OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

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SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

 October 26, 2006 

 

MEMORANDUM FOR COMMANDING GENERAL, U.S. ARMY SUSTAINMENT 

 COMMAND 

 COMMANDER, DEFENSE CONTRACT MANAGEMENT 

 AGENCY-IRAQ 

 MANAGEMENT COUNSELOR, U.S. EMBASSY-IRAQ 

SUBJECT: Interim Audit Report on Inappropriate Use of Proprietary Data Markings by the 

 Logistics Civil Augmentation Program (LOGCAP) Contractor (SIGIR-06-035) 

Due to data access and reporting issues and their impact on transparency of government 

operations the Special Inspector General for Iraq Reconstruction (SIGIR) is providing this 

interim audit report for your information and use. We are performing this review at the request 

of the Office of the Chief of Mission, U.S. Embassy-Iraq. 

Objective

This review was announced on July 24, 2006, with the overall objective of determining whether 

the U.S. government is receiving the services paid for under Logistics Civil Augmentation 

Program (LOGCAP) Task Order 130 and whether the support provided is reasonable, efficient, 

and cost-effective. During our review we noted that the LOGCAP contractor, Kellogg Brown 

and Root Services, Inc. (KBR), continuously marked all information provided to the government 

as “Proprietary Data”. In addition, the contractor initially refused to provide us with requested 

data in its native format (Excel spreadsheet or Access database), because KBR claimed the actual 

spreadsheets or databases contained specific proprietary information relating to how KBR 

conducts its business. 

The purpose of this interim review was to provide an assessment of whether KBR is following 

applicable Federal Acquisition Regulation (FAR) direction on classifying proprietary data and is 

complying with contract provisions regarding information. 

Background 

On December 14, 2001, the Army awarded Contract DAAA09-02-D-0007 to KBR as an 

overarching worldwide support contract for the military’s logistical requirements. Specific 

requirements under the LOGCAP contract are issued as task orders. On April 27, 2006, Task 

Order 130 was awarded as a cost-plus award-fee task order for the period April 8, 2006,

400 Army Navy Drive • Arlington, Virginia 22202 
through April 7, 2007, to provide services necessary to support, operate, and maintain the Chief 

of Mission and Multi-National Force-Iraq staffs at the U.S. Embassy-Iraq. This Task Order was 

essentially a continuation of services previously obtained under Task Order 100, which was 

awarded on November 5, 2004. Task Order 100 was a continuation of services provided under 

Task Order 44, which was awarded on March 6, 2003, to provide support to the Coalition 

Provisional Authority (CPA) in support of Operation Iraqi Freedom. 

Task Order 130 was awarded as a cost-plus award-fee task order. A cost-plus award-fee contract 

is defined in FAR Section 16.305 as a cost-reimbursement contract that provides for a fee 

consisting of (a) a base amount fixed at inception of the contract and (b) an award amount, based 

upon a judgmental evaluation by the government, sufficient to provide motivation for excellence 

in contract performance. Some of the factors used in determining the award fee for Task Order 

130 are the contractor’s cost, responsiveness, quality of service, and adherence to schedule. 

Results 

KBR routinely marks almost all of 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. 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. 

FAR Contains Direction on What Constitutes Proprietary Data 

The FAR, which is the compilation of government regulation involving the federal government’s 

acquisition of goods and services, addresses the subject of proprietary data. Among many 

things, the FAR addresses what constitutes proprietary data and the process for the government 

to challenge what it believes to be inappropriate marking of data as proprietary. There are also 

definitions and descriptions of what constitutes proprietary data in defense acquisition 

publications. 

2
Definition of Proprietary 

The Defense Acquisition University defines the term “proprietary rights” in its Defense 

Acquisition Acronyms and Terms publication1 as: 

“A broad contractor term used to describe data belonging to the contractor. These data 

could be intellectual property, financial data, etc. This is a generally a term used in the 

submission of a proposal to protect the contractor’s sensitive information from disclosure 

and is not a category of rights applicable to Technical Data under all contracts.” 

