Mr. Smith Learns About Washington

Charles M. Smith, the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the war, learned a hard lesson. Threatening to withhold payment to a well-connected government contractor because of a lack of documentation will get your backside transferred right out of your position. From today's NY Times.

...Speaking out for the first time, Mr. Smith said that he was forced from his job in 2004 after informing KBR officials that the Army would impose escalating financial penalties if they failed to improve their chaotic Iraqi operations.

Army auditors had determined that KBR lacked credible data or records for more than $1 billion in spending, so Mr. Smith refused to sign off on the payments to the company. “They had a gigantic amount of costs they couldn’t justify,” he said in an interview. “Ultimately, the money that was going to KBR was money being taken away from the troops, and I wasn’t going to do that.”

But he was suddenly replaced, he said, and his successors — after taking the unusual step of hiring an outside contractor to consider KBR’s claims — approved most of the payments he had tried to block.

Army officials denied that Mr. Smith had been removed because of the dispute, but confirmed that they had reversed his decision, arguing that blocking the payments to KBR would have eroded basic services to troops. They said that KBR had warned that if it was not paid, it would reduce payments to subcontractors, which in turn would cut back on services. ... [Emphasis added]

Not only was Mr. Smith removed and replaced by an outside contractor, itself an unusual move, that outside contractor promptly ignored the findings of the Pentagon's own auditors and paid KBR's bills. And the reason for such speed? KBR threatened to cut back on the services they were contracted to provide (such as providing meals to the troops) if they weren't paid as billed. Nice, eh?

And here's the really sweet part:

...[Mr. Smith] is giving his account just as the Pentagon ... recently awarded KBR part of a 10-year, $150 billion contract in Iraq.

And that is how Halliburton and its subsidiaries are treated, which just goes to show that it pays to be a friend and former employer of Vice President Dick Cheney. It pays and pays and pays.