Vanity Fair’s “The People vs. the Profiteers”
The November 2007 issue of Vanity Fair contains an article covering the multi-billion LOGCAP-III contract in Iraq. More specifically, it covers qui tam lawsuits launched by former KBR contractor employees, alleging fraud and/or misconduct on the part of that Halliburton subsidiary. This is no small matter in the USA; the qui tam (“who sues on behalf of the King as well as for himself”) system was instituted by Abraham Lincoln to allow private citizens to sue on the government’s behalf, and collect a share (usually about 18%) of the 3x damages awarded if they win. Many of these individuals are currently represented by Alan Grayson, a lawyer with extensive government contracting experience and the unusual distinction of having been a successful entrepreneur before he began his legal career. Given the expense of these drawn-out contingency-fee suits, the ability to be able to afford $10 million or so in expenses without blinking is no small asset.
Normally, we might just provide a link to the story and move on. Unfortunately, we can’t do that in good conscience, as there are a number of elements in the Vanity Fair article that are overblown, or indicate a weaker understanding of the field than one needs to possess when writing such serious allegations. That would disqualify our coverage in most cases, but there are also some elements that would appear to involve very clear-cut cases of wrongdoing, backed by strong documented evidence.
All of that will eventually be decided in trials, but none of it can be ignored or dismissed on account of the media source. The military and its contractors do not exist in an isolated bubble, and regardless of the source, the content of the allegations must be addressed in the courts of law and of public opinion.
In the end, therefore, an editorial decision was made to be of some service in this debate by pointing out some elements that appear poorly understood in the article and offering additional perspectives, while also listing a number of the more serious and substantive allegations being made by these former contractor employees.
Vanity Fair’s Article: Positives and Negatives
Any reporting about cases that in some cases remain under seal is going to be somewhat tilted, because at least one of the parties can’t talk about it. Nonetheless, there can be value in reporting those stories. Key questions include whether that reporting is fair, whether it is knowledgeable, and how well supported its claims are by external evidence.
On that account, Vanity Fair gets a mixed grade. On the one hand, they do acknowledge that:
“Apart from its connections in Washington, there is something else that protects KBR: the perception, widespread throughout the military, that it has provided generally good-quality services in war-zone conditions.”
Often through employees making a lot less money than one would expect, given the working conditions involved. On the other hand, the article has passages like this:
“logcap is also an “indefinite-delivery, indefinite-quantity” contract, which means that the Pentagon can go on commissioning whatever it wants from KBR whenever it wants. Instead of being subject to competitive bids, fresh items can be added to the contract at will: all officials have to do is issue a “task order.” These can be worth hundreds of millions of dollars – even billions, in the case of Task Order 59, which put KBR in charge of supporting the 130,000 U.S. troops in Iraq.”
Readers of this magazine will be aware from endless repetition that the vast majority of defense contracts are “indefinite-delivery/ indefinite-quantity.” The reason is simple. Government contracts are long and complex, and negotiating their terms takes a great deal of time and effort. Which costs money. Especially when one is dealing with large contracts aimed at unpredictable situations or widespread needs – vid. the USAF’s $10 billion AFCAP III for “Expeditionary Engineering”, the Army’s $20 billion ITES-II I.T. services contract, the GSA’s $50 billion Alliant cross-government contract for I.T services, NAVFAC’s $1 billion global construction contract, KBR’s delivery orders under a $500 million, multiple winner “emergency services” contract, Ashbritt, Inc.’s $500 million delivery order for cleanup work after Hurricane Katrina, etc. Having one set of umbrella terms establishes the labor and rates a federal agency will pay for approved services or goods, and there is a maximum ceiling on the total value of services and goods that can be procured. It also drastically reduces the time involved, so that services can be provided on a timely basis. There’s no point waiting 6 months without a computer in your government job, while some lawyer works to hammer out vendor terms.
This becomes an especially crucial variable in a situation like Iraq, where work needs to be done quickly as part of the military effort and the words “fatal delay” are no mere figure of speech. IDIQ contracts also reduce costs, since the cost of all the lawyers on both sides for each contract would be borne by the taxpayer. Spending $5, and paralyzing work, in order to avoid being overcharged $1, is not necessarily good public policy.
None of this is particularly surprising information to anyone with any familiarity in the field. It will, however, comes as a surprise to Vanity Fair’s readers. To imply, as Vanity Fair does, that IDIQ contracts are a serious problem reveals a fundamental ignorance of government contracting, let alone defense contracting, and does both its readers and the public a deep disservice.