The Army Logistics Management College also provides information regarding what constitutes 

proprietary data. In response to a question on the issue of protection of contractor data the 

college provided the following response: 

“Protection of contractor data is an extraordinarily sensitive issue in Federal 

Procurements. As such, FAR Subpart 3.1 implements federal statutes designed to protect 

contractor “bid or proposal information”. Contractor bid or proposal information means 

“any of the following information submitted to a Federal agency as part of or in 

connection with a bid or proposal to enter into a Federal agency procurement contract, if 

that information has not been previously made available to the public or disclosed 

publicly: 

(1) Cost or pricing data (as defined by 10 U.S.C. 2306a(h) with respect to procurements 

subject to that section, and section 304A(h) of the Federal Property and Administrative 

Services Act of 1949 (41 U.S.C. 254b(h)), with respect to procurements subject to that 

section). 

(2) Indirect costs and direct labor rates. 

(3) Proprietary information about manufacturing processes, operations, or techniques 

marked by the contractor in accordance with applicable law or regulation. 

(4) Information marked by the contractor as "contractor bid or proposal information" in 

accordance with applicable law or regulation. 

(5) Information marked in accordance with 52.215-1(e). 

Government employees are strictly prohibited from disclosing such information by FAR 

3.104-4.” 

 

1

 Glossary Defense Acquisition Acronyms and Terms, Twelfth Edition, July 2005, published by the Defense 

Acquisition University Press. 

3
FAR Direction on Marking Data as Proprietary 

The FAR provides for the protection of contractor bid or proposal information in section 3.104 

(Procurement Integrity). The purpose of this section is to protect the overall integrity of the 

federal procurement process, to include appropriate protection for contractors’ proprietary data. 

Within that section, paragraph 3.104-4 states that “no person or other entity may disclose 

contractor bid or proposal information or source selection information to any person other than a 

person authorized . . .” The purpose of this FAR paragraph is to protect bid or source selection 

information from falling into the hands of other bidders or proposers and thus compromising the 

procurement process. This is the FAR provision repeatedly cited by KBR to justify the 

proprietary data markings. However, the data marked proprietary by KBR is not related to 

contract proposals. Rather it is data produced by KBR for the government related to its 

performance under a contract that has already been awarded. 

KBR’s citing of FAR paragraph 3.104-4 in its proprietary markings places the burden of 

addressing what is truly proprietary on the government. Specifically, FAR 3.104-4(d) gives the 

government an option to address specific instances of inappropriate use of proprietary data 

markings by a contractor. FAR 3.104-4(d) states: 

(d) Except as provided in paragraph (d)(3) of this subsection, the contracting officer must 

notify the contractor in writing if the contracting officer believes that proprietary 

information, contractor bid or proposal information, or information marked in accordance 

with 52.215-1(e) has been inappropriately marked. The contractor that has affixed the 

marking must be given an opportunity to justify the marking. 

(1) If the contractor agrees that the marking is not justified, or does not respond within 

the time specified in the notice, the contracting officer may remove the marking and 

release the information. 

(2) If, after reviewing the contractor’s justification, the contracting officer determines that 

the marking is not justified, the contracting officer must notify the contractor in writing 

before releasing the information. 

In the case of a negotiated procurement, after award the FAR provides in Section 15.503(b) that 

the contracting officer provide to each offeror whose offer was in the competitive range “. . . (iv) 

The items, quantities, and any stated unit prices of each award . . .” Later, the Section states: 

“(v) In no event shall an offeror’s cost breakdown, profit, overhead rates, trade secrets, 

manufacturing processes and techniques, or other confidential business information be disclosed 

to any other offeror.” 

