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SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

 June 22, 2007 

 

MEMORANDUM FOR MANAGEMENT COUNSELOR, U.S. EMBASSY-IRAQ 

 COMMANDING GENERAL, U.S. ARMY SUSTAINMENT 

COMMAND 

 COMMANDER, DEFENSE CONTRACT MANAGEMENT 

 AGENCY 

 COMMANDER, JOINT AREA SUPPORT GROUP–CENTRAL 

SUBJECT: Logistics Civil Augmentation Program Task Order 130: Requirements 

Validation, Government Oversight, and Contractor Performance 

 (SIGIR-07-001) 

We are providing this audit report for your information and use. We performed the review at 

the request of the Management Counselor, U.S. Embassy-Iraq to determine whether the U.S. 

government is receiving the services paid for under the U.S. Department of the Army’s 

Logistics Civil Augmentation Program (LOGCAP) Task Order 130 and whether the support 

provided is reasonable, efficient, and cost effective. 

We considered written and verbal comments from the U.S. Embassy–Iraq, the Joint Area 

Support Group–Central, the Army Sustainment Command, and the Defense Contract 

Management Agency on the draft of this report when preparing the final report. Written 

responses received are included in the Management Comments section of this report. 

This report is embargoed until 12:01 a.m., Eastern Daylight Time, Monday, June 25, 2007. 

We request that the recipients not publicly release, in any medium, information contained in 

this report until the embargo expires. 

We appreciate the courtesies extended to the staff. For additional information on this report, 

please contact Mr. Clifton E. Spruill (clifton.spruill@iraq.centcom.mil / 703-343-9275) or 

Mr. Frank Slayton (frank.slayton@iraq.centcom.mil / 914-360-9371). For the report 

distribution, see Appendix G. 

Stuart W. Bowen, Jr. 

Special Inspector General for Iraq Reconstruction 

cc: See Distribution 

400 Army Navy Drive • Arlington, Virginia 22202 
Table of Contents 

Executive Summary i 

Introduction 

Background 1 

Objectives 4

Findings 

Requirements Validation 6 

Contractor Performance 7 

Government Oversight 23 

Conclusion and Recommendations 29 

Appendices 

A. Scope and Methodology 34 

B. Acronyms 39 

C. Description of the Requirements Validation Process 40 

D. Defense Contract Management Agency Responsibilities 42 

E. Contracting Officer's Technical Representatives Responsibilities 44 

F. Billeting Criteria 45 

G. Report Distribution 47 

H. Review Team Members 49 

Management Comments 

 Chief of Mission and Joint Area Support Group-Central 50 

 Defense Contract Management Agency 52 
Logistics Civil Augmentation Program 

Task Order 130: Requirements Validation, 

Government Oversight, and Contractor 

Performance 

SIGIR-07-001 June 22, 2007

Executive Summary 

Introduction 

Established in 1985, the Logistics Civil Augmentation Program (LOGCAP) is a U.S. 

Department of the Army (Army) program that preplans for the use of global corporate 

resources in support of worldwide contingency operations. In the event that U.S. forces 

deploy, contractor support is then available to a commander as an option. The LOGCAP 

objectives are twofold: 

• Provide combat support and combat service support augmentation to both 

combatant and component commanders, primarily during contingency and other 

operations (including reconstitution and replenishment within reasonable cost). 

• Facilitate the management and physical responsibility to support deployment, site 

preparation, set preparation, modules operations and maintenance, redeployment, 

and transportation requirements for the force provider. 

Examples of the type of support available include supply operations, laundry and bath, 

food service, sanitation, billeting, maintenance, fuel services, transportation, and power 

generation and distribution. LOGCAP has been used to support U.S. forces in operations 

in Somalia, Haiti, and Bosnia, and is currently being used to support operations in 

Afghanistan, Kuwait, and Iraq. The use of LOGCAP to support U.S. troops in Iraq is the 

largest effort in the history of LOGCAP. 

Additionally, LOGCAP support is authorized for other U.S. military services, coalition 

forces, other government agencies, and nongovernmental organizations. The basic 

contract requires the contractor, unless indicated otherwise, to adhere to functional Army 

regulations and to gather operational performance data required by regulations or the 

contract’s required list of deliverables. 

Awarded on December 14, 2001, the LOGCAP contract (DAAA09-02-D-0007) 

comprises a series of task orders that commit both the contractor to provide support 

services and the government to pay for those services. Task orders under this contract can 

be either fixed price or cost–reimbursable. In Iraq, the total cost of all 149 task orders 

issued under the LOGCAP contract as of March 4, 2007, is approximately $22.5 billion. 

i 
The focus of this review is LOGCAP Task Order 130 that was awarded on April 27, 

2006, to Kellogg, Brown and Root Services Inc. (KBR) to provide services necessary to 

support, operate, and maintain the Chief of Mission and Multi-National Force-Iraq staffs 

located at the U.S. Embassy-Iraq, and at other Chief of Mission sites within Iraq located 

in Baghdad, Basra, Al Hillah and Kirkuk. The task order has an estimated value of about 

$243 million, and was scheduled to expire on April 7, 2007. On April 7, 2007, the task 

order was extended for up to 90 days. This task order is a continuation of services 

previously awarded under Task Orders 100 and 44 which were awarded on November 5, 

2004, and March 6, 2003, respectively. Because these task orders provided support to 

both the Department of Defense (DoD) and Department of State (DoS) missions in Iraq, 

an agreement was reached between DoD and DoS that the reimbursement of costs 

associated with the three task orders would be shared 60% by DoS and 40% by DoD. The 

total cost associated with these three task orders is approximately $1.3 billion dollars. 

The primary government offices involved with the operation of Task Order 130 in Iraq 

are: 

• The DoS Embassy Management Office headed by the Counselor for Management 

Affairs, U.S. Embassy-Iraq, is responsible for the day-to-day support of Chief of 

Mission (COM) operations in Iraq. 

• The DoD Joint Area Support Group–Central (JASG-C), located in the 

International Zone, is the military component of the Multi-National Force–Iraq 

that provides administrative and logistical services and coordinates military 

support to the U.S. Mission–Iraq. 

• The Baghdad, Iraq, office of the Defense Contract Management Agency (DCMA) 

provides on-site monitoring of the contractor. For additional details on DCMA’s 

responsibilities, see Appendix D. 

• The U.S. Army Sustainment Command is responsible for administration of the 

LOGCAP program. The Procuring Contracting Officer, the LOGCAP Program 

Manager, and the Logistical Support Element Office—established in Iraq to help 

customers with LOGCAP requirements—are assigned to this command. 

• The Defense Contract Audit Agency provides its expertise in reviewing the 

contractor’s financial management system and ensuring that costs claimed by the 

contractor are reasonable, allowable, and allocable. 

Objectives 

We performed this review at the request of the Management Counselor, U.S. EmbassyIraq. The broad objectives of this review were to determine whether the U.S. government 

is receiving the services paid for under LOGCAP Task Order 130 and whether the 

ii 
support provided is reasonable, efficient, and cost effective. This report specifically 

addresses three issues: 

• Does the government have a process in place that ensures requirements are 

properly validated? 

• Did KBR’s performance meet contractual requirements in an effective and 

efficient manner? 

• Is the government performing adequate oversight of KBR’s performance? 

This is a partial review of Task Order 130 and specifically examined elements of 

contractor operations conducted within the International Zone of Baghdad, Iraq, for 

services in four areas: fuel operations, food service, billeting, and 

morale/welfare/recreation services. 

On October 26, 2006, we issued an interim report, Inappropriate Use of Proprietary Data 

Markings by the Logistics Augmentation Program (LOGCAP) Contractor, (SIGIR-06-

035), which discussed KBR’s practice of routinely marking information provided to the 

government as “KBR Proprietary Data” and KBR’s initial refusal to provide data we 

requested in its native electronic format. 

We plan to issue additional reports as we continue our review of other elements of 

LOGCAP Task Order 130. 

Results 

DoS and JASG-C have a process in place to ensure that all new requirements, including 

those initiated by the contractor, are properly validated. However, the standard operating 

procedure guide that describes the process is not current. At the time of this report, a 

DoS/JASG-C working group was in the process of revising this guide to reflect the 

current procedures for new requirements validation. As of May 31, 2007, a revised guide 

had not been issued. 

Although KBR, according to its customer survey results, satisfactorily supplied the 

required services, we identified several areas where we believe contractor services and 

government oversight could be improved. Specifically, improvement can be made to the 

U.S. government oversight of KBR’s performance and in the management and use of 

government resources. Independent quality assurance reviews were not conducted on 

KBR’s internal controls, nor were reviews for its compliance to applicable government 

policies and Army regulations. However, several actions were initiated by U.S. 

government activities during the course of our review to improve the monitoring and 

delivery of KBR’s services, such as the appointment of Contracting Officer’s Technical 

Representatives (COTRs), and improving the oversight of the billeting tracking system. 

Fuel Service. We found weaknesses in KBR’s fuel receiving, distributing, and 

accountability processes of such magnitude that we were unable to determine an accurate 

measurement of the fuel services provided. These weaknesses were material and 

iii 
identified a high risk of a potential improper use of fuel. We also determined that 

government monitoring was not particularly strong during this period due to the lack of 

qualified staff to perform oversight for this technical area. However, during our on-going 

discussions with KBR management, corrective action was implemented to improve 

controls and reduce the high risk of unauthorized use or improperly recorded issuances of 

fuel supplies. The government has also appointed a COTR as a government monitor with 

the necessary technical skills to improve the government’s oversight. 

Food Service. We found that during fiscal year 2006, the food service subsistence 

account was overspent by $4.5 million when compared to the Department of the Army’s 

Basic Daily Food Allowance (BDFA) and the recorded level of service provided, and that 

responsibilities for oversight of the account had not been clearly understood or 

established by the government oversight participants. According to officials from the 

Management Counselor’s Office, they were not aware of the applicable food service 

guidance provided in Army Regulation 30-22 relating specifically to the operations of 

LOGCAP dining facilities.1

 Consequently, these requirements associated with 

government management and oversight were not being followed in accordance with the 

contract terms and Task Order 130. DCMA told us that there were two reasons for the 

overspent status of the subsistence account: (1) that the menu used to support the COM 

dining facilities may have provided a significant number of higher cost food items from 

the standard Army dining facility menu published by the Army’s Center of Excellence, 

Subsistence; and (2) that the government did not have the requisite number of qualified 

personnel to properly oversee the headcount in accordance with applicable guidance. 

KBR also cited similar reasons for the overspent status. 

However, for the first reason, we could not determine who gave this order to use more of 

the higher cost food items. We could not find any documentation authorizing KBR to 

exceed the normal BDFA meal allowance costs; and nothing in the current LOGCAP 

contract or statement of work (SOW) for Task Order 130 authorizes the contractor to 

procure subsistence for meals for the dining facilities supporting the COM in excess of 

the established Army standard BDFA rate for Iraq. We were told by the DoS staff that 

they did not believe the Army’s guidance applied to them. 

We also determined that, because Management Counselor officials told us they were 

unaware of the requirement, they did not appoint a disinterested inventory officer to 

oversee the semiannual subsistence (food) inventory which is conducted in March and 

September. As a result, prior to SIGIR pointing out the requirement for an independent 

inventory, the contractor was performing self-oversight of the acquisition and use of 

food. In September 2006, the government did conduct a proper fiscal year 2006 inventory 

with the appropriately appointed government staff. 

Billeting. We found numerous errors in KBR’s automated billeting tracking tool, which 

were caused primarily by poor in- and out-processing procedures for housing allocations 

that resulted in less than optimal use of available trailers. Trailers are to be assigned as 

single or shared occupancy according to rank, grade, or status, and properly relinquished 

 

1

 U.S. Army Regulation (AR 30-22), The Army Food Program, May 10, 2005. 

iv 
upon out-processing for subsequent allocation. Furthermore, while both DoS and JASGC billeting guidance require trailers for COM and MNF-I contractors to have shared 

occupancy, we found housing disparities because the government allowed KBR to 

manage its own separate billeting area (Camp Hope), and that in most cases, KBR 

employees (749 of 835, or 90%) are housed as single occupants in trailers—a higher 

standard than for those they support. 

DoS officials told us they were generally unaware of their ability to control KBR’s 

billeting practices. Our review of the contract and task order showed that the contractual 

language in this area is vague and we found no fault with KBR’s actions. However, we 

could not identify a specific reference in the contract or task order that relieved the 

government of its oversight function in regards to KBR billeting or allowed KBR to 

establish its own standard. As a matter of economy and an effective use of limited 

housing, we question the difference in standards given that the government pays all costs 

associated with KBR’s billeting. Adherence to the current COM and JASG-C billeting 

policy could have the potential of a 45 % reduction in housing requirements of the 

LOGCAP contractor for Task Order 130. Further, there may also be opportunities for the 

COM and JASG-C to utilize any excess billeting space now in full control of the 

contractor. 

Moral, Welfare, and Recreation Services. We found no significant problems with 

KBR’s performance or government oversight in this area. A COTR has been appointed.

Government Oversight. The examples cited support what we consider to be two key 

weaknesses in the government’s oversight of the LOGCAP contract. The first weakness 

identified was an oversight process that did not carefully examine the contractor’s 

internal controls over the services being provided. The second weakness was the limited 

oversight to ensure economy and efficiency in the use of the LOGCAP contract. Our 

review identified that DCMA’s oversight processes tended to focus too heavily on the 

delivery of service under the contract without focusing sufficiently on whether adequate 

controls were in place to protect the access to and use of government resources. For 

example, we found numerous problems with the contractor’s fuel receiving and 

disbursing processes that were not identified by DCMA’s fuel services quality assurance 

reviews. Instead, DCMA staff conducted their quality assurance reviews in conjunction 

with the contractor’s quality assurance auditors using a quality assurance checklist based 

on KBR’s internal procedures. As a result, DCMA’s quality assurance reviews focused 

on KBR’s operational processes rather than its internal controls. We believe this flawed 

quality assurance review methodology led to material weaknesses that were not identified 

by the government. The reviews were also documented on the contractor’s forms marked 

as proprietary, limiting their use to the government, and questioning the independence of 

the government’s participation in these reviews. 

We determined that part of the DCMA’s shortfalls in performing adequate oversight can 

be attributed to problems its staff has described to us in identifying and appointing 

qualified COTR’s—normally subject matter experts provided by the customer to assist 

DCMA in its administrative contracting officer duties and an important element in 

effective oversight. However, we found that no COTRs were appointed until September 

v 
2006, when we were conducting our review. In fact, from September 2006 to December 

2006, DCMA has identified and appointed a total of 18 COTRs to this task order from 

JASG-C and DoS. We believe that had these appointments been made earlier, many of 

the control shortfalls we identified in the fuel and food service area may have been 

detected earlier. 

