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The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations. In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data. We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services. Report an instance of misconduct »

KBR

Excessive Subcontract Costs

Date: 06/09/2004 (Date of Testimony)

Misconduct Type: Government Contract Fraud

Enforcement Agency: Defense – Army

Contracting Party: Defense - Army

Court Type: Administrative

Amount: $55,000,000

Disposition: Administrative Agreement

Synopsis: The DCAA (Defense Contract Audit Agency) “has identified issues related to the reasonableness of negotiated subcontract costs for DFACs (Dining Facilities). KBR has been unable to support the reasonableness of subcontract prices or the appropriate billing methodology intended in its subcontracts.” Billed headcount numbers [at these facilities] exceeded the actual meals served by at least 19 percent according to KBR’s own studies and could be as high as 36 percent based on on-going DCAA analysis. Initially, DCAA and KBR agreed on a withholding of $176.5 million until additional supporting data could be provided by KBR…[however] the DCAA has currently increased its suspended DFAC costs to $186 million.” As reported in its 2005 10-K, the government eventually agreed to withhold $55 million.