In addition, Department of Defense contracts are also governed by the Defense Federal 

Acquisition Regulation Supplement (DFARS). DFARS Section 227.7103-13 supplies a method 

for challenging a contractor’s assertion of proprietary rights to data and information. It states 

“(an) offeror's assertion(s) of restrictions on the Government's rights to use, modify, reproduce, 

release, or disclose technical data do not, by themselves, determine the extent of the 

Government's rights in the technical data. Under 10 U.S.C. 2321, the Government has the right 

to challenge asserted restrictions when there are reasonable grounds to question the validity of 

 4 
the assertion and continued adherence to the assertion would make it impractical to later procure 

competitively the item to which the data pertain.” Challenges are not to be asserted unless there 

are reasonable grounds to question the validity of an assertion. When a challenge is made and 

the contractor responds with an attempted justification, then the contracting officer must issue a 

final decision. Consequently, the final decision on whether specific information is proprietary is 

a decision for the government’s contracting officer, not the contractor. 

Misuse of Proprietary Data Statement 

The contractor, KBR, is marking nearly all the information provided to the U.S. government as 

proprietary data that must be protected in accordance with FAR paragraph 3.104. KBR has 

marked as proprietary (1) data it is specifically required to maintain for the government, (2) 

reports on U.S. government forms (or similar electronic version of the form), and (3) data that 

contains no information describing KBR’s cost, operational procedures, or data collection 

procedures. These data are routinely marked as proprietary with the following or a similar type 

statement: 

Examples of government reports that KBR that has marked as proprietary that we believe are 

incorrectly marked include the following: 

• Daily Dining Facility Headcount Report. The contractor is required to maintain and 

report a daily dining facility headcount in accordance with paragraph 3.4.2 of the Task 

Order Statement of Work. This report shows the number of breakfast, lunch, and dinner 

meals served by the dining facility. KBR’s report contains the following restrictive 

statement: 

This document is releasable to U.S. Government Personnel Only – For Official Use Only. It is not releasable 

to the public. It is requested that any government entity receiving this information act in accordance with 

DoD 5400.7-R, and mark, handle and store this information so as to prevent unauthorized access. This 

document contains business and technical information and data, trade secrets, and know-how that are highly 

confidential and proprietary to Brown and Root Services. Any unauthorized publication or disclosure of such 

information to any person, or unauthorized use of such information without the express written consent of 

Brown & Root Services is strictly prohibited. 

 5 
• Fuel Report showing Fuel Issued by KBR to Foreign Embassies. This report shows 

the date and number of liters of fuel issued to generators maintained by foreign embassies 

in Iraq. KBR’s report contains the following statement: 

Kellogg Brown & Root Proprietary Data 

NOTE: In addition to protection under Federal Acquisition Regulation 3.104, this document 

contains information which may be withheld from the public because disclosure would cause a 

foreseeable harm to an interest protected by one or more Exemptions of the Freedom of 

Information Act, 5USC Section 552. Furthermore, it is requested that any government entity 

receiving this information act in accordance with DoD 5400.7-R, and consider this information 

as being for official use only (FOUO), and mark, handle and store this information so as to 

prevent unauthorized access. 

We believe that the use of proprietary data markings on reports and information submitted by 

KBR to the government is an abuse of the FAR and the procurement system. As noted in the 

examples cited in this report, KBR is not protecting its own data, but is in many instances 

inappropriately restricting the government’s use of information that KBR is required to gather 

for the government as part of KBR’s management of Task Order 130. 

DCMA and the LOGCAP Program Office Concerns 

We discussed KBR’s practices for identifying proprietary data with the Defense Contract 

Management Agency (DCMA) office in Iraq, which has delegated Administrative Contracting 

Officer responsibility for Task Order 130, and with the LOGCAP Program Office in Rock 

Island, Illinois. Both shared our concerns about KBR’s routine marking of most data as 

proprietary. DCMA agreed that proprietary data markings were not appropriate and specifically 

requested in an e-mail that KBR remove the proprietary data markings unless the data are truly 

KBR proprietary data. KBR’s e-mail response back to DCMA is shown below: 

Extract of KBR e-mail dated September 12, 2006, in response to DCMA

... KBR corporate input regarding this issue is that KBR has encountered situations in the past 

where extremely competition sensitive data has found its way to the press and/or to the internet. 