We also determined that there was no formal government-led process that actively 

pursued economy and efficiency in the use of contractor-provided services except in the 

new requirements validation and approval process. We determined that although the 

primary customers—DoS and JASG-C—had a process for approving requirements and 

ensuring that adequate funds were available, they did not always determine for each 

category of services provided: (1) the appropriateness of the day-to-day services, (2) the 

level of services being provided, and (3) the economy and efficiency with which the 

services are being provided. Customer-based reviews that focus on these attributes have 

not been conducted by the government, but would have increased the likelihood of 

identifying issues we found such as the difference in the application of billeting standards 

between KBR employees and COM- and DoD-affiliated contractors. We believe first line 

responsibility for defining the level of support in any contract belongs to the customer 

who should periodically evaluate each category of contracted service for potential 

savings and improved service delivery. 

Further, we also noted that in its letter dated April 6, 2006, the Headquarters, U.S. Army 

Field Support Command delegated the Administrative Contracting Officer (ACO) 

functions to DCMA. In this letter, the administrative support functions were defined and 

included such functions as ensuring the contractor performs in accordance with the 

statement of work and the basic terms and conditions of the contract. It also stated that 

DCMA was to ensure the efficient use of contractor personnel, but it did not specifically 

direct DCMA to ensure that the contract was performed in a cost efficient and effective 

manner. We believe that had the delegation letter been more specific, DCMA may have 

performed its oversight beyond compliance to delivery of services. We will report on the 

overall program management aspects of the full task order in a future review. 

Government and Contractor Management Actions 

During the review, COM, JASG-C, DCMA, and the contractor all took actions to address 

several of the U.S. government management control weaknesses discussed in this report. 

The DoS Management Office and the JASG-C established a working group in September 

2006 to revise the standard operating procedure guide to reflect current procedures for 

validating new requirements. However, as of May 31, 2007, a revised guide had not been 

issued. 

For the ongoing services being performed, DCMA identified and appointed staff from 

both the COM and JASG-C as COTRs to monitor all services required under this task 

order. 

vi 
For the fuel area, KBR had taken positive actions to address weaknesses in the control 

over the receipt, issuance, and accountability of fuel that we noted during the review. 

KBR also modified the fuel database to add data integrity controls and exception reports 

to ensure data is entered accurately and to identify attempts to enter data that is outside of 

acceptable parameters. 

For the food services area, during our review, DCMA appointed, as required, a 

disinterested, independent government representative to oversee the September 2006 

fiscal year-end subsistence (food) accountability inventory. 

For the billeting services, DoS Management Office, U.S. Embassy-Iraq, and the JASG-C 

both took action during the course of this review to verify the billeting assignments under 

the COM/JASG-C control and, in coordination with KBR, took action to update and 

correct the information in the automated billeting tracking tool. This verification did not 

include the separate KBR-controlled housing. However, at our recommendation, the 

Procuring Contracting Officer under the U.S. Army Sustainment Command told us that 

he drafted proposed contract modification language that states KBR’s billeting is subject 

to government billeting oversight. He said he was going to consider this new language in 

future LOGCAP task orders. 

Further, the U.S. Army Sustainment Command, in response to our interim report 

regarding KBR’s propriety data markings on documents, took immediate action by 

adding modification P00018, dated October 30, 2006, to the basic LOGCAP contract, 

which among other things added specific language to the contract that we had 

recommended concerning government proprietary information and electronic submission 

directions. In response to discussions regarding a draft of this report, the U.S. Army 

Sustainment Command made several contract management changes to the Statement of 

Work for the successor to Task Order 130 (Task Order 151) to improve oversight in the 

areas of food service, fuel operations and billeting operations. 

Recommendations 

We recommend that the Counselor for Management Affairs, U.S. Embassy-Iraq: 

1. Continue working with JASG-C to revise the standard operating procedures to 

include requirements for validating new work under Task Order 130 and 

successor task orders. 

2. Continue working with JASG-C to verify billeting assignments and ensure proper 

assignment of billets based on published criteria. 

3. Develop and issue, in coordination with the JASG-C, a process and procedure for 

central in-out processing. This process should be added to a standard process for 

personnel arriving into and departing from Task Order 130 supported billets in 

Iraq. All personnel (military, federal civilian employees, contractors, etc.) should 

vii 
be required, as part of the departure process, to present a sign-off from billeting 

that they have cleared billeting before permanently departing from Iraq and that 

they no longer have a recurring need for bed space under Task Order 130 and 

successor task orders. 

4. Continue working with JASG-C to improve management controls over food 

services, including developing proper controls to ensure that there is an 

accountability process for tracking the personnel utilizing the dining facilities and 

that those personnel are properly authorized to receive food services subsistence. 

5. Work with Army and DoS representatives to clearly define each government 

entity’s responsibilities in overseeing Task Order 130 and successor task order 

activities. If the determination is made that additional assistance is needed from 

either organization to oversee key activities then the Management Counselor 

should formally request specific assistance. 

We recommend that the LOGCAP Procuring Contracting Officer take the following 

actions: 

6. Amend the delegation letter for the Administrative Contracting Officer duties to 

include: 

a. Examining the contractor’s internal control practices including contractor 

reporting data integrity to ensure that basic and proper internal controls are 

established and adhered to and that the services are performed in an efficient 

and cost effective manner. 

b. Developing DCMA-specific quality assurance criteria, procedures, and reports 

to conduct an independent government review. 

7. Reinforce its delegation for DCMA to ensure that qualified contracting officer’s 

technical representatives are formally identified, appointed and assigned, as 

necessary, to assist DCMA-Baghdad in reviewing technical aspects of the 

contractor’s functions. 

8. In accordance with Army Regulation 30-22 dated May 10, 2005, render a 

procuring contracting officer’s determination as to the reasons why the overspent 

status occurred and take appropriate action in accordance with the LOGCAP 

contract terms. 

Because of the potential for improving the utilization of housing resources and 

reducing costs of the LOGCAP contractor life support services, we recommend that 

the LOGCAP Procuring Contracting Officer, in coordination with the overall 

LOGCAP Program Management Office, take the following actions: 

viii 
9. Address the appropriateness of any LOGCAP contractor controlling its own 

billeting assignments/standards during negotiations for any future task orders that 

may be issued under the current LOGCAP contract as well as during negotiations 

for the follow-on LOGCAP contracts. As a matter of public policy, two issues that 

should be addressed in this regard are: 

a. Should a LOGCAP contractor be permitted to define its own billeting 

standards for its own employees that are above the established standards for 

other contractors and/or federal military and civilian personnel for whom the 

contractor supports, and be reimbursed for the full cost? 

b. Should a LOGCAP contractor be permitted to have exclusive control of 

billeting assignments for its own employees? If so, what are the proper 

controls needed to ensure LOGCAP billeting is operating in an economical 

and efficient matter as determined by the appropriate government oversight 

entity? 

Management Comments and Audit Response 

We received written management comments on a draft of this report from the DoS 

Management Counselor’s Office and technical comments from DCMA, which are 

included in the Management Comments section of this report. Actions have been taken to 

meet the intent of our recommendations. While both organizations stated that they 

believed there had always been adequate oversight on Task Order 130, each organization 

(1) acknowledged the need for changes in their contract management processes, and (2) 

listed specific actions taken in response to each of the issues we bought to their attention 

during the course of our review. We extended the comment period to accommodate the 

time required by DCMA to respond to the draft report to be able to include copies of 

these responses as part of the final report. 

We received oral comments from representatives of the U.S. Army Sustainment 

Command in which those officials generally concurred with our findings and 

recommendation. Further, U.S. Army Sustainment Command used several of our verbal 

recommendations made during the audit to revise the Statement of Work for the 

successor to Task Order 130 (Task Order 151) to improve oversight in the areas of food 

service, fuel operations and billeting operations. We did not receive written comments 

from the U.S. Army Sustainment Command. 

ix 
Introduction 

Background 

The Logistics Civil Augmentation Program (LOGCAP) is a U.S. Department of the 

Army (Army) program that preplans for the use of global corporate resources in support 

of worldwide contingency operations. In the event that U.S. forces deploy, contractor 

support is then available to a commander as an option. The LOGCAP objectives are 

twofold: 

• Provide combat support and combat service support augmentation to both 

combatant and component commanders, primarily during contingency and other 

operations (including reconstitution and replenishment within reasonable cost). 

• Facilitate the management and physical responsibility to support deployment, site 

preparation, set preparation, modules operations and maintenance, redeployment, 

and transportation requirements for the force provider. 

Examples of the type of support available include supply operations, laundry and bath, 

food service, sanitation, billeting, maintenance, fuel services, transportation, and power 

generation and distribution. LOGCAP has been used to support U.S. forces in operations 

in Somalia, Haiti, and Bosnia, and is currently being used to support operations in 

Afghanistan, Kuwait, and Iraq. The use of LOGCAP to support U.S. troops in Iraq is the 

largest effort in the history of LOGCAP. 

Additionally, LOGCAP support is authorized for other U.S. military services, coalition 

forces, other government agencies, and nongovernmental organizations. The basic 

contract requires the contractor, unless indicated otherwise, to adhere to functional Army 

regulations and to gather operational performance data required by regulations or the 

contract’s required list of deliverables. 

On December 14, 2001, the Army awarded LOGCAP contract DAAA09-02-D-0007 to 

Brown & Root Services, a division of Kellogg Brown & Root Inc. The contract was 

issued for a base year (December 14, 2001 to December 13, 2002) with nine option years. 

On December 14, 2005, by modification P00014, the Army exercised option year 4 of the 

contract for the period December 14, 2005 to December 13, 2006. The official name of 

the contractor was changed on December 14, 2003, by modification P00007, to Kellogg 

Brown & Root Services Inc. (KBR). The overall contract was awarded as a cost plus 

award fee contract in which KBR earns a 1% base fee and up to a 2% award fee. Specific 

services under the LOGCAP contract are awarded through the issuance of task orders. 

Task orders under this contract can be either fixed price or cost-reimbursable. As of 

March 4, 2007, 149 individual task orders were issued for Iraq under this contract for a 

total cost of approximately $22.5 billion. 

Task Order 130—the focus of this review—was awarded April 27, 2006, to provide 

services necessary to support, operate, and maintain the Chief of Mission (COM) and 

1 
Multi-National Force-Iraq staffs at the U.S. Embassy-Iraq, and at other Regional 

Embassy sites within Iraq located in Basra, Al Hillah, and Kirkuk. This task order was 

scheduled to expire on April 7, 2007. However, it was extended for up to 90 days. 

The specific category of services provided under Task Order 130, as identified in the 

statement of work are: 

• Facilities Management/Base Camp Operations 

• Billeting/Office Space 

• Laundry Service 

• Food Service 

• Office Automation/Supplies & Operational Requirements 

• Communications 

• Force Protection/Security 

• Transportation Motor Pool 

• Retail Fuel Support 

• Equipment Maintenance 

• Transportation 

• Power Generation 

• Property Accountability and Supply 

• Vector Control 

• Waste Management 

• Morale, Welfare, and Recreation (MWR) Support 

• Interpreter/Translator Support 

• Graphic Design 

• Fire Protection 

• Postal Services 

• Heliport Maintenance Support 

• Medical Support Services 

Task Order 130 is a continuation of services previously obtained under Task Order 100, 

which was awarded on November 5, 2004. Task Order 100, in turn, was a continuation of 

services provided under Task Order 44, which was awarded on March 6, 2003, to support 

the then Coalition Provisional Authority mission in support of Operation IRAQI FREEDOM. 

Because Task Orders 44, 100, and 130 provided support to both Department of Defense 

(DoD) and Department of State (DoS) missions in Iraq, an agreement was reached 

between DoD and DoS that the costs associated with these three task orders would 

normally be shared 60% by DoS and 40% by DoD. As of March 4, 2007, the total cost 

associated with these three task orders is approximately $1.26 billion dollars, as shown in 

Table 1. 

2 
Table 1—LOGCAP Estimated Task Order Support Costs as of March 4, 2007 

Task Order Performance Dates Total 

(millions)* 

 44 03/06/2003-10/07/2004 $ 579.0 

100 10/08/2004-04/07/2006 $ 440.2 

130 04/08/2006-04/07/2007 $ 242.6 

 TOTAL $1, 261.8 

* Source: Costs identified are estimated costs identified within the contract task orders and associated modifications and 

do not necessarily reflect actual costs incurred or paid. 

The U.S. government organizations involved with the operation of Task Order 130 in 

Iraq are: 

• The Army’s Office of the Deputy Chief of Staff, G-4 (Logistics), is both the 

Army and Joint Staff proponent for LOGCAP. 

• Army service component commands2 and other LOGCAP-supported customers 

and their respective commanders are responsible for determining requirements 

and providing detailed statements of work for services performed under 

LOGCAP. 

• The U.S. Army Materiel Command, as the executive agent for the program, 

implements overall policy, guidance, and direction. 

• The U.S. Army Sustainment Command at Rock Island, Illinois, a subordinate 

command of the U.S. Army Materiel Command, is the contracting agent for the 

program and awards, manages, and executes the LOGCAP contract through a 

duly appointed Procuring Contracting Officer. The Procuring Contracting Officer 

then delegated Administrative Contracting Officer (ACO) duties to the Defense 

Contract Management Agency (DCMA), a DoD proponent for contract 

administrative services. The U.S. Army Sustainment Command also established a 

logistics support element at each approved LOGCAP site to coordinate and 

monitor LOGCAP requirements during a contingency mission. 

• The Baghdad, Iraq, office of the DCMA provides on-site monitoring of the 

contractor. DCMA, as the ACO provides technical advice and expertise, and intheater contract administration and quality assurance. For additional detail on 

DCMA’s responsibilities, see Appendix D. 

 

2 There are nine Army Service Component Commands, comprised primarily of operational organizations, 

serving as the Army component for a combatant commander. Specifically: U.S. Army Europe, U.S. Army 

Central, U.S. Army North, U.S. Army South, U.S. Army Pacific, U.S. Army Special Operations Command, 

Military Surface Deployment and Distribution Command, U.S. Army Space and Missile Defense 

Command/Army Strategic Command, and Eighth U.S. Army.

3 
• The DoS Embassy Management Office, headed by the Counselor for 

Management Affairs, U.S. Embassy-Iraq, is responsible for the day-to-day 

support of COM operations in Iraq. The DoS has assigned a contracting officer’s 

representative (COR) to this task order. 

• The DoD Joint Area Support Group–Central (JASG-C), located in the 

International Zone, is the military component of the Multi-National Force–Iraq 

that provides administrative and logistical services and coordinates military 

support to the U.S. Mission–Iraq. 

