N.Y. Times (June 19. 2008)

June 19, 2008

Editorial
Mr. Smith Goes to War With KBR

In the annals of Iraq war profiteering, put Charles Smith down as one of the casualties. Four years ago, Army auditors notified Mr. Smith, a Pentagon contract manager, that KBR, the Bush administration’s most favored defense contractor, could not adequately explain more than $1 billion in war billings.

Mr. Smith, a career civilian employee, did his duty: He confronted KBR and warned that unless they supplied credible justification, he would levy penalties of 15 percent on future work payments while also, needless to say, blocking any performance bonuses for the company.

Whoops. Mr. Smith was replaced suddenly by the brass in overseeing the contract and the Pentagon took the unusual step of second-guessing its own auditors by hiring an outside contractor to reconsider the claims from KBR. Such is the clout of the Texas-based company and largest Pentagon contractor in Iraq, once part of the Halliburton conglomerate so dear to the heart and wallet of Vice President Dick Cheney.

Sure enough, KBR’s claims were soon unblocked. The contract Goliath got performance bonuses, too.

The risks of bucking KBR from inside the defense establishment were disclosed by Mr. Smith to James Risen of The Times. “Ultimately, the money that was going to KBR was money being taken away from the troops, and I wasn’t going to do that,” said Mr. Smith, now retired. The Pentagon insists that it had good management motives in reversing Mr. Smith and heeding KBR’s warning that penalties would erode basic services for the troops. The military dares to maintain that Mr. Smith was not taken off the job because of political pressure.

Nothing much seems to have stood in the company’s way since Mr. Smith was purged. KBR just snared a big piece of a new 10-year, $150 billion Iraq contract.