As a result, this data is being properly protected. It includes the data that is submitted in 

accordance with Army Regulations which is prepared by KBR and includes statistical and/or 

financial data that impacts KBR operations. Please note that the statement below DOES allow 

For Official Use Only use of the data. That being said, a recipient of the data would be 

prohibited from posting the data on the internet for the public to see. 

 

In addition to protection under Federal Acquisition Regulation 3.104, this document contains 

information which may be withheld from the public because disclosure would cause a 

foreseeable harm to an interest protected by one or more Exemptions of the Freedom of 

Information Act, 5 USC Section 552. Furthermore, it is requested that any Government entity 

receiving this information act in accordance with DoD 5400.7-R, and consider this 

information as being for official use only (FOUO), and mark, handle and store this information 

so as to prevent unauthorized access. 

The specific data in question in these e-mails was dining facility data maintained in accordance 

with Army Regulation 30-22 in Army established format. 

 6 
DCMA also expressed its concerns that it may not be in a position to require KBR to change its 

policy on proprietary data markings, adding this issue needs to be addressed at the Procurement 

Contracting Officer’s level. The Procurement Contracting Officer for the Army’s LOGCAP 

contract is located at the U.S. Army Sustainment Command, which is a major subordinate 

command of the U.S. Army Materiel Command. The U.S. Army Sustainment Command is also 

located at Rock Island, Illinois. 

The Army Sustainment Command Counsel for the LOGCAP program also expressed concern 

about KBR’s use of proprietary markings. Counsel told us that he was aware of the situation and 

had been seeking ways to prevent improper marking of information as proprietary. In addition, 

the Command is in the process of transitioning from the present LOGCAP contract to a series of 

successor contracts. The Command’s Counsel for LOGCAP matters expressed concern that 

KBR’s practice of marking almost all data it provides the government as proprietary may inhibit 

the transition of work being performed under the current LOGCAP contract to the successor 

contracts. 

While we have not conducted recent audit work related to the other Task Orders, we believe that 

the problem of KBR’s inappropriate use of protective data markings may not be limited to Task 

Order 130, but could be a systemic problem occurring throughout the Army’s LOGCAP 

contract. 

KBR’s Initial Refusal to Provide Data in its Native Electronic Format 

KBR also attempted to impede our ability to analyze data it develops for the government in 

carrying its assigned work under Task Order 130. In response to our request for information as 

part of the on-going audit of Task Order 130, KBR initially provided the requested information 

to us in a format that is not easily utilized or analyzed for reporting purposes. 

In one instance, we requested that KBR provide us a copy of the electronic Excel Spreadsheet 

(the format in which KBR retains its native data), showing daily fuel issues that KBR made to 

foreign embassies. Instead of providing the data in the native Excel spreadsheet format, KBR 

provided the data to SIGIR in a 50 page Acrobat PDF file that contained over 1,500 individual 

line item entries. Because the data was provided in an Acrobat PDF file in image format that can 

not be converted to Excel, SIGIR would have to reenter the data into a Spreadsheet, a time 

consuming process, to perform any meaningful analysis of the data. 

In another instance, we requested a copy of the Access database used by KBR to record and track 

retail vehicle fuel issues. KBR initially refused the request for the copy of the database, replying 

instead that we should advise KBR what end product datum the auditors are seeking and KBR 

will support the request by pulling the information. KBR personnel involved with the retail fuel 

operation were advised prior to the request that SIGIR wanted the database itself to perform a 

series of comprehensive data analyses on, to include data matching with other similar KBR 

databases. 

Upon being informed by us on September 19, 2006, of KBR’s refusal to provide us data in native 

format and access to data bases containing data complied for the government, the contracting 

 7 
officer immediately directed KBR to provide the data. On September 19, 2006, in response to 

the contracting officer’s direction KBR provided the report on foreign embassy fuel issues in 

Excel format, but did not provide the access database. KBR’s response for not providing us the 

access database is shown below. 

