides the billing dispute, Event Source has suffered a far more severe consequence of its work in Iraq : Five of its employees have died there since June, Morrell said - one from friendly fire, one from insurgent activity and three from natural causes, including heatstroke and heart attack.

 

 
 
 
 
 
 

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