The Pentagon's cubicle mercenaries - Frida Berigan
Read this revealing article about Big Corporations and the Pentagon.
What this means in practice can be illustrated by KBR, a privately-held company that does not publish quarterly reports. Nonetheless, its recent history provides an object lesson in what the MIC 2.0 can do for the profitability of a private contractor. KBR has shadowed the US military every step of the way through the invasion and occupation of Iraq: first as Kellogg Brown and Root, a subsidiary of Halliburton (for which Dick Cheney was once CEO), and then as KBR, an independent company. It has, in fact, made its corporate fortune on the Pentagon's now infamous "no-bid," "cost-plus contracts". Since December 2001, KBR has been working for the Pentagon under the Logistics Civil Augmentation Program (LOGCAP) - a multi-billion dollar agreement that guarantees the company those cost-plus profits for fulfilling contracted tasks.
This huge and sweeping contract was awarded without the rigors of the competitive marketplace. Its "no-bid" nature was a sign that KBR was anything but a run-of-the-mill Pentagon contractor. A second sign lay in the Pentagon's acceptance of that cost-plus arrangement. A rarity in the business world, "cost plus" means that the more a job costs, the more profit the company pockets. Professor Steve Schooner, a contract expert at George Washington University Law School, commented, "Nobody in their right mind would enter into a contract that basically says, 'come up with creative ways to spend my money and the more you spend the happier I'll be.'" Under this contract, the Pentagon has doled out $20 billion to KBR to build and staff facilities for military personnel in Iraq and provide food and other necessities to US troops there.
What this means in practice can be illustrated by KBR, a privately-held company that does not publish quarterly reports. Nonetheless, its recent history provides an object lesson in what the MIC 2.0 can do for the profitability of a private contractor. KBR has shadowed the US military every step of the way through the invasion and occupation of Iraq: first as Kellogg Brown and Root, a subsidiary of Halliburton (for which Dick Cheney was once CEO), and then as KBR, an independent company. It has, in fact, made its corporate fortune on the Pentagon's now infamous "no-bid," "cost-plus contracts". Since December 2001, KBR has been working for the Pentagon under the Logistics Civil Augmentation Program (LOGCAP) - a multi-billion dollar agreement that guarantees the company those cost-plus profits for fulfilling contracted tasks.
This huge and sweeping contract was awarded without the rigors of the competitive marketplace. Its "no-bid" nature was a sign that KBR was anything but a run-of-the-mill Pentagon contractor. A second sign lay in the Pentagon's acceptance of that cost-plus arrangement. A rarity in the business world, "cost plus" means that the more a job costs, the more profit the company pockets. Professor Steve Schooner, a contract expert at George Washington University Law School, commented, "Nobody in their right mind would enter into a contract that basically says, 'come up with creative ways to spend my money and the more you spend the happier I'll be.'" Under this contract, the Pentagon has doled out $20 billion to KBR to build and staff facilities for military personnel in Iraq and provide food and other necessities to US troops there.
posted by temporal at 9/16/2008
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