• The Defense Contract Audit Agency provides its expertise in reviewing the 

contractor’s financial management system and ensuring that costs claimed by the 

contractor are reasonable, allowable, and allocable. 

Objectives 

We performed this review at the request of the Management Counselor, U.S. EmbassyIraq. The broad objectives of this review were to determine whether the U.S. government 

is receiving the services paid for under LOGCAP Task Order 130 and whether the 

support provided is reasonable, efficient, and cost effective. Specifically, our 

announcement of the review stated we will answer the following questions: 

• Are all requirements, including those initiated by the contractor, properly 

validated? 

• Is a proper and adequate review process in place for all work? 

• Does the contractor present auditable invoices? 

• Is all work properly evaluated against criteria? 

• Do proper controls exist for the property associated with this task order? 

• What are the lessons learned from the management and execution of the service 

contract process and practices related to this task order? 

In addition, our review announcement stated we will assess the suitability of continuing a 

LOGCAP-type contract arrangement for selected services when the U.S. Embassy-Iraq 

moves into its new embassy compound. 

This report addresses three of the review objectives identified in the announcement: 

• Does the government have a process in place that ensures requirements are 

properly validated? 

• Did KBR’s performance meet contractual requirements in an effective and 

efficient manner? 

• Is the government performing adequate oversight of KBR’s performance? 

4 
This is a partial review of Task Order 130 and specifically examined elements of 

contractor operations conducted within the International Zone of Baghdad, Iraq, for 

services in four areas: fuel operations; food service; billeting; and morale, welfare, and 

recreation support. 

We plan to issue additional reports as we continue our review of other elements of 

LOGCAP Task Order 130. 

For a discussion of the review’s scope and methodology, and summary of prior coverage, 

see Appendix A. For the acronyms, see Appendix B. For a description of the 

requirements validation process, see Appendix C. For a discussion of DCMA’s 

responsibilities, see Appendix D. For details on the requirements of Contracting Officer’s 

Technical Representatives, see Appendix E. For a description of the billeting criteria 

published by the COM and JASG-C, see Appendix F. For the report distribution, see 

Appendix G. For a list of the review team members, see Appendix H. 

5 
Requirements Validation 

DoS and JASG-C have a process in place to ensure that all new requirements, including 

those initiated by the contractor, are properly validated; however this process is currently 

being documented. We did determine that a guide exists that describes the process that 

was in effect for the prior Task Order 100. However, this process was written in an 

undated standard operating procedure document and a decision was made by DoS and 

JASG-C to update the document for Task Order 130 and the follow on task orders. This 

new document was still in the process of being developed as of May 31, 2007. 

Our review of the requirements validation process, which was orally described to us by 

DoS, JASG-C, and the Logistics Support Office staff, determined that the government 

was doing a good job of properly evaluating the validity and affordability of new work 

under Task Order 130. New work requests over $50,000 were evaluated by the DoS COR 

and by the LOGCAP logistical support officer3

 assigned to the U.S. Embassy-Iraq. Once 

reviewed, the new work requests were submitted first to a working group of the 

Requirements Advisory Panel for evaluation of the justification and affordability of the 

requested work, and then finally to the formal Panel for approval. For a detailed 

description of the requirements validation process, see Appendix C. 

While the process being used for managing requirements was adequate, the written 

guidance or standard operating procedures describing the requirements validation process 

specific to Task Order 130 was not up to date. Current documentation of the practices and 

process is particularly important for successful operations in Iraq, where personnel from 

several government entities have to work together and where high turnover of key 

personnel is the norm. 

A formal working group composed of DoS Embassy and JASG-C personnel was 

established in September 2006 to develop the requirements validation process as a 

Standard Operating Procedure that will be specific to Task Order 130. As of May 31, 

2007, however, the new procedures had not been approved or issued. 

 

3

 The LOGCAP Logistical Support Officer is part of the LOGCAP Program Management Team assigned to 

Iraq by the U.S. Army Sustainment Command. 

6 
Contractor Performance 

Based on the results of KBR’s customer surveys, KBR supplied the end product or 

service to the customers’ satisfaction in each of the four areas we examined. However, 

KBR did not always implement basic internal controls over its operations in the areas of 

fuel, food service, and billeting, to ensure that performance was accomplished 

economically and efficiently and that those resources were properly safeguarded. As a 

consequence, KBR’s operations may have resulted in excessive government costs and 

high risk that government resources could have been used improperly. On the positive 

side, as we identified control weakness during the review, the contractor took immediate 

corrective action to improve or start a series of events to improve the controls. 

Fuel Service 

We found weaknesses in KBR’s fuel receiving, distributing, and accountability 

processes. These weaknesses were material and identified a high risk of a potential 

improper use of fuel. We also determined that the government monitoring was not 

particularly strong during this period due to the lack of qualified staff to perform 

oversight for this technical area. However, during our on-going discussions with KBR 

management, corrective action was implemented to improve controls and reduce the high 

risk. During our review, DCMA also appointed a contracting officer’s technical 

representative for fuel service, with the necessary technical skills, to improve its 

oversight. The overall appointment of contracting officer’s technical representatives 

(COTRs) for contractor services is discussed in the government oversight section of this 

report. 

Contract Requirements

The fuel operations Statement of Work (SOW) requires that KBR provide bulk and retail 

fuel support and storage and distribution by tank truck, tank trailer, or other means for all 

assigned equipment and vehicles. It also requires that KBR maintain a system that allows 

only authorized users of fuel provided under COM authority to draw fuel from the 

support system and that fuel dispensed be (1) recorded as to type and quantity disbursed; 

(2) identified by Vehicle Identification Number, make, model and color to whom it was 

disbursed; and (3) identified by which assigned agency has the responsibility for the asset 

that service was rendered. KBR is also required under the SOW to provide reports as 

directed that track and monitor dispensed fuel as well as fuel stocks on hand. The SOW 

for retail fuel support does not state what reports or to whom the reports are to be 

provided. However, we identified during our review that production of reports are 

directed by DCMA. 

The basic LOGCAP contract and the SOW also require that, except as otherwise set forth 

in the contract or SOW, the contractor shall, at a minimum, meet the Army standards set 

forth in Army regulations for the type of work performed. The basic Army Regulation 

7 
(AR) applicable to fuel operations is AR 710-24

, which in turn cites specific fuel 

procedures and controls that must be followed as stated in Department of the Army (DA) 

Pamphlet 710-2-1.5

 

Customer and Government Views of KBR’s Performance 

According to KBR customer surveys, KBR appears to have satisfactorily performed the 

mission of providing bulk and retail fuel support as required. In addition, DCMA Quality 

Assurance reviews of fuel operations conducted during the period August 2005 to June 

2006 also reported that KBR fuel operations were in general conformance with KBR’s 

standard operating procedures. 

Internal Controls 

While KBR performed the mission of providing bulk and retail fuel as required, the 

internal operations within KBR lacked some basic internal controls routine to the 

operation of retail fuel operations, such as the effective use of totalizers, calibrated 

meters, strapping charts and gauge sticks, and receipt documents. 

Totalizers. One of these controls is the utilization of totalizers that exist on fuel pumps. 

The totalizer is a meter designed to continuously record all issues of fuel from the pump. 

Figure 1 shows a retail fuel pump used by KBR and the locations of the totalizer meter 

and the normal dispensing meter. The totalizer meter normally cannot be reset without 

physically opening up the fuel pump cabinet and removing a seal or using a reset key or 

electronic pin code. The normal dispensing meter is usually reset at the end of each 

vehicle fill-up by the fuel pump operator or customer and is used to identify the amount 

of fuel disbursed to each customer. 

Under most retail fuel operations, a manager or other trusted employee would record the 

totalizer meter amount on a routine basis, such as at the beginning and end of a work 

shift. This amount would then be compared to the paperwork showing fuel issues made 

by the pump during the same timeframe as a control to ensure that no unrecorded fuel 

issues were made. KBR fuel managers, however, told us that they never recorded the 

totalizer meter amounts. Thus, a basic built-in control that could have been used to detect 

potential unauthorized and unrecorded issuances of fuel was rendered useless. The bulk 

storage tanks also had meters attached to them that included totalizers. As with the retail 

meters, the fuel managers told us that they never recorded the totalizer amounts, similarly 

rendering the bulk meter totalizers useless as a control tool. 

 

4

 AR 710-2, Supply Policy Below the National Level, July 8, 2005. 

5

 DA Pamphlet 710-2-1, Using Unit Supply System Manual Procedures, December 31, 1997. 

8 
Figure 1—Retail Fuel Pump at the Fuel Site in the International Zone 

 Retail Fuel Pump Location of Totalizer Meter

 Normal Dispensing Meter 

 Source: Picture taken by SIGIR review team at Task Order 130 Retail Fuel Site on September 5, 2006. 

Calibrated Meters. Another control is proper calibration of fuel meters to ensure 

accurate measurements. However, neither the retail nor bulk fuel meters had been 

calibrated since being installed. As a result, the meters may not accurately reflect the 

amount of fuel received or issued. KBR fuel management personnel advised us that the 

meters were not calibrated because KBR did not have the capacity to perform calibration 

within the International Zone. As a result, KBR told us that they relied upon bulk fuel 

inventory measurements, rather than upon fuel meter readings, to determine the amount 

of bulk fuel received and issued. 

9 
Homemade Gauge Sticks and Strapping Charts Used for Inventory Measurements. 

In conducting inventory on the bulk fuel storage tanks, KBR used their own internally 

developed gauge sticks6 and strapping charts7 to determine the fuel quantity in the 

storage tanks, many of which were legacy tanks obtained as needed to accomplish the 

mission. However, fuel accuracy is not usually something that can be determined by the 

use of homemade gauge sticks and strapping charts. Gauge stick inventory measurement 

is normally used with a strapping chart based on manufacturing specifications or exact 

scientific measurements for the fuel tank being measured. Fuel tanks, even though they 

may look the same size and be designed to hold the same amount of fuel may vary as to 

the specific internal dimensions of the tanks (due to wall thicknesses and other variables). 

As such, a strapping chart for a tank is designed to convert measurements to gallons or 

liters based on exact manufacturing specifications of the storage tank and cannot 

normally be used interchangeably with other tanks produced by other manufactures. 

Volumetric Conversions. KBR did not conduct volumetric temperature conversions to 

determine the quantity of the fuel it received or inventoried that equaled or exceeded 

3,500 gallons.8 Fuel volume is extremely sensitive to changes in the temperature, so 

accurate measurement of fuel, especially when fuel may be subject to extremes of 

temperatures (such as may occur in the Iraqi desert during day and night), is not possible 

unless the fuel received is converted to a standard volumetric temperature (either 60 

degrees Fahrenheit or 15 degrees Celsius) to permit determination of net quantity of fuel 

received. 

Controls Over Fuel Received From the Military. Due to security issues, KBR had 

difficulty in obtaining a reliable commercial supply of fuel for the International Zone 

from vendors. As such, KBR obtained approximately 95% of its fuel used for Task Order 

130 in the International Zone directly from the U.S. military fuel depot at Camp Victory. 

However, according to KBR officials, when their fuel transport trucks picked up fuel 

from the military depot, neither the transport drivers nor the KBR management at the 

International Zone fuel point9

 received any paperwork or other documentation indicating 

how much fuel was actually received. KBR stated that they determined the amount of 

fuel received from the military by using a gauge stick measurement of the fuel tanker 

trucks upon receipt of the fuel at Camp Victory and again when the tanker trucks 

unloaded the fuel at the International Zone fuel point. This process put KBR in the 

position of self-reporting. 

 

6

 A gauge stick, made of wood or other non-sparking material, is used to measure the depth of liquid in a 

storage tank. Typically, such sticks are marked or notched in 1/8 inch (or in a metric measure) increments 

starting with the bottom of the stick. 

7

 A strapping chart (sometimes referred to as a tank chart) is a table (usually provided by a tank 

manufacture) used to convert measurement readings taken from a gauge stick into gallons or liters. For 

conversion accuracy, the strapping chart must exactly match the tank being measured. 8

 In accordance with AR 710-2, paragraph 2-37, volumetric conversions will be conducted when measuring 

volumes equal to or exceed 3,500 gallons. 

9

 The fuel point is the name of the central location used by the contractor to receive, store, and disburse 

fuel. 

10 
The lack of paperwork showing how much fuel was issued by the military to KBR 

represents a significant material control weakness, particularly when combined with 

another common control not used by KBR—pre-numbered seals to secure fuel tankers 

during transport. The use of seals is a common industry control that requires the tanker’s 

fuel outlet nozzles to be sealed with a pre-numbered seal when a truck receives a load of 

fuel. Upon reaching the delivery point, the seals should be checked to determine that they 

were not broken and that the seal serial number matches with the paperwork provided the 

delivery driver. This control, along with the verification of fuel received from delivery 

sheets, is designed to provide reasonable assurance that fuel was not pilfered or tampered 

with at anytime between pick up and delivery. However, neither the controls for 

paperwork nor seals was in place or used during KBR’s pickup of fuel from the military 

depot at Camp Victory for delivery to KBR’s International Zone fuel point. 

KBR Management Actions. On April 11, 2007, DCMA told us that KBR has taken or 

are in the process of taking actions to address the internal control problems we identified. 

These actions include: 

• New fuel truck meters are installed and operational meters for fixed dispensers 

are on order and expected to arrive mid-May 2007. 

• KBR is currently dispensing from fuel trucks in US gallons using the meter 

totalizers. 

• In coordination with DCMA, a 100% technical review of all fuel storage tanks 

was completed. Fuel tanks capacities have been reconciled and added to the 

database as a control check to fuel delivered. Verification is in progress to ensure 

that volumetric measurements are performed. 

• KBR is currently developing accurate strapping charts which should be available 

for use by April 2007. 

• Fuel receipts (signed DA 2765-1) are being obtained when bulk fuel is received 

from the military. 

• Anti-pilferage seals are installed on all tanker trucks when fuel is transported. 

KBR Fuel Management Database Data Integrity 

We also found numerous errors in KBR’s fuel management database. KBR maintains a 

comprehensive fuel management database, recording all fuel issuances and information 

related to the fuel issuances (vehicle or generator receiving the fuel, number of fuel liters 

issued, type of fuel issued, date of fuel issue, etc.). This database, developed by KBR 

under Task Order 130 (and as such paid for by the government under cost-reimbursable 

terms of the contract), contained detailed information on individual vehicle and generator 

fuel issuances. The database also contained information on vehicles authorized to draw 

fuel from the International Zone fuel point and served as the mechanism under which 

vehicle fuel issuance cards10 were produced and printed. KBR initially refused to provide 

 

10 Vehicle fuel cards are issued to authorized users for identification. 

11 
us with a copy of this database11. However, KBR did provide us with a copy of this 

database after being directed to do so by the government Procuring Contracting Officer. 

