Pentagon Finds Company Violated Its Contract on Electrical Work in Iraq

October 25, 2008

By JAMES RISEN

WASHINGTON — The Pentagon has rebuked its largest contractor in Iraq after a series of inspections uncovered shoddy electrical work and other problems on American military bases there, according to several Defense Department officials.

The Defense Contract Management Agency, the Pentagon agency in charge of supervising contractors in Iraq, determined in August that KBR, the Houston-based company that provides virtually all basic services for the American military in both Iraq and Afghanistan, has been guilty of “serious contractual noncompliance” in Iraq, the officials said.

The Pentagon’s finding could lead to cuts or delays in payments to KBR, and ultimately to a decision by the Army to withhold hundreds of millions of dollars in bonuses and fees due the company, officials said, but they added that no decisions on financial penalties had been made.

Defense officials, who spoke on condition of anonymity in order to discuss internal deliberations, declined to elaborate on the reasons for the new findings, except to say that they related to electrical problems and other issues.

KBR, formerly a subsidiary of Halliburton, has had a virtual monopoly on military services contracts in Iraq since the 2003 invasion, garnering more than $24 billion from its business in the war zone.

Questions about the quality of KBR’s electrical work on American bases in Iraq have plagued the company throughout 2008, leading to investigations and hearings by Congress as well as an inquiry by the Pentagon’s inspector general.

Internal Pentagon documents obtained by The New York Times suggest that the electrical problems may be more widespread than had been believed. A chart compiled by Army officials and not previously made public shows that more American personnel have been electrocuted in Iraq than the Bush administration has acknowledged.

At least 18 people have died from electrocution since the March 2003 invasion, including 10 from the Army, 5 from the Marine Corps, 1 from the Navy and 2 military contractors. The most recent electrocution occurred on Feb. 24. A chart listing each electrocution provides details but does not identify the victims by name.

This is the second time that the Pentagon has raised its figures on electrocutions in Iraq. Last spring, the Defense Department said that 12 American personnel members had been electrocuted in the country, and then later told Congress that the accurate figure was 13.

KBR is scrambling to respond with a plan to correct the problems cited by the Defense contracting experts, Pentagon officials said. Pentagon officials held a private meeting with KBR officials in Washington last week to review the company’s response, several of the officials said.

Heather Browne, a spokeswoman for KBR, declined to comment on the Pentagon’s finding.

In the past, some Army contracting experts have complained that their superiors in the Pentagon have been reluctant to confront KBR over its fees and the quality of its work. For example, the Army’s top official in charge of the KBR contract at the beginning of the war has said that he was removed from his job in 2004 after challenging KBR’s billing records for its work in Iraq.

The issue of shoddy electrical work on American military bases in Iraq first emerged in the wake of the death in January of Staff Sgt. Ryan D. Maseth, a Green Beret from Pennsylvania who was electrocuted while taking a shower in his barracks in Baghdad.

Sergeant Maseth’s family went public with their questions about the circumstances surrounding his death and filed a wrongful death lawsuit against KBR, accusing the company of failing to adequately maintain the building’s electrical system.

The Maseth case led to investigations of electrical work on American bases by Congress and the Pentagon’s inspector general, and ultimately prompted an order for comprehensive safety inspections of the electrical work at all American military facilities in Iraq.

Officials said that the Army recently reopened its investigation into Sergeant Maseth’s death, after obtaining new testimony and evidence in the case, including the discovery that another soldier had suffered electrical shocks while assigned to the same room as Sergeant Maseth.

KBR has “fully cooperated with Army C.I.D. on this matter, and we will continue to do so,” Ms. Browne, the spokeswoman, said, referring to the Army’s Criminal Investigation Command. “KBR maintains that its activities in Iraq were not responsible for Staff Sergeant Maseth’s death.”