Pay Any Price (23 page)

In an e-mail to one of the army investigators who met with her in Pittsburgh to tell her about the reversal, Harris vented her anger. “After Ryan died . . . I was told by a military person [name withheld] that ‘KBR runs Iraq.' Every ounce of my being didn't want to believe that statement was true. Today, the CID confirmed that statement and I have an in-depth understanding of how KBR does run Iraq, and in a sense controls the U.S. Army CID [U.S. Army Criminal Investigation Command].”

The meeting failed to deter Harris. She went after KBR on her own. She kept gathering information from army investigators and other government officials, she buttonholed members of Congress, she talked to reporters, and she filed a wrongful death lawsuit against the company in federal court in Pittsburgh for its negligence. She kept the issue alive.

She wasn't afraid to berate colonels, generals—anyone and everyone in the army chain of command who refused to provide adequate answers or make the changes needed to protect more soldiers from electrocution. “I have no words to express my disappointment with the U.S. Army Corps of Engineers lack of interest in doing what's best for our soldiers,” Harris wrote in a 2009 e-mail to one general. “While you are dragging your feet in conducting the legal review of my son's case, the U.S. Army Corps of Engineers continues to award KBR contracts worth millions of dollars,” she wrote to a senior army lawyer. “I'm NOT a mother that will sit for years without answers. I want closure on my son's case and I also want to ensure the safety of our troops. Is there anyone on this email distribution list that is willing to step up and provide me with answers?”

“The generals all wanted to protect KBR because that's where the money is,” says Harris today.

Her digging also revealed that her son's death was far from an isolated incident. The Pentagon was eventually forced to acknowledge that at least eighteen American military personnel were electrocuted during the war in Iraq. In fact, army experts had warned about the safety threat posed by shoddy electrical work on bases in Iraq as early as 2004, but virtually nothing had been done about it. Worse, it turned out that another soldier had previously been shocked in the same shower in the Radwaniyah Palace complex in which Maseth died. The soldier had asked for the shower to be repaired, but no repairs were made until after Maseth's death.

The Maseth case finally forced Gen. David Petraeus, then the overall American military commander in Iraq, to order a broad review of electrical work on American bases throughout Iraq in 2008. The case also prompted KBR electricians to come forward to say they had been warning KBR managers and military officials for years about the shoddy electrical work on the bases in Iraq—work that was often performed by low-paid and poorly trained workers from other Third World nations.

One of the hidden problems in the Iraq war was that the Defense Department's auditors and contract managers were simply overwhelmed by the scale of outsourcing to private contractors. There were far too few of them to perform any significant oversight of a war-zone behemoth like KBR. The Pentagon also lacked enough experts in specific trades like electrical work or plumbing who could understand and adequately review KBR's work. At the height of the war, KBR was responsible for the maintenance on 4,000 buildings and 35,000 container housing units spread around Iraq, and it was impossible for military contract officers to supervise and keep up with work on so many facilities. All the auditors could really do was review contract paperwork, which meant that KBR and other contractors were, in effect, operating in an oversight-free zone.

Only after Ryan Maseth's death and Cheryl Harris's digging did the Defense Contract Management Agency conclude that KBR had been guilty of “serious contractual noncompliance” in its handling of electrical work. Harris, a grieving mother from Pennsylvania, shook up the Pentagon establishment and put a scare into KBR. Her actions undoubtedly saved the lives of American troops who might otherwise have suffered the same fate as her son.

“All of your efforts and your tenacity in bringing this issue to light has radically changed Iraq,” one army CID agent told Harris in an e-mail. “I saw it as I left Iraq and saw many facilities being upgraded to U.S. safety standards. Many Soldiers in Iraq, including all the Soldiers on Camp Slayer, where I was, can now safely use water without any harm to their well-being. Although there is no way to measure how many lives were saved and will be saved as a result of your fight on behalf of your son and all military service members in Iraq and Afghanistan, I wanted you know how much change you affected and how much gratitude I feel that you fought an issue that I and many Army leaders should have seen and fought.”

