New bid, same result: KBR shares big Army contract

WASHINGTON — Houston-based KBR has again been selected to participate in a 10-year military logistical support contract valued at up to $150 billion, the U.S. Army announced today.

The Army Sustainment Command, at the insistence of the Government Accountability Office, had re-evaluated its decision last summer to award the massive contract to KBR, Fort Worth-based DynCorp International and Fluor Intercontinental of Greenville, S.C.

But after rebidding the contract, the Army chose the same three players.

Jim Loehrl, the Army Sustainment Command's executive director for acquisition, said he had great confidence in the way the contract was awarded.

"It was a detailed process, with an expert team that took a thorough look and a thorough review of all the proposals," Loehrl said.

Under what is the fourth iteration of the Logistics Civil Augmentation Program, the three companies will be responsible for providing an array of support services for U.S. troops, from building bases to serving up soup.

Under the contract, each company will have an opportunity to bid for work as the Army rolls out assignments. Each participant is limited to $5 billion worth of work in any one year and $50 billion over the life of the contract.

Currently, KBR has sole responsibility for providing support services to troops in Iraq, Afghanistan and other parts of the world, under a logistics contract valued at $27 billion. The bulk of that work — more than $24 billion obligated to date — has resulted from the U.S.-led occupation of Iraq, Army records show.

But when awarding the new contract this time around, Army officials opted to split up the contract work in the hopes of stimulating competition among the three participants.

The Rock Island, Ill.-based Army Sustainment Command awarded the newest logistics contract to KBR, DynCorp and Fluor last June, after taking bids from six companies.

Two firms on the losing end of that decision — IAP Worldwide Services and Contingency Management Group — filed protests.

After reviewing their complaints, the GAO found flaws in the Army's evaluation of the proposals from KBR and Fluor.

The GAO, Loehrl said, pointed to a discrepancy in one of the proposals, as well as lack of clarity about where the contractors would obtain equipment, how they would evaluate their business systems and how they would consider employing host-country nationals.

So the Army started over, receiving new bids from the three previous winners and two protesting firms.

But after evaluating the offers anew, the results were the same.

Army officials expect to launch the new program in about 60 days, Loehrl said.

Controversy has long swirled around KBR's big Pentagon contract, partly because Vice President Dick Cheney previously served as head of KBR's former parent company, Halliburton. The companies split more than a year ago.

Since the earliest days of the war in Iraq, KBR has come under a barrage of criticism for its performance under the contract, for issues ranging from overbilling problems to worker deaths.

Army officials took the bidders' past performance into account when awarding the contract, Loehrl said.

david.ivanovich@chron.com