New York Times on KBR: money for nothing in Iraq

Halliburton subsidiary Kellogg Brown & Root spent more than $75 million in Iraq on a pipeline project engineers say was doomed before it began. A long New York Times story provides details on the project, which accomplished, literally, nothing.

When Robert Sanders was sent by the Army to inspect the construction work an American company was doing on the banks of the Tigris River, 130 miles north of Baghdad, he expected to see workers drilling holes beneath the riverbed to restore a crucial set of large oil pipelines, which had been bombed during the invasion of Iraq.What he found instead that day in July 2004 looked like some gargantuan heart-bypass operation gone nightmarishly bad. A crew had bulldozed a 300-foot-long trench along a giant drill bit in their desperate attempt to yank it loose from the riverbed. A supervisor later told him that the project’s crews knew that drilling the holes was not possible, but that they had been instructed by the company in charge of the project to continue anyway.

A few weeks later, after the project had burned up all of the $75.7 million allocated to it, the work came to a halt.

KBR’s punishment for this fraud? “[I]t got only about 4 percent of its potential bonus fees on the job order that contained the contract; there was no other financial penalty.”

That’s what passes for a penalty: rather than having to pay back the money it wasted, rather than paying a fine, the company gets its performance bonus pared. Here’s how they spent the money.

In late January, 2004, drilling began. The plan called for boreholes to accommodate 15 pipelines, which would arc beneath the Tigris at shallow angles. Troubles turned up instantly. Every time workers plied the riverbed with their drills, they found it was like sticking their fingers into a jar of marbles: each time they pulled the drills out, the boulders would either shift and erase the larger holes or snap off the bits.

The area had turned out to be a fault zone, where two great pieces of the earth’s crust had shifted and torn the underground terrain into jagged boulders, voids, cobblestones and gravel. It was just the kind of “tectonic” shift that the Fugro report had warned of — hardly the smooth clays and sandstones that KBR had suggested the drillers would find.

The crew abandoned the first borehole and started a second, the inspector general reported. Twenty-six days later, the borehole went through. But the crews found it impossible to enlarge the hole enough for a 30-inch pipe to pass through. By the end of March, five months after arriving in Iraq, they managed to jam a 26-inch pipe through.

The crews would never again get anything larger than that across the riverbed. To make matters worse, the project suffered from constant equipment shortages, just as Mr. Cox, the Army Corps project manager, had predicted.

If KBR had declined to write performance clauses into the drill subcontract, the company had also included language that prevented the crews from speaking directly with the Army Corps, let alone passing along word that some of them knew that the effort was futile.

What KBR did in lieu of imposing performance benchmarks was require the subcontractor “to try drilling holes on a daily basis — not necessarily succeed.”

There’s worse. The US government is actively participating in the largest heist of all time. With the bodies piling up, you can add a hundred thousand counts of felony murder as well. Read the whole thing.