We received the database in September 2006 for information as of September 22, 2006, 

and our analysis identified numerous obvious errors in the database leading us to 

conclude that the database lacked basic data integrity controls. For example, KBR’s 

database contained 194 separate fuel issues, totaling 12,622 liters of fuel, recorded as 

actual fuel issued for the month of December 2006; a future date and an obvious 

impossibility. The same database contained over 1,000 individual fuel issuance entries 

with inconsistent spellings for generator fuel locations and generator control reference 

numbers that did not agree with the location name. 

Furthermore, we could not always tell if problems with fuel data inaccuracies noted in the 

database were the result of errors made in recording the data or were symptoms of other 

problems, such as no controls to ensure data reconciliation or to detect possible improper 

use of fuel resources. For example, we identified 372 individual instances of fuel 

recorded as issued to generators (based on the recorded generator reference control 

number) in which the amount of fuel issued to the generator exceeded the capacity (as 

provided to us by KBR) of the generator fuel tank. According to our analysis of 

information in the contractor’s database, we determined that in total for the period June 

2004 – September 2006, the contractor had issued over 1 million liters of fuel that was 

beyond the capacity of the generator fuel tanks if filled when empty. However, we 

believe that although KBR populated this database daily from the original records, it 

contained so many errors that it can not be relied upon as an official record. 

DCMA officials told us that formal accountability for fuels is tracked through the use of 

manual Army forms and that a conclusion that the contractor cannot account for fuel 

issues should not be based on a review of its database, but rather the actual fuel issue 

documents. However, during a meeting with contractor officials on March 9, 2007, 

KBR’s fuel management personnel advised us that the issue information contained on the 

manual Army forms was entered into the database and that the information in the 

database was used to produce ad hoc fuel-related reports when requested by the 

government. Thus, while the database may not have been explicitly contractually 

required, the contractor, at government expense: 

• developed the database 

• recorded over 200,000 instances of individual fuel issues taken from the manual 

Army forms into this database 

• used the database to produce ad hoc fuel reports as requested by government 

officials 

 

11 On October 26, 2006, SIGIR issued, Inappropriate Use of Proprietary Data Markings by the Logistics 

Augmentation Program (LOGCAP) Contractor (SIGIR-06-035), which discussed KBR’s practice of 

routinely marking information provided to the government as “KBR Proprietary Data” and initial refusal to 

provide data we requested in its native electronic format. 

12 
As such, we believe that the contractor had an obligation to ensure that the fuel database 

entries were accurate and that the fuel database is a de facto accountable record under the 

contract. 

To assess the accuracy of the database and the contractor records, we compared the 

automated data to the KBR-generated original source documents used by the contractor 

and DCMA as the official record to document fuel issued to generators. We also 

compared these records against the capacity of each generator that was receiving the 

fuel12. We selected 23 entries from the database that represented fuel issued to generators 

that the record showed exceeded capacity by 1,000 liters or more. The period of time the 

records were generated under Task Order 130 was April 8, 2006 to September 22, 

2006.13 The comparison was performed with representatives from both the contractor 

and DCMA present. Our comparison of the 23 entries in the database to the supporting 

paperwork shows that 16 entries matched the paperwork and 7 entries did not match and 

could be a result of data entry errors. For the 16 entries in the database that matched the 

supporting paper documentation, the fuel delivered was above the capacity of the 

generator fuel tanks. Table 2 shows the computed number of liters over capacity for each 

of these fuel delivery entries. 

In summary, our concern is that there was no control to ensure reconciliation of the actual 

amount of fuel dispensed by the contractor’s drivers to the recorded capacity of the 

generator fuel tanks. A second concern is that if data entry errors were made in the 

automated system, there were no controls in place to reconcile the manual totals for the 

day to the automated totals for the same day. 

 

12 The capacity of the generator fuel tanks receiving fuel was based on the official capacities verified by the 

contractor and DCMA and provided to SIGIR on December 11, 2006. 13 This is the starting period of Task Order 130 and the period at which the contractor database ended for 

our selection. 

13 
 Table 2—Amount of Individual Fuel Deliveries That Were Over 

 Capacity of Generator Fuel Tanks Receiving the Fuel 

Fuel Issue Based on Paper Document Information 

provided 

by KBR 

SIGIR 

Computed 

Amount 

Document 

Reference 

Number14

Generator 

Location 

Fuel 

Issue 

Date 

Liters 

Issued 

Maximum 

Tank 

Capacity 

Liters Over 

Capacity 

142 Fire Station 4/27/2006 9,300 2,000 7,300 

48 Conention Center 

Back Up 

5/02/2006 5,258 4,000 1,258 

113 New Gerker 

Camp 

5/25/2006 3,290 1,130 2,160 

101 British Embassy 5/28/2006 22,000 4,583 17,417 

113 New Gerker 

Camp 

6/01/2006 4,108 1,130 2,978 

113 New Gerker 

Camp 

6/06/2006 3,312 1,130 2,182 

113 New Gerker 

Camp 

6/08/2006 5,442 1,130 4,312 

113 New Gerker 

Camp 

6/09/2006 6,266 1,130 5,136 

65 RTI 6/12/2006 8,000 5,647 2,353 

147 State Department 7/19/2006 4,130 2,550 1,580 

113 New Gerker 

Camp 

7/19/2006 3,762 1,130 2,632 

40 Greker Camp 7/23/2006 21,585 8,860 12,725 

55 Freedom Rest 7/26/2006 10,615 3,000 7,615 

6 TAMIMI 7/30/2006 3,050 1,900 1,150 

141 Check Point 12 8/18/2006 7,746 1,130 6,616 

141 Check Point 12 8/18/2006 2,586 1,130 1,456 

Source: SIGIR-produced table based on information in KBR Fuel Database reconciled to fuel issue 

amounts in KBR paper fuel issue receipts, KBR Generator Capacity List provided to SIGIR on 

December 11, 2006, and SIGIR computations. 

Note: The spellings of the generator location names, although inconsistent, are as provided to 

SIGIR. 

We also identified 289 separate vehicles in the database in which the fuel issued to the 

vehicle was different than the fuel that the database recorded as normally issued to the 

vehicle (e.g., a vehicle normally issued unleaded fuel was shown as being issued Diesel 

 

14 The document reference number is the primary control that links the specific generator to a specific 

location. 

14 
fuel and vice versa). We find it extremely unlikely that a vehicle that normally requires 

unleaded fuel would operate on Diesel fuel, thus leaving one of three options: 

• vehicle identification was entered incorrectly in the database 

• fuel type was recorded incorrectly in the database when the vehicle was filled 

• improper fuel entries were made in the database 

 

KBR Management Actions. On February 21, 2007, contractor officials advised us that 

they had made significant control improvements to the fuel database. KBR stated that 

they added both data integrity controls to ensure data is entered accurately, and exception 

reports to flag attempts to enter data outside acceptable parameters. 

Risk Assessment of Use of Fuel 

Based on the foregoing problems, we believe that KBR’s fuel operations under Task 

Order 130 were at a high risk for potential improper uses of fuel resources. Thus, while 

KBR accomplished its mission of providing fuel as needed to the government, KBR’s 

internal management processes did not ensure adequate controls were in place to properly 

control, account for, and safeguard government fuel resources. Further, because of the 

need for KBR to self report its fuel pickup at Camp Victory, we made a recommendation 

at the Iraq Inspector General Council15 in February 2007 that a separate review should be 

considered of the fuel operations at Camp Victory. The DoD Office of Inspector General, 

the Army Audit Agency, and SIGIR are in the planning phase for such a review. 

Food Service Operations

Although the contractor provided quality food service at an estimated cost for fiscal year 

2006 of about $28 million, we found control weaknesses in government oversight of the 

food service that may have led to a $4.5 million overspent status16 when compared to the 

Department of Army’s Basic Daily Food Allowance (BDFA) and the recorded level of 

service provided for the food service subsistence account during fiscal year 2006. We 

also determined that Army Regulation 30-2217, which is the applicable guidance on food 

service in accordance with the contract terms, was not being followed because, according 

 

15 The Iraq Inspectors General Council was formed in March 2004 to provide a forum for discussion of 

oversight in Iraq and to enhance collaboration and cooperation among the U.S. government Inspectors 

General of the agencies that oversee Iraq relief and reconstruction. Ten accountability organizations 

attended the most recent meeting held on February 14, 2007. 

16 SIGIR took a conservative approach to identify the $4.5 million overspent status. KBR records showed 

that the transportation costs included within the food costs ranged from $5.4 million to $7.5 million. We 

used the higher estimate of $7.5 million to subtract from the overall food cost to arrive at the $4.5 million 

overspent status. When the LOGCAP Procuring Contracting Officer performs its required reviewed, this 

overspent status could actually be higher. 

17 AR 30-22, The Army Food Program, May 10, 2005. 

15 
to Management Counselor officials, they were unaware of the requirement before being 

informed of such during the course of this review. In the government oversight section of 

this report, we discuss the shortfalls in the government oversight and that responsibilities 

for oversight of the account had not been clearly established by the government oversight 

participants. 

Under the food services part of the SOW under Task Order 130, KBR is required to 

provide three hot meals a day for personnel located at COM sites within Iraq. According 

to KBR customer surveys, individuals rated KBR’s level of food services as high. 

However, while mission output services (furnishing of quality meals) were accomplished 

satisfactorily, the KBR food service subsistence account for the dining facilities operating 

in the International Zone was in an overspent status for fiscal year 2006 by more than 

$4.5 million. In our discussion with various contractor staff responsible for the food 

service, we were told that there were two main causes of the overspending status. First, 

DoS management officials told them that they did not have to conform to the Army 

regulations; and second, that no one from the government was enforcing the proper use 

and documentation of the head count at meal time. Properly recording head counts is 

important because the subsistence account income is based on documenting the number 

of meals served. We discuss the government response and actions in the government 

oversight section. 

Contract Requirements 

To accomplish the food service requirement, KBR operates four dining facilities within 

the International Zone located in Baghdad and three dining facilities at COM sites located 

in Basrah, Al Hillah, and Kirkuk. These dining facilities serve meals to DoS employees 

as well as other authorized military, civilian, contractor, and foreign personnel who are 

working or residing at the COM sites within Iraq. The food service SOW requires that the 

contractor shall, at a minimum, meet Army regulatory standards for the type of work 

performed. Our review only looked at food service operations within the International 

Zone. 

AR 30-22, The Army Food Program, dated May 10, 2005,18 and DA Pamphlet 30-22, 

Operating Procedures for the Army Food Program, dated August 30, 2002, lay out the 

basic regulatory, management, fiscal and operational principles for operations of Army 

dining facilities. Army dining facilities operating in accordance with AR 30-22 are 

required to balance the cost of subsistence (food) purchased with the monetary allowance 

earned through dining facility headcounts. The monetary allowance provided to dining 

facilities is established by the Army as a BDFA. During fiscal year 2006, the Army’s 

basic daily food allowance for dining facilities in Iraq was $17.70 per authorized patron 

(as recorded in the dining facility headcount), with the allowance earned at the rate of 

20% for the breakfast meal, 40% for the lunch meal, and 40% for the dinner meal 

(including any midnight meals authorized). 

 

18 AR 30-22 was originally published on August 30, 2002, and revised on May 10, 2005. 

16 
DA Pamphlet 30-22 further specifies that because of menu selection/variety and 

headcount fluctuation, the dining facility is authorized to be, and may be, over- or underspent at the end of the month, but that the primary requirement of the dining facility is to 

conclude the fiscal year in a zero or under-spent status. It also states that any dining 

facility that exceeds the established year-to-date management factor of 3% over-spent 

status at the end of any month will undergo an analysis and validation by a responsible 

food adviser to determine the reason(s) the facility exceeded the established management 

factors. On Task Order 130, KBR had a 19.45% over-spent rate for fiscal year 2006 

based on the basic daily food allowance for reimbursement criteria established by the 

Army. 

AR 30-22 requires that a report of survey be initiated for relief from loss whenever an 

installation food program financial status does not end the fiscal year at zero or an underspent status. In the case of contractor operated dining facilities, paragraph 3-17d of 

AR 30-22 states that the contracting officer’s letter of determination will be used in the 

place of the report of survey. We determined that neither the report of survey nor a letter 

of determination had been done. 

Possible Reasons for Overspent Status 

DCMA advised us that one of the reasons for the overspent status of the subsistence 

account was that the menu used to support the COM dining facilities may have provided 

a significant number of higher cost food items from the standard Army dining facility 

menu published by the Army’s Center of Excellence, Subsistence. However, we could 

not determine who gave this order for a higher food standard. LOGCAP personnel also 

indicated that the DoS menu requirements for the COM dining facilities may have been 

higher than for the standard Army dining facility menu, thus accounting for increased 

subsistence costs. We could not find any documentation authorizing KBR to exceed the 

normal BDFA meal allowance costs; and nothing in the current LOGCAP contract or 

SOW for Task Order 130 authorizes the contractor to procure subsistence for meals for 

the dining facilities supporting the COM in excess of the established Army standard 

BDFA rate for Iraq. 

Summary of Food Services Operations 

Management Counselor officials told us they were unaware of the requirements of 

AR 30-22 before being informed by SIGIR during the course of this review. 

Consequently, the Food Services Operations function was being performed without 

effective oversight by the government to ensure that the cost of the food provided was 

reasonable in relationship to the number and cost of meals provided. The cost of the food 

itself should be compared to the appropriate allowance earned; which is based on the 

number of meals served (headcount) in a dining facility operation. This comparison, over 

a period of time, is an important management control mechanism to ensure that the cost 

of meals remains in line with appropriate guidelines. 

17 
Future SIGIR Work 

During this review we determined that DoS has not reimbursed DoD for actual costs of 

the subsistence (food) used in Task Order 130 dining facilities. This issue, as well as 

other issues related to DoS-DoD reimbursement costs, will be addressed in a subsequent 

report on Task Order 130. 

Billeting Operations 

Although, according to customer surveys, KBR provided a good service in providing for 

and maintaining living accommodations, we found numerous errors in the contractor’s 

automated billeting tracking tool caused primarily by poor in- and out-processing 

procedures for housing assignments that resulted in less than optimal use of available 

trailers. 

We also determined that KBR was allowed by the government to manage its own 

billeting and, that in most cases, KBR employees (749 of 835, or 90% of KBR 

employees) are housed at a higher standard than those they support. Both the COM and 

JASG-C have billeting criteria19 that specifies that contractors are to be assigned to 

double-occupancy half-trailers (roommates - 2 persons in living area of a containerized 

trailer). However, although the contractual language is vague, we could not identify a 

specific reference in the contract or task order that would have prevented the government 

from conducting fully its oversight function in regards to KBR billeting or allowed KBR 

to establish its own standard. Management Counselor officials told us they were 

generally unaware of their ability to control KBR billeting or of their responsibility to 

oversight the cost and use of KBR billeting resources. However, as a matter of economy 

and effective use of limited housing, we question why the government allowed the 

difference in standards given the government pays all costs associated with KBR’s 

billeting. 