Unfortunately, she has struggled to defeat KBR in a court of law. In 2012, her wrongful death lawsuit against KBR was dismissed by a federal judge. But Harris doesn't like to take no for an answer. Long after the last American troops were withdrawn from Iraq, she vowed to fight on. In 2013, Cheryl Harris's case was revived when an appeals court reversed the dismissal of the case by the judge in the lower court, prompting KBR in early 2014 to ask the U.S. Supreme Court to hear the case.

 

Charles Smith was a plainspoken army contracting specialist not looking to rock the boat. He spent his career working at the historic Rock Island Arsenal and living a quiet life with his family in nearby Davenport, Iowa. His ambitions were modest. He just wanted to support the troops in Iraq and climb one or two more rungs on the ladder of the army hierarchy before he retired.

But his showdown with KBR changed all that. Smith came closer than anyone else to blocking the massive waste that highlighted the Iraq war. But when he got close to achieving his objective, the largest contractor in the Iraq war struck back with all of its force.

 

Born in Louisville, Smith graduated from Washington and Lee University in Virginia and went to graduate school in philosophy at Vanderbilt before marriage and a family prompted him to find steady work as a civil servant. He got a job in army procurement at Rock Island in 1976. In 1999, his supply operation there was put in charge of army field support, which meant handling the army's contracts with outside companies that would provide basic services for troops who were deployed on missions overseas. During peacetime, that assignment was a sleepy backwater.

During 2000 and 2001, Smith focused on a lengthy bidding process among three companies to take over a contract called LOGCAP—the army's main field support program. The final award for the bidding came in December 2001, just after 9/11, when KBR defeated two other major defense contractors, Raytheon and Dyncorp, with an extremely low-cost bid. At the time, KBR had a lot going for it. The military, particularly the army Corps of Engineers, liked the work the company had done for U.S. troops in the Balkans in the 1990s. But more importantly, KBR was then a subsidiary of Halliburton, the Texas-based oil services company run by Dick Cheney before the 2000 presidential campaign.

Under the terms of the LOGCAP contract, KBR would be reimbursed for all of its costs associated with performing the work required by the contract—as long as the costs were approved and allowed by the army. On top of that, the contract called for bonus payments, called award fees, which would be determined by panels set up by the army.

When KBR won the bidding, the LOGCAP program was still in peacetime mode and no one gave much thought to those contract specifications. Before long, however, they would turn KBR into the biggest money machine of the Iraq war.

 

The U.S. invasion of Iraq came just over a year after KBR won the LOGCAP bidding, making the company the army's prime contractor for all field services for troops in Iraq, Kuwait, and even Afghanistan. KBR was now asked by the army to handle all of the basic services, including food, housing, water, and sanitation, for hundreds of thousands of American troops throughout the Middle East. It was a contracting bonanza on an unprecedented scale. It was as if a single company had been awarded a contract to provide every service needed by every citizen of a small state. The company's virtual monopoly over basic services for American troops gave KBR enormous influence and inevitably helped to shape the course of the war. As the U.S. military established bases scattered around Iraq, KBR was responsible for supplying them, and soon KBR's long truck convoys became favorite targets of insurgent attacks. The army, in turn, had to divert troops to escort the convoys, and ambushes and IEDs hitting convoys led to mounting casualties.

The chaos in Iraq in the early days after the U.S. invasion posed an enormous challenge for KBR as it sought to keep up with the growing American presence. Overall, the army was generally pleased with how rapidly KBR was able to provide good food and decent housing on forward bases. KBR managers made it a top priority to keep American officers in Iraq pleased by ensuring that the services that affected them the most were up to their standards.

But soon, Charles Smith, now running LOGCAP and overseeing KBR, began to see looming financial problems. In 2003, in the months after the U.S. invasion, the army started demanding that camps and bases be built overnight throughout Iraq. Smith's office would write huge orders for KBR to spend billions of dollars to build the bases and provide services. Because of the army's need to get the work done as quickly as possible, Smith would allow KBR to do the work and submit the paperwork and billing records later. The army often changed its mind about where to build the bases, adding an extra layer of confusion for Smith and KBR to sort out.