KBR Response to Contracting Officer’s Direction to Provide Database to SIGIR 

The Procurement Contracting Officer did not accept the KBR response as an acceptable reason 

for denying us the data. On September 20, 2006, he directed KBR to immediately release the 

information to SIGIR. KBR complied and released the information to SIGIR on September 22, 

2006. 

 

The Access Databases that KBR utilizes are maintained by KBR as part of its management and 

operation of Task Order 130. SIGIR access to the data in its native database format, as well as 

access to the data by other U.S. government agencies involved with the LOGCAP program, is 

necessary for the efficient and effective analysis of the information. With respect to SIGIR’s 

access, it is also required as part of SIGIR’s statutory mission to perform audits in accordance 

with generally accepted government auditing standards. One of the government auditing 

standards required (as stated in the Comptroller General of the United States Government 

Auditing Standards (2003 Revision) Chapter 7, Field Work Standards for Performance Audits) is 

that: Sufficient, competent, and relevant evidence is to be obtained to provide a reasonable basis 

for the auditors’ findings and conclusions. In this regard the standards state that while auditors 

can use data gathered by officials of the audited entity as part of their evidence, auditors should 

determine the validity and reliability of the data and may do so by direct tests of the data. To 

comply with this standard, SIGIR requires access to the database itself, not just to reports 

produced by the auditable entity (in case the contractor, KBR, which is gathering, maintaining 

and reporting the information for the government). 

The audit clause in Section I – 16 of the basic LOGCAP contract, which incorporates FAR 

section 52.215-2 into the contract by reference, requires KBR to make records required for audit 

purposes available to SIGIR. Applicable parts of FAR 52.215-2 which require this are: 

 52.215-2(a) As used in this clause, “records” includes books, documents, 

accounting procedures and practices, and other data, regardless of type and 

regardless of whether such items are in written form, in the form of computer 

data, or in any other form. 

 8 
 52.215-2(b) Examination of costs. If this is a cost-reimbursement, incentive, timeand-materials, labor-hour, or price redeterminable contract, or any combination of 

these, the Contractor shall maintain and the Contracting Officer, or an authorized 

representative of the Contracting Officer, shall have the right to examine and 

audit all records and other evidence sufficient to reflect properly all costs claimed 

to have been incurred or anticipated to be incurred directly or indirectly in 

performance of this contract. This right of examination shall include inspection at 

all reasonable times of the Contractor’s plants, or parts of them, engaged in 

performing the contract. 

 52.215-2(e) Reports. If the Contractor is required to furnish cost, funding, or 

performance reports, the Contracting Officer or an authorized representative of 

the Contracting Officer shall have the right to examine and audit the supporting 

records and materials, for the purpose of evaluating— 

(1) The effectiveness of the Contractor’s policies and procedures to 

produce data compatible with the objectives of these reports; and 

(2) The data reported. 

 52.215-2 (f) Availability. The Contractor shall make available at its office at all 

reasonable times the records, materials, and other evidence described in 

paragraphs (a), (b), (c), (d), and (e) of this clause, for examination, audit, or 

reproduction, until 3 years after final payment under this contract or for any 

shorter period specified in Subpart 4.7, Contractor Records Retention, of the 

Federal Acquisition Regulation (FAR), or for any longer period required by 

statute or by other clauses of this contract. 

 52.215-2 (g) The Contractor shall insert a clause containing all the terms of this 

clause, including this paragraph (g), in all subcontracts under this contract that 

exceed the simplified acquisition threshold, and— 

(1) That are cost-reimbursement, incentive, time-and materials, laborhour, or price-redeterminable type or any combination of these; 

(2) For which cost or pricing data are required; or 

(3) That require the subcontractor to furnish reports as discussed in 

paragraph (e) of this clause. 

The clause may be altered only as necessary to identify properly the contracting parties 

and the Contracting Officer under the Government prime contract. 