The magazine is on far more solid ground when it says:
“Between 1991 and 2005, the size of the staff responsible for managing and auditing Pentagon contracts was cut in half. “What we have seen in recent years is an explosion in contracting, while at the same point in time we have seen a contraction of those engaged in oversight of contracting matters,” says Comptroller General David M. Walker, the head of the G.A.O. This, he says, serves “to exacerbate the systemic problems that have existed for years.” “
It seems extremely hard to argue, as all of these factors were cited recently in the Army’s own Gansler Report‘, which found serious deficiencies in “expeditionary contracting” skills and staffing.
Normally, these qui tam suits remain sealed for 60 days, with all participants forbidden to discuss it, while the Department of Justice decides whether to take up the case as its own. After that period, the suit is usually made public regardless of the DOJ’s choice. Many of the cases have remained under seal far longer than 60 days while investigations are carried on. While this is assuredly an especially difficult class of cases to investigate, there are allegedly suites from 2003-2004 still under seal.
Which brings us to the core of the Vanity Fair article: the qui tam lawsuits and their allegations. The core message of the article is not subtle: the suits are all true and prove massive corruption in Iraq, but they are being suppressed by being kept under seal for political reasons related to Vice President Dick Cheney’s past affiliation with Halliburton.
Whatever one may think of any of this, that’s a string of 5 sequential contentions, each of which is rather less than certain. Journalism is not enhanced by transparent paragraphs like these:
“Given that the same lawyers who are suppressing the Iraq cases continue to be cooperative on other matters, Grayson suspects that they are following orders from on high. Would it be so outlandish, he wonders, to suggest that the same Justice Department that has been accused of firing U.S. attorneys for political reasons might be suppressing war-related fraud claims for political purposes?”
Note that this paragraph does not contain an actual quote; and that the article does not contain any discussions with a second experienced voice, unconnected to the lawsuits, who may have a different theory. “He said, she said” simply will not do when making accusations of this nature. Nor will offering a political agenda in the guise of reporting.
Despite these glaring weaknesses, the article does contain examples of qui tam lawsuits that address clear misconduct if true, and appear to have strong documentation.
Bud Conyers worked in Iraq as a driver for Halliburton subsidiary Kellogg, Brown & Root (KBR). He claims that on June 16/03, refrigerated tractor trailer R-89 was opened and found to carry badly decomposed bodies. This is not itself an issue, except that under military regulations, a truck used this way can never again store food or drink for human consumption. Bud Conyers claims to have photographs of that same vehicle later being used for that purpose (one of which was reproduced in the article), and a mission log allegedly bears him out. He reported the incidents to KBR several times. He was fired in October 2003.
Barrington Godfrey, a naturalized citizen and military veteran, had 18 years’ experience as a contract-management executive in Saudi Arabia’s oil industry when he joined KBR in the summer of 2004. Unlike many of the other qui tam complainants, he kept records, and his suit was unsealed in April 2007 by a Virginia judge after the DOJ refused to take up the case. His documentation, if true, shows margins of 1,500% – 2,500% over subcontractor fees at troops dining & recreation facilities (“D-Facs”), other D-Facs facilities that engaged in blatant numbers inflation to drive up costs (an allegation other Grayson plaintiffs have made), and little to no control over key subcontractors like the Saudi Gulf Catering Company. His suit estimates overbilling of $10 million at just one D-Fac in Iraq.
Vanity Fair also cited the case of Bunnatine Greenhouse, a former civilian procurement chief at the Army Corps of Engineers who had been demoted after protesting the decision to give Halliburton the Iraqi-oil-industry contract. Her verdict that KBR and its LOGCAP 2 bills were “out of control” in Kosovo were allegedly backed by the US GAO (now Government Accountability Office). That’s relevant if true, and any readers who know of the appropriate GAO report would do us a favor by pointing us to it or giving us the GAO number; we’ll add it as a link.
There is much to ponder in the Vanity Fair article, despite the distaste its flaws rightly evoke. Amidst the cheap theorizing, limited points of view, and lack of context are stories that appear to have serious substance behind them, as well as conclusions that are backed by independent investigations and official reports. For those reasons alone, “The People vs. the Profiteers” is worth our readers’ time and attention.
On the other hand, so, too is our readers’ own expertise, born of long experience on both sides of the government/ contractor fence, and in some cases from experience on the front lines. Defense Industry Daily is a magazine – but our delivery medium allows us to tap that depth and direct experience in the course of publication. We intend to leverage it.
- Winds of Change.NET (Oct 5-7/06) – Contractors’ Voice Series. A 3-part series, as told by an individual who worked in Iraq for 2 years as a (non-security) contractor employee: “You’ll Never Know What We Did” | “I Learned to Handle Myself…” | “I Wasn’t Chasing Blood”
- Taxpayers Against Fraud Education Fund – False Claims Act Legal Center