Adherence to the current COM and JASG-C billeting policy, rather than the housing 

standard utilized by KBR could have the potential of a 45% reduction in housing 

requirements of the LOGCAP contractor for Task Order 130. Further, there may also be 

opportunities for the COM and JASG-C to utilize any excess billeting space that is now 

in full control of the contractor. 

Contract Requirements 

The billeting operations SOW requires that KBR use a software system that will enable 

KBR not only “to allocate, issue, account for, and maintain a correct number of available 

billets,” but also to locate individuals and provide billeting status twenty-four hours a 

day. 

 

19 See Appendix F for the COM and JASG-C billeting criteria. 

18 
Billeting Information Data Integrity

The software system used by KBR (an Excel spreadsheet) did not contain accurate 

information as to personnel currently housed in the COM International Zone housing. 

Inaccurate billeting status information reflected in KBR’s billeting spreadsheets occurred 

both as a result of the government’s failure to enforce established billeting practices 

during in-/out-processing of personnel and errors by KBR in entering names and 

checkout dates in the billeting spreadsheets. 

KBR provides living accommodations under Task Order 130 both within the 

International Zone and at three other COM sites located in Basrah, Al Hillah, and Kirkuk. 

This review only evaluated KBR billeting operations within the International Zone. The 

billeting normally provided was a containerized living unit (trailer), divided into two 

separate living sections with a shared bathroom between the sections. Personnel were 

supposed to be assigned to either a single half-trailer or a shared half-trailer (2 persons 

per half-trailer) based upon published billeting criteria. The DoS General Services Office 

(GSO) housing manager has overall authority for billeting. Actual responsibility for 

assignment of billets is shared between the General Services Office housing manager and 

the JASG-C. Both the GSO housing manager and the JASG-C had published guidance 

(see Appendix F) defining who was authorized what type of billeting (single or shared 

half-trailer room), using such criteria as the billeted person’s affiliation (with COM or 

military), position (civilian, military, or contractor), grade or rank, and length of tour. 

Priority for assignment of personnel to Task Order 130 billets is for personnel (including 

civilians, military, and contractors) operating for or in support of COM. Other military, 

civilians, and contractors not directly associated with or in support of the COM were 

supposed to be permitted to utilize the billets on a space available basis only. 

We requested and received a copy of the KBR billeting spreadsheets in September 2006. 

Our initial review of the billeting assignments shown on the spreadsheets identified 

instances of duplicate housing assignments (for same individual), names of individuals 

who had left Iraq but shown as still occupying billets20, first and last names reversed, 

misspelled names, and incorrect supporting units and nationalities. In addition, we noted 

that the billeting spreadsheet did not contain a contract number (a requirement in the 

SOW) or civilian occupants’ grade/rank (a requirement to verify proper billeting 

assignment). Both the DoS GSO housing manager and the JASG-C initiated their own 

review of the billeting spreadsheets and reached the same conclusion that we did—the 

current billeting spreadsheets were unreliable and did not contain adequate information to 

verify appropriate billeting assignments. 

As a result, on November 1, 2006, the Management Counselor, U.S. Embassy-Iraq, 

issued an administrative notice requiring that a 100% inventory of trailer (billeting) keys 

be conducted for all billeting occupants during the period November 2, 2006 to December 

2, 2006. During this period, all occupants of Task Order 130 billets in the International 

Zone were required to come to the KBR Billeting Office and provide proper 

identification, including office assigned, contract number, etc. Simultaneously with this 

 

20 We identified SIGIR staff that still had billets assigned that had departed Iraq. 

19 
action, the contractor agreed to work with the DoS GSO housing manager and JASG-C to 

develop a new and accurate billeting database. When we asked how many trailers were 

made available as a result of the 100% inventory of trailer residents, we were told by DoS 

officials, including the DoS COR, that they believed 20 half trailers were made available; 

representing 20 to 40 beds depending on how each half of a trailer would be used. 

Central In-Out Processing 

One of the reasons that the KBR billeting spreadsheets contained inaccurate information 

was that there is no central in-/out-processing procedure that verified the billeting 

information was cleared before personnel out-processed and left the International Zone 

and/or Iraq. As a result, individuals who departed Iraq sometimes left their billeting keys 

with their organizations, which in turn apparently turned the keys and the billeting space 

over to new personnel in their organization without in-processing through the KBR 

Billeting Office. Also, in the past some units and offices were assigned bulk billeting 

spaces and rotated personnel into and out of billeting trailers without notifying the KBR 

Billeting Office of the change of personnel. The JASG-C billeting COTR, appointed by 

DCMA in September 2006, took action to correct this problem by collecting unassigned 

keys from contractors and military units that previously received block assignments of 

housing. JASG-C has also advised all military units housed in Task Order 130 billets to 

individually request a housing assignment and to include billeting key turn-in as part of 

their out-processing checklist. The GSO housing manager is also taking action, 

concurrent with the billeting verification process, to restrict bulk assignment of billeting 

space and enforce the requirement that all COM related individuals out-process through 

the KBR Billeting Office. 

Chief of Mission (COM) Concern 

One of the concerns expressed to us by COM Management Counselor officials was that 

COM billeting space was increasingly being utilized by military personnel and 

contractors with no COM affiliation. As of August 30, 2006, KBR records reflected that 

70% of the Task Order 130 billeting space was utilized by Multi-National Force-Iraqrelated personnel and only 30% by COM personnel. Because of the unreliability of the 

current billeting assignment spreadsheets, we could not independently confirm these 

percentages, but they do provide an indication that COM management concerns may be 

correct. 

Compliance to COM Billeting Standards 

Our analysis of the KBR billeting assignment spreadsheets shows that some personnel 

below the rank/grade and/or tour length authorized for assignment to double half-trailers 

appear to be assigned to single-occupancy half-trailers, as opposed to the doubleoccupancy half-trailers (2 persons in each half of a containerized trailer). This issue is 

being examined during the current billeting assignment verification. Unless a valid 

exception exists, COM and JASG-C management personnel have told us that personnel 

will be assigned based upon published billeting criteria. 

20 
Management of the LOGCAP Contractor’s Billeting 

Both the GSO housing manager and the JASG-C have published guidance (see 

Appendix F) that states that all DoD- and COM-affiliated contractors are to be assigned to 

double-occupancy half-trailers. KBR, however, maintains a separate billeting area (Camp 

Hope) in the International Zone exclusively for KBR employees assigned to Task Order 

130. KBR managed and assigned billet spaces at Camp Hope itself, without oversight by 

the government billeting officers. KBR’s billeting assignment spreadsheet for Camp 

Hope for September 2006 showed that 749 (90%) of the 835 KBR employees were 

assigned to single living areas (no roommates) in this self-managed KBR billeting area. 

This is contrary to published guidance on billeting assignments for contractors 

established by the government for Task Order 130 and exceeds the JASG-C billeting 

standards for military officers at the rank of O-3 and below and enlisted personnel at the 

rank of E-7 and below, as well as civilian federal employees at the rank of GS-12 and 

below. 

Not only does KBR have 90% of its employees assigned to single rooms, KBR also 

maintains executive and other trailers within the International Zone which have both 

single rooms and private baths in which KBR employees were billeted. This exceeds 

published standards (shared bath) for all federal civilian and military personnel. 

According to the contract terms, the government will provide life and logistics support to 

the contractor in accordance with Special Contract Provisions specified in Section H of 

the basic contract and the following: 

Basic life support includes government-controlled working and living space and 

accommodations, material, equipment, and services, which the government 

determines can be made available at, or through any site where LOGCAP support 

services are performed. All government property in the possession of the 

contractor, provided through the basic life support clause, shall be used and 

managed in accordance with the government property clause applicable to this 

task order. 

Section H-25 of the basic contract, Living Under Field Conditions states: 

The government at its discretion may provide to contractor employees deployed in 

the theater of operations the equivalent field living conditions, subsistence, 

emergency medical and dental care, sanitary facilities, mail delivery, laundry 

service, and other available support afforded to government employees and 

military personnel in the theater of operations, unless otherwise specified in the 

contract. 

Section 3.2 of the statement of work addresses Living Conditions: 

The standard contractor living accommodations will be a containerized living unit 

or hardstand structure with the following furnishings for each person if possible: 

3⁄4 Twin-sized bed, lockable wall locker or closet, desk, chair. 

21 
When we discussed this issue with COM Management Counselor officials, we were told 

that they believed that the contractor was authorized to manage its own billeting and that 

the Camp Hope billeting was not part of the billeting managed by the GSO housing 

manager. However, these officials could not provide any documentation to support this 

belief. As far as we can determine, the government allowed KBR to maintain exclusive 

control of its own employees’ billeting assignments and neither the GSO housing 

manager nor the JASG-C has ever managed the billets at Camp Hope even though all 

costs associated with these billets are part of Task Order 130 costs which are paid for by 

the U.S. government. Further, if Camp Hope was managed under the rules applied to 

other U.S. government contracts, there may have been an opportunity to reduce the cost 

of the contractor’s billeting up to 45%. Further, if the government was managing this 

space it may be able to take advantage of excess capacity of the contractor’s billeting 

area. We did not review the contractor’s capacity rates but we intend to follow up on this 

in a future Task Order 130 review. 

LOGCAP-wide Issue 

While we did not perform any work outside of Task Order 130 on billeting, our 

discussions with personnel associated with other LOGCAP task orders within Iraq 

suggest that the situation of KBR controlling its own billets is not unique solely to Task 

Order 130, but applies to LOGCAP as a whole within Iraq. The LOGCAP contract is a 

cost-reimbursable contact and, as such, the total costs for any billeting criteria that KBR 

implements within Iraq for its own employees are fully reimbursable by the government. 

While changing KBR’s control of its own billeting standards may not be possible during 

the current LOGCAP task orders, we believe the U.S. Army Sustainment Command may 

have an opportunity to improve the cost effectiveness of housing the LOGCAP contractor 

in conducting negotiations for any future task orders that may be issued under the current 

LOGCAP contract and during negotiations for the follow-on LOGCAP contracts. 

Morale, Welfare, and Recreation Support Operations 

The Task Order 130 SOW requires that KBR “shall provide, operate and maintain the 

morale, welfare, and recreation (MWR) facilities to include a movie theater, game room, 

library, weight room, aerobic/cardiovascular workout facility, and Internet café.” 

According to the KBR customer surveys, KBR did a good job of performing this mission. 

Our limited review of the cost of this service found that most of the current costs are for 

salaries, and that cost to provide the MWR service appeared reasonable. 

 

We found no significant problems with government oversight and that a COTR has been 

appointed. 

22 
Government Oversight 

During the course of this review we examined the government’s oversight of KBR’s 

performance for the following services: fuel, food, billeting, and morale, welfare, and 

recreation. Based on our review, we identified two key weaknesses in the government 

oversight of the LOGCAP contract. The first weakness identified was an oversight 

process that did not carefully examine the contractor’s internal controls over the services 

being provided. The second weakness was the limited oversight to ensure economy and 

efficiency in the use of the LOGCAP contract. Our review identified that the 

government’s oversight processes tended to focus too heavily on delivery of service 

under the contract without focusing sufficiently on whether adequate controls were in 

place to protect the government’s resources. As a result we determined that government 

oversight was not adequate to ensure that contractor’s processes used to supply the end 

product or services: 

• were conducted in an efficient and economical manner 

• conformed to regulatory requirements 

• properly accounted for and safeguarded government resources 

We determined that part of DCMA’s shortfalls in performing adequate oversight can be 

attributed to problems its staff described to us as (1) a lack of qualified DCMA resources 

and (2) difficulty in recruiting qualified Contracting Officer’s Technical Representatives 

(COTRs) for appointment. We also determined that there was limited government-led 

process that actively sought out economy and efficiency in the performance of the 

contract except in the validation and approval of new requirements and tracking trends of 

cost expenditures across the services provided. We determined that although the 

Management Counselor had a process for approving requirements and ensuring that 

adequate funds were available, it did not always determine for the day-to-day services 

provided: (1) the appropriateness of the day-to-day services, (2) the level of services 

being provided, and (3) the economy and efficiency with which the services are being 

provided. Overall, Management Counselor officials appeared to be generally unaware of 

the requirements associated with oversight of the LOGCAP contractor. We believe the 

responsibility for defining the level of support in any contract belongs to the customer, 

the Management Counselor, which should periodically evaluate each contracted service. 

Overall program management will be covered in a future report on Task Order 130. 

Responsibility for Oversight 

The LOGCAP Procuring Contracting Officer, located at the U.S. Army Sustainment 

Command, Rock Island, Illinois, has overall responsibility for oversight of the contract. 

For Task Order 130, the Procuring Contracting Officer delegated Administrative 

Contracting Officer functions to DCMA in a memorandum.21 This memorandum stated 

 

21 AMSFS-CCF-L Memorandum dated April 6, 2006, Subject: Delegation of Administrative Contracting 

Officer (ACO) Functions for Contract DAAA09-02-D-0007, Task Order #0130, Chief of Mission, U.S. 

Embassy, Baghdad and Iraq. 

23 
that to “ensure contractor compliance, it is necessary to have continuous on-ground 

Government oversight” and that administrative support functions “should include, but not 

be limited to: performance IAW the terms and conditions of the basic contract and task 

order; performance IAW the SOW; property administration surveillance; ensuring 

personnel manning requirements are met; ensuring efficient use of contractor personnel; 

ensuring contractor is compliant with level of effort necessary; and ensuring the 

contractor is compliant with quality assurance requirements”. 

Further, we noted that although the procuring contracting officer stated in the April 6, 

2006, delegation letter that DCMA was to ensure the efficient use of contractor 

personnel, it did not specifically mention that DCMA should also ensure the contract was 

being performed in a cost efficient and effective manner. We believe that had the 

delegation letter been more specific, DCMA may have performed its oversight beyond 

compliance to delivery of services. This report only focuses on the four reviewed services 

and the process for approval of new services. We will report on the overall program 

management aspects of the full task order in a future review. 

DCMA implemented a review process in Iraq (see Appendix D) to provide on-the-ground 

government oversight of the contract in accordance with the delegation memorandum. 