Faced with so much upheaval and uncertainty, Smith gave KBR the benefit of the doubt on its paperwork throughout 2003. But by 2004, as the invasion turned into a prolonged American occupation and KBR's role in Iraq became more stable, Smith began to demand answers.

KBR stalled. It would not give Smith auditable proposals to cover its cost estimates. It would not explain how it had been spending money in Iraq. Over time, Smith grew angry and frustrated over what he believed was KBR's refusal to cooperate with his efforts to piece together the bottom line for the costs KBR had actually incurred in Iraq.

As he dug, Smith began to conclude that KBR had been effectively taking full advantage of the open-ended nature of its deal with the army. Since KBR had never had to provide the army with an original cost estimate for its work in Iraq in the rush to invade, there were few limits on how much money KBR could claim it was owed by the army—with extra profits and bonus payments added on for good measure. And by claiming that Iraq was still too chaotic for KBR to provide adequate records, KBR could come up with its own figures for how much it was owed. There was no way for the army to double-check KBR's numbers. It was as if it had a blank check.

The only obstacle in KBR's way was Charles Smith.

In 2004, Smith told KBR that he would not give his approval to their requests for their bills to be paid by the army until they began updating their paperwork and providing clear records to prove what they had really spent in Iraq. Pentagon auditors told Smith that as of the end of 2003, about $1 billion in KBR's supposed costs in Iraq were not credible and should be thrown out. Armed with that information, Smith became more insistent that KBR provide the records and paperwork due for the billions of dollars in costs that it had been billing the army. Smith told KBR officials that he would block reimbursements for their bills, prevent them from getting contract bonuses, and slash 15 percent of their payments for future work if they did not get him the documentation to back up their bills to the army.

Now, he had KBR's attention. But not in the way he was hoping.

Smith's tough stance with KBR was initially backed by his boss, Maj. Gen. Wade McManus, even in the face of mounting concerns over the worsening confrontation with KBR from the Pentagon. But after McManus retired later in 2004, Smith no longer had a protector. In June 2004, Smith went to a meeting at KBR's office in suburban Virginia, outside Washington. There, Brig. Gen. Jerome Johnson, McManus's successor, argued with Smith in front of a roomful of KBR officials. Smith interpreted Johnson's decision to dress him down during a meeting with KBR as sending “a message to KBR that my influence on the program wasn't going to be there much longer.”

With Johnson now in charge, Smith began to lose his leverage with KBR. Johnson and top civilian officials at the Pentagon now seemed to be in “let's take care of KBR mode,” recalled Smith.

In August 2004, after months of back-and-forth with KBR, Smith told one of his deputies to give a letter to a KBR official that said that Smith was about to unilaterally impose penalties on KBR because the company had not come through with the records he had been demanding. But when his aide hand-delivered the letter, the KBR official said that the decision was “going to get turned around.” Just as the KBR official predicted, Smith got a call the next morning from Johnson, who told Smith to rescind the letter.

Then Smith was ambushed. He went to a scheduled meeting at Rock Island with KBR officials and discovered that another army official was there in his place. That was how Smith learned that he had lost his job and that his replacement had already taken over. Smith was sidelined and later retired. Soon, the aide who had hand-delivered his ultimatum to KBR was moved out as well. The calculated move against Smith sent a clear message to other officials: don't mess with KBR.

In addition, the army arranged for an outside contractor to review KBR's costs, replacing the role previously played by army auditors at the Defense Contract Audit Agency, who had provided Smith with the data showing that KBR's bills weren't credible.

With Smith and the army auditors out of the way, KBR began to get what it wanted. Its bills were approved and its bonuses were awarded. The threat of penalties on its future work evaporated. Instead, KBR's dominant role in Iraq was extended throughout the rest of the war. The Obama administration cut a secret deal to allow KBR to keep its monopoly over basic services for American soldiers in Iraq until the end of the war. That decision reversed a plan, originally conceived by Smith and his team, to open up the Iraq work to other companies and force KBR to compete for the work. That secret decision meant billions in additional revenue for KBR.