DoD's $213M Iraq Restoration Contract Awarded to Kellogg Brown & Root Services for Critical Support

Contract Overview

Contract Amount: $213,238,847 ($213.2M)

Contractor: Brown & Root Services

Awarding Agency: Department of Defense

Start Date: 2004-02-11

End Date: 2004-12-07

Contract Duration: 300 days

Daily Burn Rate: $710.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: 200412!000593!2100!W9126G!* !DACA6303D0005 !A!N! !N!0006 ! !20040211!20041207!133469119!133469119!964409007!N!KELLOGG BROWN & ROOT SERVICES,!4100 CLINTON DR !HOUSTON !TX!77020!00000! !IZ!* !* !IRAQ !+000222000000!N!N!000000000000!X300!RESTORATION ACTIVITIES !S1 !SERVICES !000 !* !928110!E! !5!B!S! ! !D!20040307!B! ! !N!A!D!U!R!1!001!N!2A!Z!N!Z! ! !N!M!N! ! ! ! ! !A!A!00 !A!B!N! ! ! ! ! ! !0001! !

Plain-Language Summary

Department of Defense obligated $213.2 million to BROWN & ROOT SERVICES for work described as: 200412!000593!2100!W9126G!* !DACA6303D0005 !A!N! !N!0006 ! !20040211!20041207!133469119!133469119!964409007!N!KELLOGG BROWN & ROOT SERVICES,!4100 CLINTON DR !HOUSTON !TX!77020!00000! !IZ!* !* … Key points: 1. Contract awarded for essential restoration activities in Iraq, highlighting critical infrastructure needs. 2. Significant value suggests a large-scale, complex operation requiring extensive logistical and technical expertise. 3. Sole-source award raises questions about competition and potential impact on pricing and value for money. 4. Contract duration of approximately 9 months indicates a focused, short-term effort for immediate needs. 5. The 'Cost Plus Award Fee' structure incentivizes performance but requires careful oversight to manage costs. 6. Awarded by the Department of the Army, underscoring the military's role in post-conflict stabilization.

Value Assessment

Rating: questionable

The contract's value of over $213 million for a 9-month period is substantial, particularly for restoration activities. Without comparable sole-source contracts for similar restoration efforts in a conflict zone, it is difficult to benchmark the value for money. The 'Cost Plus Award Fee' (CPAF) contract type allows for costs plus a fee that is adjusted based on performance, which can lead to cost overruns if not managed tightly. The lack of competition inherently limits the government's ability to secure the lowest possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, Kellogg Brown & Root Services, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified in urgent situations or when a specific contractor possesses unique capabilities, they typically result in higher prices and reduced transparency compared to full and open competition. The absence of multiple bidders means there was no market pressure to drive down costs or encourage innovative solutions.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competition. Without a competitive bidding process, there is less assurance that the government secured the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are likely military personnel and civilian populations in Iraq requiring restored infrastructure and services. Services delivered include restoration activities, crucial for rebuilding essential facilities and supporting ongoing operations. Geographic impact is focused on Iraq, addressing immediate post-conflict needs. Workforce implications could involve significant employment opportunities for both U.S. and local personnel supporting the contractor's operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost Plus Award Fee structure requires robust oversight to prevent uncontrolled cost escalation.
Contract awarded in a high-risk environment (Iraq) which can introduce unforeseen costs and delays.
Limited contract duration may not cover long-term restoration needs, potentially requiring follow-on contracts.

Positive Signals

Award to an experienced contractor (Kellogg Brown & Root Services) suggests a capacity to handle complex logistical challenges.
Focus on restoration activities addresses critical needs for stability and rebuilding.
The contract aims to provide essential services, contributing to operational success in the region.

Sector Analysis

This contract falls within the broader Defense and Government Services sector, specifically focusing on logistics, construction, and support services in a contingency environment. The market for such services is often dominated by a few large contractors capable of operating in high-risk areas. Spending benchmarks are difficult to establish due to the unique nature of post-conflict restoration, but large-scale support contracts in the Middle East have historically represented significant portions of defense budgets.

Small Business Impact

The data indicates this contract was not set aside for small businesses and was awarded sole-source. Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside. The primary contractor, Kellogg Brown & Root Services, would likely manage all aspects of the work, potentially limiting opportunities for small business participation unless they are specifically engaged by the prime contractor.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army, likely through contracting officers and program managers responsible for operations in Iraq. Given the sole-source nature and the 'Cost Plus Award Fee' structure, rigorous oversight is crucial to monitor expenditures, ensure performance standards are met, and prevent potential fraud or abuse. Transparency may be limited due to the non-competitive award, but reporting requirements within the contract should provide some level of accountability.