Example of Improved Contract Provisions for Marking Data as Proprietary 

and Providing Electronic Reports 

The Army has another contract with KBR similar in nature to LOGCAP for support services in 

U.S. Army Europe’s (USAREUR) area of operation, the USAREUR Support Contract. To 

prevent future abuse of the protective data statements and facilitate the government’s ability to 

effectively analyze and utilize information obtained from the contractor; this contract when it 

 9 
was being drafted proposed directions on marking proprietary information and providing 

electronic data. Specifically the proposal stated the following in paragraphs 1.2.10.5 and 1.2.11 

of Section C-1, General Requirements and Information, Performance Work Statement version 

6.0: 

• Marking Proprietary Information 

All records, files, reports, and data deemed proprietary by the Contractor shall be clearly 

marked in accordance with applicable laws, regulations, and clauses in this contract. The 

Contractor is required to identify specific portions of the records, files, reports, and data 

that it considers to be proprietary, by circling, underscoring, highlighting, or other 

appropriate identifier, as required by, or in addition to, applicable laws, regulations, or 

clauses in this contract. The Government intends to challenge, in accordance with 

applicable regulatory procedures, any marking which it believes fails to conform to these 

requirements. 

• Electronic Reports 

Electronic reports, which include data and data summaries, shall be submitted in 

Microsoft Excel or Microsoft Access. Electronic reports, which are primarily composed 

of text shall be submitted in Microsoft Word. 

Management Actions 

Both the Defense Contract Management Agency-Iraq and the Procurement Contracting Office at 

the U.S. Army Sustainment Command took timely and responsive actions within their respective 

authorities to address the concerns raised in this interim report. The Procurement Contracting 

Officer took immediate action by directing KBR to provide the information requested by SIGIR 

in the native format maintained by KBR. On September 22, 2006, KBR complied with the 

Procurement Contracting Officer’s directions and provided the requested information to SIGIR. 

Conclusion 

The use of proprietary data markings on reports and information submitted by KBR to the 

government is an abuse of the FAR and the procurement system. As noted in the examples cited 

in this report, KBR is not protecting its own data, but is in many instances inappropriately 

restricting the government’s use of information that KBR is required to gather for the 

government as part of KBR’s management of Task Order 130. 

KBR’s practice of routinely marking almost all of the information it provides to the government 

as KBR proprietary data, even when the data marked does not relate to internal contractor 

information such as indirect costs, labor rates, or internal processes—and so does not appear to 

be proprietary—is not consistent with the direction in the FAR as to what constitutes proprietary 

data and is a misuse of the FAR. 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. This 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 

 10 
from KBR and to challenge inappropriate proprietary markings. It may also impede the 

government’s effort to transition the work currently being performed under the LOGCAP 

contract to successor contracts. Both the LOGCAP Program Office and DCMA in its LOGCAP 

oversight role are seeking to prevent misuse of proprietary markings by KBR. 

Recommendations 

To limit the use of inappropriate marking of information as proprietary under the LOGCAP 

contract and to ensure that data are provided in native format, we recommend that the 

Commanding General, U.S. Army Sustainment Command, direct the LOGCAP Program 

Director to take these actions: 

1. In all future LOGCAP task orders and modifications to existing task orders, include 

language restricting the use of proprietary markings. 

2. Exercise appropriate contracting officer authority, either directly or through delegated 

authority to DCMA, to advise KBR in accordance with the requirements of FAR 3.104-

4(d) whenever contractor submissions appear to inappropriately contain proprietary 

markings. 

3. Include specific statements within the Performance Work Statements for the new 

LOGCAP contract that address both the issue of proprietary data markings and receipt of 

contract reports and data submissions in native formats. 

4. Establish as a performance metric KBR’s use of proprietary markings and responsiveness 

to requests for information as a factor in the determination of award fee ratings. 

5. Exercise appropriate contracting officer authority, either directly or through delegated 

authority to DCMA, to require KBR to provide information to the government—

including SIGIR and any other U.S. government audit activity—in the native electronic 

format (Excel or Access) in which KBR maintains the information. This will facilitate 

the government’s analysis of the information. 

