by hilzoy

From the NYT:



"The Army official who managed the Pentagon’s largest contract in Iraq says he was ousted from his job when he refused to approve paying more than $1 billion in questionable charges to KBR, the Houston-based company that has provided food, housing and other services to American troops. The official, Charles M. Smith, was the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the war. 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."

The obvious way to read this is as indicating that Halliburton had the connections to block any investigation of its recordkeeping. And while that's true, I'm not sure that's what's going on here. The next paragraph of the NYT story:



"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."

In fact, KBR did at one point threaten to stop providing basic supplies -- little things like food -- to our troops in Iraq. (I've put the account of this episode below the fold.) What that means is, to my mind, even more scandalous than simple corruption by a company with good connections. It means that we have outsourced absolutely critical functions to private companies, companies which, unlike military personnel, can threaten to stop doing their jobs without facing courts-martial. In wartime, when a company is doing something as important as providing food to our troops, the military has no choice but to cave to their demands. (That's one reason I said it was more scandalous than simple corruption: it virtually ensures that that corruption will occur, while simultanously leaving our troops at risk.)

To my mind, we should not allow any company to assume any critical function in wartime without putting in place some guarantee that it will go on performing that function whether it wants to or not. If it's impossible to do that legally, then that function should not be outsourced. Period. We cannot allow any private company to threaten to stop supplying our troops during wartime. But we have.