Our review determined that they generally followed this process. However, we also 

determined that DCMA’s process did not always provide adequate oversight of KBR’s 

performance. Specifically, DCMA did not exercise proper oversight because it did not: 

• adequately evaluate KBR’s internal controls and management processes when 

conducting quality assurance reviews 

• prior to the start of our review, aggressively recruit for or appoint COTRs —

government representatives familiar with the technical and functional aspects of 

the services required—to assist in the evaluation of KBR’s operations 

• prior to the start of our review, establish its own quality assurance and oversight 

process but relied upon KBR-produced Quality Audit/Inspection Reports, which 

were marked KBR Proprietary Data, as documentation for its own quality 

assurance reviews 

Oversight of KBR’s Internal Controls. DCMA’s quality assurance reviews did not 

adequately evaluate KBR’s internal controls and management processes. Within DCMABaghdad, a quality assurance representative is responsible for oversight of contractor 

operations through scheduled quality assurance reviews. These reviews are jointly 

conducted by the DCMA Quality Assurance Representatives and KBR quality assurance 

auditors and are designed to monitor KBR’s compliance with contractor-generated 

procedures. In conducting these audits, the DCMA quality assurance personnel used 

checklists that are based on KBR’s Standard Operating Procedures and did not 

independently develop its own oversight program. As a result, the reviews only identified 

instances when KBR did not comply with its own procedural requirements. DCMA 

reviews did not detect—nor was an adequate review methodology developed to detect—

fundamental control problems and internal recordkeeping discrepancies, such as those 

that we identify in the contractor performance section of this report. 

24 
Independent Government Quality Assurance Reviews. We also identified a control 

shortfall with the process used by DCMA-Baghdad to produce and maintain its quality 

assurance reports because the office did not independently record the results of its 

reviews. In conducting the government’s quality assurance reviews, DCMA-Baghdad 

conducted joint reviews with KBR Quality Assurance/Quality Control auditors and 

recorded its results on a KBR form entitled Quality Audit/Inspection Report. When we 

requested copies of the DCMA Quality Assurance reports for reviews conducted on Task 

Orders 100 and 130, DCMA provided us with copies of the KBR form and stated that 

these were the DCMA Quality Assurance reports. An example is shown in Figure 2. This 

illustrated report is for a DCMA Quality Assurance review performed on August 21, 

2006, of the main Palace dining facility within the International Zone. While the report 

does reflect that the inspection was done with the DCMA quality assurance 

representative, the fact that the report is produced on a KBR form, shown as being 

approved by an KBR employee (APPROVAL block of form), and labeled as KBR 

Proprietary Data gives the distinct impression that this report is a KBR product and not 

an official government quality assurance review of the contractor. 

In addition, the KBR labeling of the report as KBR Proprietary Data may limit its use to 

the government. SIGIR does not agree that information within the form should be 

considered proprietary information. Further, such markings appear to be inconsistent with 

the intent to provide an independent government quality assurance review of a 

contractor’s performance. Nevertheless, for the purpose of being able to publish the KBR 

form that is used as the DCMA Quality Assurance report, SIGIR has redacted specific 

information from the report as highlighted in Figure 2. 

On April 11, 2007, in our discussion on the facts and conclusions of this report, DCMA 

stated that, in November 2006, they had established an independent quality assurance 

checklist review and reporting process. DCMA further stated that in conducting the 

government's quality assurance reviews, DCMA-Baghdad, quality assurance 

representatives (QARs) have the opportunity to perform surveillance inspections 

independently, or as a joint inspection with the contractor (KBR). The decision to 

perform independent or joint inspections can be based upon several factors to include, but 

are not limited to: process stability, sophistication, performance history or simply 

familiarization of the service provided. The results of these reviews are prepared and 

controlled by the DCMA Theater Lead QAR. Each document is unique for the functional 

service performed, and will reference those requirements as provided by the SOW and 

standard operating procedure (SOP). However, according to the samples DCMA 

provided to us, it appears that review criteria are still based on the KBR SOPs.

25 
Figure 2—DCMA Quality Assurance Review Report 

Source: DCMA-Baghdad

Note: SIGIR redacted the names of the persons involved in the quality assurance/inspection, the 

 deficiency results and the observations noted.

26 
Government Oversight of Task Order 130 Subsistence (Food) Account. DCMA, as 

part of its quality assurance reviews of food service operations, conducted more than 20 

joint reviews with KBR’s quality assurance auditors/inspectors during fiscal year 2006, 

addressing basic operational aspects of food service operations in such areas as menu 

planning, food preparation, cooking temperature, sanitation, etc. DCMA conducted these 

reviews utilizing DCMA’s Quality Assurance review checklists which were derived from 

KBR’s Standard Operating Procedures. As such, the checklists were designed to verify 

that KBR was following its own procedures; which did not address the issue of the 

monetary status of the subsistence (food) account. As a result, the DCMA review 

checklists did not address the status of the subsistence account and DCMA never 

evaluated the subsistence account status during its reviews. A DCMA official advised us 

that DCMA was not responsible for oversight of the financial status of the subsistence 

(food) account for the dining facilities; that DCMA Quality Assurance personnel are not 

trained in food subsistence issues; and that DCMA-Baghdad was not staffed to perform 

subsistence account oversight to LOGCAP dining facilities operated under AR 30-22. 

Further, based on our discussions with COM, JASG-C and DCMA staff, we could not 

determine if any of these organizations believe that they had individual responsibility to 

provide this oversight. We intend to address this issue further when we report on the 

overall program management of Task Order 130. 

Oversight by the Military for Other Dining Facilities in Iraq. The other KBR 

LOGCAP-operated dining facility subsistence accounts within Iraq (other than Task 

Order 130 dining facilities) were monitored during fiscal year 2006 by military food 

advisers appointed as COTRs. We discussed the issue of the Task Order 130 dining 

facility subsistence account with military food advisers at the various military command 

levels within Iraq and Kuwait, to include those at Multi-National Corps-Iraq, MultiNational Force–Iraq, and Coalition Forces Land Component Command. Each of the 

respective military command food service advisers told us that they did not get involved 

with or conduct oversight of the Task Order 130 dining facilities subsistence accounts. 

They also told us that they believed oversight of Task Order 130 dining facilities was 

DoS’s responsibility. DoS COM personnel, however, were not aware of the details of the 

operation of the dining facilities subsistence accounts, and therefore, did not monitor the 

subsistence accounts. 

Oversight of Food Service. During our review, we noted two other problems 

concerning compliance with provisions in the SOW and AR 30-22. The SOW for food 

service operations specifically requires that, “The Government will provide uniformed 

service members from supported units to serve as headcount personnel IAW applicable 

U.S. military regulations”. There were no military personnel verifying headcounts within 

the Task Order 130 dining facilities during the period of our review; and, we found no 

evidence that government personnel had ever been appointed or used to verify 

headcounts for dining facilities under Task Order 130 or the prior Task Orders 100 and 

44. In addition, we could find no evidence that the requirements in AR 30-22 concerning 

the appointment of a disinterested inventory officer to oversee the semiannual (March 

and September) accountable subsistence (food) inventories for the dining facilities under 

27 
Task Order 130 (or predecessor Task Orders 100 and 44 ) had ever been accomplished. In 

September 2006, we brought the disinterested inventory officer requirement to the 

attention of DCMA who promptly took action to arrange for disinterested government 

officer oversight of the September 2006 Task Order 130 dining facility subsistence 

inventories, and we expect this to continue for future semiannual inventories. 

Contracting Officer’s Technical Representatives (COTRs)

We determined at the beginning of our review, that DCMA had not identified or 

appointed COTRs to assist it in the evaluation of KBR’s operations. COTRs are normally 

subject matter experts provided by the customer to assist DCMA in its administrative 

contracting officer duties and are an important element in effective oversight. COTRs are 

used to perform specific oversight tasks within functional areas by augmenting and 

assisting the DCMA Quality Assurance Representatives in assessing contractor’s 

performance in areas where specific technical expertise is required. We also determined 

that COTRs had not been appointed for the previous Task Orders 100 and 44. However, 

during our review, starting in September and continuing through December 2006, DCMA 

identified and appointed a total of 18 COTRs to this task order from both of its primary 

customers, JASG-C and DoS. We believe that had these appointments been made earlier, 

many of the control shortfalls we identified in the fuel and food service area may have 

been detected earlier. 

We believe the use of these COTRs should greatly improve the government oversight of 

KBR operations. However, we are concerned that this is not the first time this issue has 

been identified and pointed out to DCMA. The need to appoint COTRs to assist in quality 

assurance oversight has been discussed in previous audit reports. For example, a U.S. 

Government Accountability Office (GAO) report, DOD’s Extensive Use of Logistics 

Support Contract Requires Strengthened Oversight (GAO-04-854), dated July 19, 2004, 

also found in the LOGCAP contract for Iraq that “DCMA did not always appoint 

contracting officer’s technical representatives who could have assisted DCMA in its 

quality assurance responsibilities,” and “that having contracting officer’s technical 

representatives for each functional area at each division and camp would improve 

government oversight.” 

28 
Conclusion and Recommendations 

Conclusion 

The government has a process in operation to ensure that all new requirements, including 

those initiated by the contractor, are properly validated. However, the specific procedure 

as to how the process operates is based upon an undated Standard Operating Procedure 

(SOP) issued for the prior Task Order 100, and has not been updated for the current Task 

Order 130. 

According to KBR customer surveys, KBR’s performance was adequate to ensure that 

KBR met the end product or service requirements to the satisfaction of the customer. 

Government oversight, however, was not adequate to ensure that KBR’s processes used 

to supply the end product or services were conducted in an efficient and economical 

manner, that regulatory requirements were adhered to, and those government resources 

controlled/utilized by KBR were properly accounted for and safeguarded. 

In three of the four areas we evaluated, KBR did not implement basic internal controls 

over its operations as indicated by the following conditions: 

• KBR’s fuel operations—lack of basic controls and significant instances of 

incorrect fuel issuances recorded in KBR’s fuel issue database 

• KBR’s management of the food subsistence account—overspent status of over 

$4.5 million for fiscal year 2006 

• KBR’s billeting operations—inaccurate billeting assignment records 

As a consequence, KBR’s operations may have resulted in excessive government costs 

and possible improper use of government resources. 

We also noted that KBR managed and assigned billet spaces at its own housing area in 

Camp Hope, without oversight by the government billeting officers, and that 90% of 

KBR’s employees enjoyed a billeting standard of living in excess of that authorized for 

the military and civilian personnel they support or other contractors in Task Order 130 

billets in the International Zone. While we did not perform any work outside of Task 

Order 130 on billeting, our discussions with personnel associated with other LOGCAP 

Task Orders within Iraq, suggest that the situation of KBR controlling its own billeting is 

not unique to Task Order 130, but applies to LOGCAP as a whole within Iraq. However, 

we believe had Management Counselor officials been aware of its responsibilities to 

monitor the cost of the contractor billeting and the government’s right to control this 

activity, they could have applied the applicable billeting standards to KBR. Had they 

taken this action there may have been an opportunity to reduce KBR billeting 

requirements and essentially the cost of the KBR billeting by as much as 45%. Further, 

there may also be opportunities to more effectively and efficiently utilize Camp Hope’s 

unused billeting. 

29 
Finally, although government officials are taking steps to improve controls over the costs 

and use of government resources related to Task Order 130, as a result of this review, we 

were concerned about the lack of awareness by government officials as to their oversight 

responsibilities. We were also equally concerned as to how much the government relied 

on the contractor to self-manage and self-report on its performance under Task 

Order 130. 

Government and Contractor Management Actions 

During the review DCMA took actions to address several of the control weaknesses 

discussed in this report. Between September and December 2006, DCMA appointed 18 

functional representatives from JASG-C and COM as COTRs to monitor services 

required under the contract. Further, in September 2006, DCMA appointed independent 

government representatives to oversee the fiscal year-end accountability inventory of the 

dining facilities that was conducted in September 2006. 

The DoS Management Office of the U.S. Embassy-Iraq, and the JASG-C both took 

action during the review to verify billeting assignments and, in coordination with KBR, 

took action to improve the accuracy of the billeting database. In addition, the DoS 

Management Office and the JASG-C established a working group in September 2006 to 

revise the SOP to reflect current requirements validation procedures. However, as of 

May 31, 2007; a revised SOP had not been issued. 

KBR took positive actions to address control problems over the receipt, issue and 

accountability of fuel that we noted during the review. KBR also modified the fuel 

database to add data integrity controls and exception reports to ensure data is entered 

accurately and to identify attempts to enter data that is outside of acceptable parameters. 

The U.S. Army Sustainment Command, in response to our interim report, took immediate 

action by adding modification P00018, dated October 30, 2006, to the basic LOGCAP 

contract (DAAA09-02-D-0007), which among other things added specific language to 

the contract that we had recommended concerning government proprietary information 

and electronic submission directions. The U.S. Army Sustainment Command also drafted 

proposed contract language that states KBR billeting is subject to government billeting 

oversight. 

Future SIGIR Work 

We plan to continue our review of Task Order 130 and will report periodically on our 

findings and recommendations. During this review we determined that while KBR 

received over 95% of its fuel directly from the military, KBR did not incur actual costs 

for the military fuel. Thus, these costs were not reflected as part of the Task Order 130 

cost of fuel operations. This issue, as well as other issues related to DoS-DoD 

reimbursement costs and program management, will be addressed in subsequent reports 

on the continuing review of Task Order 130, and its successor, Task Order 151. 

30 
Recommendations 

We recommend that the Counselor for Management Affairs, U.S. Embassy-Iraq: 

1. Continue working with JASG-C to revise the standard operating procedures to 

include requirements for validating new work under Task Order 130 and 

successor task orders. 

2. Continue working with JASG-C to verify billeting assignments and ensure proper 

assignment of billets based on published criteria. 

3. Develop and issue, in coordination with the JASG-C, a process and procedure for 

central in-out processing. This process should be added to a standard process for 

personnel arriving and departing Task Order 130 supported billets in Iraq. All 

personnel (military, federal civilian employees, contractors, etc.) should be 

required, as part of the departure process, to present a sign off from billeting that 

they have cleared billeting before permanently departing from Iraq and that they 

no longer have a recurring need for bed space under Task Order 130 and 

successor task orders. 

4. Continue working with JASG-C to improve management controls over food 

services, including developing proper controls to ensure that there is an 

accountability process for tracking the personnel utilizing the dining facilities and 

that those personnel are properly authorized to receive food services subsistence. 

5. Work with Army and DoS representatives to clearly define each government 

entity’s responsibilities in overseeing Task Order 130 and successor task order 

activities. If the determination is made that additional assistance is needed from 

either organization to oversee key activities then the Management Counselor 

should formally request specific assistance. 

We recommend that the LOGCAP Procuring Contracting Officer take the following 

actions: 

6. Amend the delegation letter for the Administrative Contracting Officer duties to 

include: 

a. Examining the contractor’s internal control practices including contractor 

reporting data integrity to ensure that basic and proper internal controls are 

established and adhered to and that the services are performed in an efficient 

and cost effective manner. 

b. Developing DCMA-specific quality assurance criteria, procedures, and reports 

to conduct an independent government review. 