Management Comments and Audit Response

Because of the continuing impact of the misuse of proprietary markings and the pressing need to 

address this practice, we obtained formal oral comments from the Army Sustainment Command, 

rather than written comments, to expedite the issuance of this report. We discussed our findings 

with command officials from the LOGCAP Program Office on October 10, 2006, who agreed 

with the content of the report and stated that it was very timely. The Army Sustainment 

Command agreed with the intent of our recommendations, stating that alternative action would 

be taken to address them. Specifically, these officials said that they will (1) prepare a 

modification to the existing LOGCAP base contract to provide guidance to KBR on marking of 

proprietary data, and (2) include guidance on marking proprietary data in the successor 

LOGCAP contracts. We believe that these actions are responsive to and fully meet the intent of 

recommendations number 1 and 2. We will follow up and comment in our final report on the 

alternative actions to meet the intent of the remaining recommendations. 

 11 
Scope and Methodology 

This review was announced on July 24, 2006 (Project No. 6029) with the with the overall 

objective 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 costeffective. 

We are conducting this review at KBR sites located in Baghdad, Iraq and at the Procurement 

Contracting Officer’s office located at the 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 to include: 

• The Commander, Administrative Contracting Officer and other personnel with the 

Defense Contract Management Agency-Iraq 

• Auditors assigned to the Defense Contract Audit Agency in Iraq 

• The Department of State Contracting Officers Representative and other Department of 

State personnel at the U.S. Embassy in Iraq 

• Functional support personnel with the Joint Area Support Group-Central in Iraq 

• Personnel with the LOGCAP Logistic Support Office in Iraq 

• The Procurement Contracting Officer and other personnel, including legal counsel, with 

the Army Sustainment Command, Rock Island, Illinois 

We also interviewed KBR managers and operational personnel. We toured KBR operational 

sites in 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 

reviewed the FAR and information maintained by the defense acquisition community to identify 

requirements regarding the marking of information as proprietary data and the government’s 

authority to challenge such markings. 

We performed this review in accordance with generally accepted government auditing standards. 

- - - - 

This interim report is provided for management’s use and appropriate action. No formal 

response to this interim report is required, but we will follow up on the status of corrective 

actions to our recommendations as we continue with our audit. 

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

report, please contact Mr. Joseph T. McDermott (703-604-0982/joseph.mcdermott@sigir.mil) or 

Mr. Steve Sternlieb (703-428-0240/steven.sternlieb@sigir.mil). 

Stuart W. Bowen, Jr. 

 Inspector General 

cc: See Distribution 

 12 
Report Distribution 

Department of State 

Secretary of State 

Senior Advisor to the Secretary and Coordinator for Iraq 

U.S. Ambassador to Iraq 

Director, Iraq Reconstruction Management 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 

Director, Defense Reconstruction Support Office 

Under Secretary of Defense (Comptroller)/Chief Financial Officer 

 Deputy Chief Financial Officer 

 Deputy Comptroller (Program/Budget) 

Inspector General, Department of Defense 

Director, Defense Contract Audit Agency 

Director, Defense Finance and Accounting Service 

Director, Defense Contract Management Agency 

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) 

Director, Project and Contracting Office 

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 

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 

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 

 13 
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 Terrorism 

Subcommittee on Near Eastern and South Asian Affairs 

Senate Committee on Homeland Security and Governmental Affairs 

Subcommittee on Federal Financial Management, Government Information and 

International Security 

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 Foreign Operations, Export Financing and Related Programs 

Subcommittee on Science, State, Justice and Commerce and Related Agencies 

House Committee on Armed Services 

House Committee on Government Reform 

Subcommittee on Management, Finance and Accountability 

Subcommittee on National Security, Emerging Threats and International Relations 

House Committee on International Relations 

Subcommittee on Middle East and Central Asia 

 14