Related Government Programs

Logistics and Support Services Contracts
Contingency Operations Support
Infrastructure Restoration Programs
Department of Defense Contracts in Iraq

Risk Flags

Sole-source award
Cost-plus contract type
Operation in a conflict zone
High contract value for short duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $213.2 million to BROWN & ROOT SERVICES. 200412!000593!2100!W9126G!* !DACA6303D0005 !A!N! !N!0006 ! !20040211!20041207!133469119!133469119!964409007!N!KELLOGG BROWN & ROOT SERVICES,!4100 CLINTON DR !HOUSTON !TX!77020!00000! !IZ!* !* !IRAQ !+000222000000!N!N!000000000000!X300!RESTORATION ACTIVITIES !S1 !SERVICES !000 !* !928110!E! !5!B!S! ! !D!200

Who is the contractor on this award?

The obligated recipient is BROWN & ROOT SERVICES.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $213.2 million.

What is the period of performance?

Start: 2004-02-11. End: 2004-12-07.

What is the track record of Kellogg Brown & Root Services in performing large-scale restoration and support contracts in complex environments like Iraq?

Kellogg Brown & Root Services (KBR), formerly part of Halliburton, has a significant and often controversial history of performing large-scale logistics, construction, and support services in Iraq and other contingency operations. They were a major provider of services under the Coalition Provisional Authority and subsequent military contracts, including food services, base support, and construction. While KBR has demonstrated the capacity to execute massive operations, their contracts have also faced scrutiny regarding cost, management, and allegations of overcharging and improper practices. Their extensive experience in similar environments suggests they possess the operational capabilities required for this contract, but past performance necessitates careful oversight and performance evaluation.

How does the 'Cost Plus Award Fee' (CPAF) structure typically impact contract costs and performance compared to other contract types?

The Cost Plus Award Fee (CPAF) contract type is used when the government cannot precisely define the costs or scope of work in advance but wants to incentivize contractor performance. It reimburses the contractor for all allowable costs incurred and provides a base fee plus an award fee. The award fee is determined by the government based on how well the contractor meets or exceeds performance objectives. While CPAF can encourage high performance and flexibility, it carries a risk of cost growth if performance targets are set too low or if the government's evaluation process is not rigorous. It requires substantial government oversight to manage costs effectively and ensure the award fee is justified by exceptional performance, making it potentially more expensive than fixed-price contracts if not managed properly.

What are the primary risks associated with sole-source contracting in a high-demand, potentially unstable environment?

Sole-source contracting, especially in a high-demand and unstable environment like Iraq during the period of this contract, presents several risks. The most significant is the lack of price competition, which can lead to inflated costs as the contractor faces no market pressure to offer competitive pricing. There's also a reduced incentive for innovation, as the contractor is the only option regardless of alternative solutions. Furthermore, sole-source awards can raise concerns about fairness and transparency, potentially leading to public or congressional scrutiny. In unstable environments, risks are amplified by logistical challenges, security concerns, and the potential for unforeseen operational requirements, all of which can be more costly when negotiated without competitive bids.

What does the contract's duration of approximately 9 months suggest about the nature of the restoration activities?

A contract duration of approximately 9 months (from February 2004 to December 2004) for restoration activities suggests a focused, short-term effort rather than a comprehensive, long-term rebuilding program. This timeframe implies that the contract was likely intended to address immediate, critical needs for infrastructure repair, essential services restoration, or support for ongoing military operations that required rapid deployment and execution. It may indicate that the scope was well-defined for this period, or that the government planned for subsequent phases or different contracts to address longer-term reconstruction goals. Such a duration is common for specific projects or to bridge gaps until more extensive, competitively awarded contracts could be established.

How might the geographic focus on Iraq influence the contract's execution and cost?

The geographic focus on Iraq during the mid-2000s significantly influences the contract's execution and cost. Operating in Iraq at that time involved substantial logistical complexities, including transportation of personnel and equipment, security risks, and the need for specialized local knowledge or coordination with military forces. These factors inherently drive up costs due to the need for enhanced security measures, higher wages for personnel working in a hazardous environment, and potentially higher prices for materials and services sourced locally or imported. Furthermore, the political and security situation could lead to unforeseen delays or changes in requirements, impacting both the execution timeline and the overall cost of the contract.

Industry Classification

NAICS: Public Administration › National Security and International Affairs › National Security

Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF RESTORATION ACTIVS

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Address: 9900 WESTPARK, HOUSTON, TX, 77063

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DACA6303D0005

IDV Type: IDC

Timeline