31 
7. Reinforce its delegation for DCMA to ensure that qualified contracting officer’s 

technical representatives are formally identified, appointed and assigned, as 

necessary, to assist DCMA-Baghdad in reviewing technical aspects of the 

contractor’s functions. 

8. In accordance with Army Regulation 30-22 dated May 10, 2005, render a 

procuring contracting officer’s determination as to the reasons why the overspent 

status occurred and take appropriate action in accordance with the LOGCAP 

contract terms. 

Because of the potential for improving the utilization of housing resources and 

reducing costs of the LOGCAP contractor life support services, we recommend that 

the LOGCAP Procuring Contracting Officer, in coordination with the overall 

LOGCAP Program Management Office, take the following actions: 

9. Address the appropriateness of any LOGCAP contractor controlling its own 

billeting assignments/standards during negotiations for any future task orders that 

may be issued under the current LOGCAP contract as well as during negotiations 

for the follow-on LOGCAP contracts. As a matter of public policy, two issues that 

should be addressed in this regard are: 

a. Should a LOGCAP contractor be permitted to define its own billeting 

standards for its own employees that are above the established standards for 

other contractors and/or federal military and civilian personnel for whom the 

contractor supports, and be reimbursed for the full cost? 

b. Should a LOGCAP contractor be permitted to have exclusive control of 

billeting assignments for its own employees? If so, what are the proper 

controls needed to ensure LOGCAP billeting is operating in an economical 

and efficient matter as determined by the appropriate government oversight 

entity? 

Management Comments and Audit Response 

We received written management comments on a draft of this report from DoS 

Management Counselor’s Office and technical comments from DCMA, which are 

included in the Management Comments section of this report. Actions have been taken 

to meet the intent of our recommendations. While both organizations stated that they 

believed there had always been adequate oversight on Task Order 130, each organization 

(1) acknowledged the need for changes in their contract management processes and (2) 

listed specific actions taken in response to each of the issues we bought to their attention 

during the course of our review. We extended the comment period to accommodate the 

time required by DCMA to respond to the draft report to be able to include copies of 

these responses as part of the final report. 

32 
We received oral comments from representatives of the U.S. Army Sustainment 

Command in which those officials generally concurred with our findings and 

recommendation. Further, U.S. Army Sustainment Command used several of our verbal 

recommendations made during the audit to revise the Statement of Work for the 

successor to Task Order 130 (Task Order 151) to improve oversight in the areas of food 

service, fuel operations and billeting operations. We did not receive written comments 

from the U.S. Army Sustainment Command. 

33 
Appendix A—Scope and Methodology 

This review was announced on July 24, 2006, (Project No. 6029) with the overall 

objectives to determine whether the U.S. government is receiving the services paid for 

under LOGCAP Task Order 130 and whether the support provided is reasonable, 

efficient, and cost effective. 

We conducted this review at Kellogg Brown & Root Services Inc. (KBR) sites located in 

Baghdad, Iraq, and at the procurement contracting officer’s office located at the U.S. 

Army Sustainment Command, Rock Island, Illinois. As part of this review we 

interviewed government personnel involved with the administration or oversight of Task 

Order 130, as well as government personnel involved in services similar to that provided 

by Task Order 130, including: 

• Defense Contract Management Agency (DCMA) commander, administrative 

contracting officer, and other DCMA personnel in Iraq 

• Defense Contract Audit Agency in Iraq 

• Department of State personnel assigned to the U.S. Embassy-Iraq, such as the 

Chief of Mission (COM) Management Counselor, the Task Order 130 

contracting officer’s representative, the senior financial management officer, and 

the General Services Office housing officer, and others 

• Functional support personnel with the Joint Area Support Group-Central newly 

appointed Task Order 130 contracting officer’s technical representatives 

• Personnel with the Camp Victory Logistics Support Element, such as the Deputy 

Program Director for LOGCAP in Iraq and the Task Order 130 LOGCAP 

Support Officer 

• U.S. Army Sustainment Command procurement contracting officer and other 

personnel, such as legal counsel 

• Military food service advisers for the Multi-National Corps-Iraq , Multi-National 

Force-Iraq, and Coalition Forces Land Component Command 

• Personnel at the Army Center of Excellence, Subsistence, U.S. Army 

Quartermaster Center and School, Fort Lee, Virginia

• KBR managers and operational personnel 

We visited KBR operational sites in the International Zone, Iraq; observed ongoing KBR 

operations; observed the methods used by KBR to capture, maintain, and report data; and 

examined reports that KBR provided to the government. We also requested, received, 

analyzed, and evaluated KBR internal reports and databases, such as the fuel database, 

the dining facilities subsistence account and inventory reports, the billeting assignment 

spreadsheet, and the morale, welfare, and recreation reports. 

34 
We also reviewed the Federal Acquisition Regulation (FAR) and information maintained 

by the defense acquisition community to identify FAR clauses and other potential 

contract documents applicable to conditions we noted during this review. We reviewed 

the following significant Army regulations, pamphlets, and other guidance applicable to 

the performance and oversight of Task Order 130: 

• Army Regulation 30-22, The Army Food Program, May 10, 2005 

• Department of the Army Pamphlet 30-22, Operating Procedures for the Army 

Food Program, August 30, 2002 

• Army Regulation 710-2, Inventory Management: Supply Policy Below the 

National Level, July 8, 2005 

• Department of the Army Pamphlet 710-2-1, Inventory Management: Using Unit 

Supply System (Manual Procedures), December 31, 1997 

• Memorandum of Agreement Between Department of State and Department of 

Defense for Support Services in Iraq, dated June 10, 2004 

• Army Regulation 215-1, Morale, Welfare and Recreation Activities and 

Nonappropriated Fund Instrumentalities, June 28, 2004 

• Defense Contract Management Agency Contract Management Office Quality 

Assurance Surveillance Plan for DCMA Iraq, June 2005 

We performed this review from August 1, 2006 to May 31, 2007, in accordance with 

generally accepted government auditing standards. 

Prior Coverage 

Special Inspector General for Iraq Reconstruction (SIGIR) 

Reports issued by the Office of the Special Inspector General for Iraq Reconstruction 

(SIGIR) can be accessed on its website http://www.sigir.mil. 

SIGIR Report No. 05-003, Task Order 0044 of the Logistics Civilian Augmentation 

Program III Contract, dated November 23, 2004, noted that weaknesses in KBR cost 

reporting process used for Task Order 0044 prevented SIGIR from effectively addressing 

the audit objectives. That audit was terminated and addressed only the issue of cost data 

submitted by KBR to the Coalition Provisional Authority for work performed under Task 

Order 0044. The report noted that KBR did not provide the administrative contracting 

officer with sufficiently detailed cost data to evaluate overall project costs or to determine 

whether specific costs for services performed were reasonable. This occurred because 

both the basic LOGCAP contract and Task Order 0044 required detailed cost data and the 

LOGCAP contract was awarded to KBR even though the contractor did not have certified 

billing or cost and schedule reporting systems. As a result, the administrative contracting 

35 
officer did not receive sufficient or reliable cost information to effectively manage Task 

Order 0044. In addition, the lack of certified billing or cost and schedule reporting 

systems hampered the administrative contracting officer from effectively monitoring 

contract costs. Finally, due to the lack of contractor provided detailed cost information to 

support actual expenses incurred, resource managers were unable to accurately forecast 

funding requirements to complete Task Order 0044. 

SIGIR Report No. 06-035, Interim Audit Report on Inappropriate Data Markings by the 

Logistics Civilian Augmentation Program (LOGCAP) Contractor, dated October 26, 

2006. This reported noted that KBR routinely marks almost all the information it 

provides to the government as KBR proprietary data, citing the FAR section 3.104 as the 

justification. This provision of the FAR, however applies to the protection of bid or 

source selection information during the procurement process, while the information KBR 

is marking as proprietary is data produced by KBR for the government related to its 

performance under a contract that has already been awarded. This practice is not 

consistent with FAR direction as to what constitutes proprietary data. The routine use of 

proprietary markings when the data marked is not internal contractor information, such as 

indirect costs, labor rates, or internal processes is an abuse of FAR procedures, inhibits 

transparency of government activities and the use of taxpayer funds, and places 

unnecessary requirements on the government to both protect from public disclosure 

information received from KBR and to challenge inappropriate proprietary markings. The 

result is that information normally releasable to the public must be protected from public 

release just because the information gathered for the government by KBR, pursuant to 

KBR’s contractual obligations, was marked as proprietary. In effect, KBR has turned 

FAR provisions designed to protect truly proprietary information and to enhance 

procurement competition by protecting proprietary data from unauthorized disclosure 

into a mechanism to prevent the government from releasing normally transparent 

information, thus potentially hindering competition and oversight. 

U.S. Army Audit Agency (AAA) 

AAA Audit Report A-2006-0099-ALL, dated April 25, 2006, Audit of Program 

Management in the Iraq Area of Operations, Audit of Logistics Civil Augmentation 

Program Operations in Support of Operation Iraqi Freedom, concluded that the current 

management structure over LOGCAP operations in the Iraq area of operations was not 

fully conducive to ensuring the program is managed in the most effective and efficient 

manner to provide the greatest potential for being a force multiplier for the battle space 

commander. Specifically, contracting activities in theater have been fragmented and too 

understaffed to effectively furnish overall integrated support to component commands. At 

the same time, more centralized control over LOGCAP operations is needed within the 

Multi-National Forces-Iraq command to ensure requirements are properly managed and 

contract support is effectively integrated into its combat service support mission. 

36 
AAA Audit Report A-2006-0168-ALL, dated August 4, 2006, Report on the 

Subsistence Prime Vendor Contract, Audit of Logistics Civil Augmentation Program 

Operations in Support of Operation Iraqi Freedom, concluded that the operations related 

to providing subsistence items under the prime vendor contract to dining facilities in 

Kuwait and Iraq were effective and efficient for the prime vendor-owned products. The 

management of government-owned operational rations inventory at the prime vendor’s 

warehouses could be improved. The inventory balances and locations of operational 

rations in the bulk storage facilities at the Kuwait Free Trade Zone did not match what 

was recorded in the work management structure database because those facilities did not 

have an automated inventory tracking system or an adequate warehouse identification 

system to manage and store operational rations. Operational rations with more than one 

national stock number were not being pulled according to the first-to-expire inventory 

method required by the prime vendor contract. The prime vendor did not maintain 

adequate and accurate supporting documentation for the destruction of governmentowned operational rations. The government has incurred excess storage fees due to 

inadequate monitoring of expired government-owned products in the prime vendor’s 

warehouse. There were over 400,000 cases of government-owned operational rations 

worth approximately $34 million stored in the prime vendor’s warehouse that were on 

hand or were en route to the warehouse. These rations exceeded the average quantity that 

the prime vendor ships out each month plus the 3-month safety stock that the Army 

attempts to maintain in the prime vendor’s warehouses. The government was not 

adequately monitoring contractor performance. The administrative contracting officer 

and the contracting officer’s representative were not using a Quality Assurance 

Surveillance Plan to monitor contractor performance. In addition, we found the 

designation memorandum appointing each of these officials lacked specifics on their 

quality assurance requirements. The overall approach to monitoring the requirements of 

the contract was not reviewed to ensure the terms of the contract were fulfilled.

AAA Audit Report A-2006-0022-ALL, dated November 28, 2005, Logistics Civil 

Augmentation Program, U.S. Army Materiel Command, concluded overall that the 

Army’s management of the LOGCAP contract was adequate. LOGCAP was providing 

essential support to Soldiers and doing a good job of meeting the Army’s needs. In 

addition, the contract was competitively awarded; the contract type was appropriate for 

the type of work performed; appropriate pre-award reviews were conducted on the 

contractor’s proposals, management controls, and accounting system; and appropriate 

structures were in place to manage the contract. Although the contract was adequately 

managed, some problems did occur up front because of the volume of work involved and 

the need to process contract actions quickly. Specifically, independent government cost 

estimates were not prepared in sufficient depth to evaluate contractor cost estimates, and 

task orders awarded under the contract often were not definitized in a timely manner. 

AAA Audit Report A-2005-0043-ALE, dated November 24, 2004, Audit of Logistics 

Civil Augmentation Program in Kuwait, concluded that the program management office 

did not provide adequate oversight to the LOGCAP Support Unit to ensure 

implementation of procedures for effective performance-based contracting. The audit also 

found that the basic contract and the statements of work for task orders specified that the 

contractor was to provide a variety of reports and plans at various intervals throughout 

37 
the contract. The contract reports and plans either were not provided or were not useful. 

The LOGCAP Support Unit did not have established goals and objectives or standing 

operating procedures to define its program support role in Southwest Asia. Moreover, the 

support unit’s mission-essential task list included tasks that could not be performed in 

Southwest Asia. Consequently, support unit personnel were not sure of their roles and 

responsibilities and frequently performed tasks that fell outside their authority.

U.S. Government Accountability Office (GAO) 

Report GAO-04-854, DoD’s Extensive Use of Logistics Support Contracts requires 

Strengthened Oversight, dated July 19, 2004, found that the effectiveness of DOD’s 

planning to use the logistics support contracts during contingency operations varies 

widely between the commands that use them and the contracts themselves. In many 

cases, planning was done effectively, in close coordination with the respective 

contractors. For LOGCAP, however, the Army Central Command did not develop plans 

to use the contract to support its military forces in Iraq until May 2003, even though 

Army’s LOGCAP guidance calls for early planning and early involvement of the 

contractor. These plans, moreover, have undergone numerous changes since that initial 

planning. In Kuwait, as well, the Army has made frequent changes in its use of 

LOGCAP. The report notes that DOD’s contract oversight processes were generally 

good, although there is room for improvement. DOD customers have not always ensured 

that contractors provide services in an economic and efficient manner, although they have 

a responsibility to do so. GAO found that when the customer reviews the contractor’s 

work for economy and efficiency, savings are realized. Under the LOGCAP contract, 

months-long delays in definitizing contract task orders have frequently undermined the 

contractor’s cost control incentives and the absence of an Army award fee board to 

comprehensively evaluate the contractor’s performance has further limited DOD’s 

oversight. 

Report GAO/NSAID-00-225, Army Should Do More to Control Contract Costs in the 

Balkans, dated September 29, 2000, found that both the Army and its contractor, Brown 

& Root Services, had taken various actions to control the cost of services provided under 

the Balkans Support Contract. These actions include a contract provision requiring the 

contractor to regularly identify cost savings, recycling materials from elsewhere in the 

Balkans and Europe and using soldiers to perform such tasks as building construction 

whenever possible. Nevertheless, the Army should have done more to control costs. One 

step it should have taken was to give more consideration to costs in making decisions on 

the extent of services to be provided by the contractor. 

38 
Appendix B—Acronyms 

AAA Army Audit Agency 

ACO Administrative Contracting Officer 

AR Army Regulation 

BDFA basic daily food allowance 

COM Chief of Mission 

COR contracting officer’s representative 

COTR contracting officer’s technical representative 

DA Department of the Army 

DCMA Defense Contract Management Agency 

DoD Department of Defense 

DoS Department of State 

GAO U.S. Government Accountability Office 

GSO General Services Office 

JASG-C Joint Area Support Group-Central 

KBR Kellogg Brown & Root Services Inc. 

LOGCAP Logistics Civil Augmentation Program 

LSO logistical support officer 

MWR Morale, Welfare and Recreation 

QAR quality assurance representative 

RAP Requirements Advisory Panel 

SIGIR Special Inspector General for Iraq Reconstruction 

SOP standard operating procedure 

SOW statement of work 

39 
Appendix C—Description of the Requirements 

Validation Process 

The specific procedure on how the government’s requirements validation process 

operates is based upon an undated Standard Operating Procedure (SOP) issued for the 

prior Task Order 100, which has not been updated for the current Task Order 130. 

Requirement processing procedures and approval authorities (as orally described to us by 

Department of State (DoS), Joint Area Support Group-Central (JASG-C), and the 

Logistics Support Office staff) differ depending upon if the requirement is considered a 

routine service order or a work request. 

Service requests for normal day-to-day operational requirements, such as the need for air 

conditioning service repair for example, are initiated by the person or office requesting 

the work to be performed by completing a service request form and submitting it to the 

contractor’s work desk. The contractor automatically initiates actions on routine service 

orders. 

Work requests were verbally described to us as any new work designed to modify 

existing assets, replace equipment, or new construction. Work requests received at the 

contractor’s work desk are scanned and submitted electronically to the DoS U.S. 

Embassy-Iraq Facilities Office. The facilities manager examines the work request to 

determine if the work requested is primarily in support of the Department of Defense 

(DoD) or the DoS. 

If the work request is DoD-related, it is forwarded to the JASG-C for review and initial 

approval. If JASG-C approves the request, the work request is then forwarded to the 

DoS’s contracting officer’s representative (COR) for the task order for disposition as 

discussed below. 

Work requests related primarily to DoS operations are forwarded directly by the DoS 

facility manager to the DoS COR. The COR reviews the work request using “staff 

guidance” (described to us as information received from U.S. Embassy-Iraq senior 

management officials during weekly meetings) and the Task Order Statement of Work 

(SOW) to differentiate the work as, “maintaining versus new,” or a “work request versus 

a service request”. The COR reviews the work request to determine if the funding would 

come from the existing Logistics Civil Augmentation Program (LOGCAP) contract or if 

the work can be done by a local company with a different contract, paid for by the 

requesting agency. If the COR believes that the work should be accomplished under the 

LOGCAP contract, he can approve the work request up to $5,000 and forward it back to 

the contractor for accomplishment. If the work request is greater than $5,000 but less than 

$50,000, the COR forwards the work request to the Administrative Contracting Officer, a 

member of the Defense Contract Management Agency (DCMA) staff, who has approval 

authority for work requests between $5,000 and $50,000. 

40 
Work requests determined by the COR to be within the LOGCAP contract scope that 

exceed $50,000 are forwarded to the LOGCAP Support Officer (LSO) within the U.S. 

Embassy-Iraq. The LSO, who is a member of the Logistical Support Element staff, then 

conducts a meeting with requesting agency or unit to review requirements and helps 

develop a SOW that defines the work requirement in contract terms. The ACO may be 

invited to attend the meeting. The LSO submits the work request to the contractor for 

development of a Project Planning Estimate. If needed the LSO, contractor, and 

requesting agency or unit will meet to discuss the estimate with the goal of gaining 

agreement from all stakeholders. The requesting agency or unit with the assistance of the 

LSO, prepares and submits a LOGCAP work request to include the Project Planning 

Estimate and SOW, to the COR for final approval before submittal to the Requirements 

Advisory Panel (RAP) working group. 

Work requests received by the RAP working group are reviewed for completeness and 

necessity before being forwarded to the formal RAP itself. The purpose of the RAP 

working group is to answer questions from the area experts that are part of the working 

group before the work requests are presented to the formal RAP meeting. After approval 

by the RAP working group, the work request project is submitted to the formal monthly 

RAP for approval. The RAP is co-chaired by the DoS Counselor for Management Affairs 

and JASG-C Commander. 

41 
Appendix D—Defense Contract Management 

Agency Responsibilities 22

The Defense Contract Management Agency (DCMA) is the Department of Defense 

component that works directly with Defense suppliers to help ensure that government 

supplies and services are delivered on time at the projected cost and that contractors meet 

all performance requirements. DCMA professionals serve as "information brokers" and 

in-plant representatives for military, federal, and allied government buying agencies 

during the initial stages of the acquisition cycle and throughout the life of the resulting 

contracts. Before contract award, DCMA provides advice and services to help construct 

effective solicitations, identify potential risks, select the most capable contractors, and 

write customer-responsive contracts. After contract award, DCMA monitors contractors' 

performance and management systems to ensure that cost, product performance, and 

delivery schedules are in compliance with the terms and conditions of the contracts. 

DCMA quality assurance representative (QAR) oversight is critical to the mission 

because of the requirement for services 24 hours a day, 7 days a week. These 

representatives conduct oversight of the contractor by visiting camps or sites, by 

evaluating process performance, and by assuring that work orders are completed. The 

QAR presence assures the monitoring of the quality of work and services. The interaction 

allows the customer to learn about the DCMA mission and articulate expectations. 

Services that are necessary for the needs of the Soldier are ongoing and require constant 

monitoring. This monitoring ensures the health, safety, morale, readiness, and overall 

well-being of soldiers to be capable of performing their missions. 

QARs are responsible for applying the Quality Assurance Surveillance Plan to the quality 

missions within their area of responsibility. They interface with the contractor's site 

managers, quality control managers, quality assurance/quality control representatives, 

and other contractor staff. These representatives are authorized to access contractor 

standard operating procedures for all services performed under the Logistics Civil 

Augmentation Program (LOGCAP) contract. QAR responsibilities include: 

• Following and maintaining this surveillance plan. 

• Maintaining records of completed audit reports, corrective action requests logs, 

continuous improvement opportunities logs, and contracting officer’s technical 

representatives’ roster. 

• Providing an independent audit of contractor operations. 

• Accomplishing audits via the lead QAR audit checklists. 

• Tracking audit results via the lead QAR provided trending spreadsheets. 

• Maintaining an audit schedule of inspections performed. 

 

22 Source: Defense Contract Management Agency Contract Management Office Quality Assurance Plan for 

DCMA Iraq dated June 2005. 

42 
• Maintaining contractor standard operating procedures (SOP) library. 

• Keeping SOP audit library provided by the lead QAR. 

• Initiating corrective action requests and track to closure. 

• Communicating regularly with partner administrative contracting officer and the 

lead QAR. 

• Regularly interacting with customers to ensure problems are resolved adequately 

and in a timely manner. 

• Providing input regarding the award fee. 

QARs will continually review relevant contractor and DCMA data with an eye to past 

performance history, evaluating the contractor's quality plan, classifying process risks, 

performing process proofing and process/product audits. 

Among other staff personnel, DCMA-Baghdad includes an administrative contracting 

officer, a QAR, and a government property administrator. 

43 
Appendix E—Contracting Officer’s Technical 

Representatives Responsibilities 23

According to the Statement of Work for Task Order 130, contracting officer’s technical 

representatives (COTRs) will monitor the following services: 

Custodial Services 

Refuse & Solid Waste 

Septic & Solid Waste 

Service Order Desk 

Heating, Ventilation, and Air Conditioning Equipment Maintenance 

Non-Tactical Vehicles Transportation Motor Pool 

Morale, Welfare, and Recreation (MWR) 

Billeting & Grounds 

Facilities Management 

Electrical Service 

Power Generation 

Food Service 

Class III Bulk & Retail Fuel 

HAZMAT 

Laundry 

Water Operations 

Fire Protection 

It should be noted that a COTR can be assigned to monitor more than one service. 

 

23 The source of this information is the DCMA appointment letters to the COTRs September – 

December 2006. 

44 
Appendix F—Billeting Criteria 

The following documents are the billeting criteria used by the Joint Area Support GroupCentral (JASG-C) and Chief of Mission (COM) for making housing assignments and the 

criteria we used in this report when assessing the billeting service. JASG-C provided its 

JASG-C Memorandum on Command Policy Letter SPO#3 (Embassy Annex Billeting 

Policy), dated March 5, 2006. The SPO represents the organizational code within JASGC and the number 3 represents its third policy. The Department of State Housing 

Manager provided the Chief of Mission Housing Assignment Policy on September 27, 

2006. The COM policy is undated, but we confirmed this was the policy in effect at the 

time of our review. 

Joint Area Support Group–Central Embassy Annex Billeting Criteria

45 
46 
Appendix G—Report Distribution 

Department of State 

Secretary of State 

Senior Advisor to the Secretary and Coordinator for Iraq 

Director of U.S. Foreign Assistance/Administrator, U.S. Agency for 

International Development 

 Director, Office of Iraq Reconstruction 

 Assistant Secretary for Resource Management/Chief Financial Officer, 

 Bureau of Resource Management 

U.S. Ambassador to Iraq* 

 Director, Iraq Transition and Assistance Office 

Mission Director-Iraq, U.S. Agency for International Development 

Inspector General, Department of State 

Department of Defense 

Secretary of Defense 

Deputy Secretary of Defense 

Under Secretary of Defense (Comptroller)/Chief Financial Officer 

 Deputy Chief Financial Officer 

 Deputy Comptroller (Program/Budget) 

Deputy Assistant Secretary of Defense-Middle East, Office of Policy/International 

Security Affairs 

Inspector General, Department of Defense 

Director, Defense Contract Audit Agency 

Director, Defense Finance and Accounting Service 

Director, Defense Contract Management Agency* 

 Commander, Defense Contract Management Agency – Iraq* 

Department of the Army 

Assistant Secretary of the Army for Acquisition, Logistics, and Technology 

Principal Deputy to the Assistant Secretary of the Army for Acquisition, 

Logistics, and Technology 

Deputy Assistant Secretary of the Army (Policy and Procurement) 

Commanding General, Joint Contracting Command-Iraq/Afghanistan 

Assistant Secretary of the Army for Financial Management and Comptroller 

Chief of Engineers and Commander, U.S. Army Corps of Engineers 

 Commanding General, Gulf Region Division 

Chief Financial Officer, U.S. Army Corps of Engineers 

Auditor General of the Army 

U.S. Central Command

Commanding General, Multi-National Force-Iraq 

Commanding General, Multi-National Corps-Iraq 

Commanding General, Multi-National Security Transition Command-Iraq 

Commander, Joint Area Support Group-Central* 

*Recipient of the draft audit report 

47 
Other Federal Government Organizations 

Director, Office of Management and Budget 

Comptroller General of the United States 

Inspector General, Department of the Treasury 

Inspector General, Department of Commerce 

Inspector General, Department of Health and Human Services 

Inspector General, U.S. Agency for International Development 

President, Overseas Private Investment Corporation 

President, U.S. Institute for Peace 

Congressional Committees and Subcommittees, Chairman and 

Ranking Minority Member 

U.S. Senate 

Senate Committee on Appropriations 

Subcommittee on Defense 

Subcommittee on State, Foreign Operations and Related Programs 

Senate Committee on Armed Services 

Senate Committee on Foreign Relations 

Subcommittee on International Operations and Organizations, Democracy and 

Human Rights 

Subcommittee on International Development and Foreign Assistance, Economic 

Affairs and International Environmental Protection 

Subcommittee on Near East and South and Central Asian Affairs 

Senate Committee on Homeland Security and Governmental Affairs 

Subcommittee on Federal Financial Management, Government Information, 

Federal Services and International Security 

Permanent Subcommittee on Investigations 

Subcommittee on Oversight of Government Management, the Federal 

Workforce, and the District of Columbia 

U.S. House of Representatives 

House Committee on Appropriations 

Subcommittee on Defense 

Subcommittee on State, Foreign Operations, and Related Programs 

House Committee on Armed Services 

House Committee on Oversight and Government Reform 

Subcommittee on Government Management, Organization, and Procurement 

Subcommittee on National Security and Foreign Affairs 

House Committee on Foreign Affairs 

Subcommittee on Middle East and South Asia 

Subcommittee on International Organizations, Human Rights, and Oversight 

48 
Appendix H—Review Team Members 

This report was prepared and the review was conducted under the direction of Joseph T. 

McDermott, Assistant Inspector General for Audit, Office of the Special Inspector 

General for Iraq Reconstruction. 

The staff members who conducted the review and contributed to the report include: 

Karen D. Bell 

Glenn Furbish 

Taghreed A. Mahdi 

Sandra A. March 

Robert L. Pelletier 

Ronald L. Rembold 

Nadia Shamari 

Frank W. Slayton 

Steven H. Sternlieb 

49 
Management Comments 

U.S. Embassy-Iraq and Joint Area Support 

Group-Central 

50 
51 
Management Comments 

Defense Contract Management Agency 

52 
53 
54 
55 
56 
57 
58 
 

SIGIR’s Mission Regarding the U.S. reconstruction plans, programs, 

and operations in Iraq, the Special Inspector General 

for Iraq Reconstruction provides independent and 

objective: 

• oversight and review through comprehensive 

audits, inspections, and investigations 

• advice and recommendations on policies to 

promote economy, efficiency, and effectiveness 

• deterrence of malfeasance through the prevention 

and detection of fraud, waste, and abuse 

• information and analysis to the Secretary of 

State, the Secretary of Defense, the Congress, 

and the American people through Quarterly 

Reports 

Obtaining Copies of SIGIR 

Reports and Testimonies 

To obtain copies of SIGIR documents at no cost, go 

to SIGIR’s Web site (www.sigir.mil). 

To Report Fraud, Waste, 

and Abuse in Iraq Relief 

and Reconstruction 

Programs 

Help prevent fraud, waste, and abuse by reporting 

suspicious or illegal activities to the SIGIR Hotline: 

• Web: www.sigir.mil/submit_fraud.html 

• Phone: 703-602-4063 

• Toll Free: 866-301-2003 

Congressional Affairs Marthena Cowart 

Assistant Inspector General for Congressional 

 Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-604-0368 

Email: marthena.cowart@sigir.mil 

Public Affairs Denise Burgess 

Assistant Inspector General for Public Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-428-1217 

Fax: 703-428-0818 

Email: PublicAffairs@sigir.mil 

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