PANAMA CITY
The company hired to oversee construction of the new Panama City-Bay County International Airport has a history of mismanaging government contracts that goes back at least 10 years and includes allegations of overbilling and fraud.
Houston-based KBR, a former subsidiary of Halliburton, is a global construction and logistics company used by the Pentagon in operations from the Balkans to the Middle East. Since the beginning of the Iraq War, the company has been paid more than $20 billion in taxpayer money to feed, house and support American troops there.
While the company’s domestic airport projects appear to have drawn no criticism, military and civilian auditors repeatedly have turned up problems with KBR’s performance overseas, and have complained about the company’s efforts to stymie government oversight.
KBR last week signed a $9 million contract to supervise and inspect the work of companies building the new airport, a project expected to cost about $330 million. Airport officials said they did not know about KBR’s troubles and focused on its track record with airport and municipal projects.
“We did go through a rather extensive selection process and review,” said Airport Authority Executive Director Randy Curtis. “We were not aware of KBR being subject to any investigations.”
He added later in a written statement that “KBR is a very large firm that does many kinds of work. Their aviation work is highly regarded.”
Selection process
Curtis said the selection process is set by law and went like this:
Companies were asked to submit their qualifications for managing the project, and Airport Authority board members selected six to give presentations in an open meeting. Afterward, board members ranked ZHA Inc. of Orlando the No. 1 competitor. KBR and another company tied for second.
The top three return for another set of presentations and questions, and KBR came out on top, according to minutes from the board meeting.
Curtis said the board checked KBR’s references, which included work done for the Dallas/Fort Worth airport, the Houston Airport System and the city of Cape Coral. The company received high marks from all of them, he said.
KBR spokeswoman Heather Browne said in a written statement that “KBR has a proven track record of successfully meeting our client’s requirements in executing major airport projects.”
The company has managed several projects at both William Hobby and George Bush Intercontinental in Houston, according to Marlene McClinton, a spokeswoman for the Houston Airport System.
The largest of those was an airfield improvement project that was subdivided into 10 to 12 smaller projects. It took nine years and cost about $200 million, and KBR was paid $85 million, she said.
When asked to characterize the company’s work, McClinton said only that KBR performed “acceptably.”
In Cape Coral, the company was hired to complete a five-year utility expansion project for the city.
“They did fine,” said Wayne Wolfarth, expansion director for the city. “Everything was well run.”
The only problem: Two years into the project, the company had money trouble and was unable to come up with the $40 million completion bond required to continue with the work. The city had to give the contract to another company, Wolfarth said.
Dallas/Fort Worth airport officials did not return calls for this story.
Massive review
Since 1997, KBR has been the subject of at least three criminal investigations and a half-dozen critical government audits, and Democratic Congressional leaders have called for a review of the company’s government contracts.
Among the findings:
Investigators with the nonpartisan Government Accounting Office discovered in 1997 that KBR had inflated costs on work done for the Army in the Balkans. That included charging nearly $86 per sheet for plywood that cost just $14, and cleaning some offices up to four times a day. The company paid $8 million to close a Justice Department investigation under the False Claims Act.
The company paid the government $2 million, without admitting wrongdoing, in 2002 to settle a lawsuit alleging that KBR overbilled for maintenance work done at the Army’s Fort Ord, Calif., in the ’90s. The suit began as a federal investigation in the U.S. Attorney’s Office in Sacramento.
The Special Inspector General for Iraq Reconstruction reported in June that, while the company provided satisfactory services, KBR had such poor control over fuel distribution that auditors couldn’t determine how much fuel the company provided; that the company overspent on meals provided for soldiers by $4.5 million; and that the company’s records of military housing in Iraq were so bad, it couldn’t tell auditors who was living where.
Browne, the KBR spokeswoman, defended the company in her written statement:
“Audits are a normal part of any government contracting work, so it is important to note that these processes are not unique to KBR. When issues have been raised, KBR has fully cooperated in providing information requested of us, and we have worked to achieve resolution.”
The recent inspector general report faulted the government, in part, for not exercising enough control over KBR’s contract in Iraq, but KBR has been accused of making oversight difficult.
The Defense Contract Audit Agency complained that the company sometimes refuses to hand over records and regularly declares routine records off-limits as “proprietary information.” For example, the agency said KBR voluntarily disclosed that two employees had been involved in a kickback scheme and reimbursed the government $6.3 million but did not give the agency records for verification.
Close oversight
Curtis said he does not expect the problems the company has had elsewhere to affect its work in Bay County. He said KBR will have only a small staff here, will be working with other respected companies such as Kimley-Horn and Associates, and will be monitored by, among others, a project manager hired by the airport.
As far as public funds are concerned, the contract requires KBR to make recommendations to the airport authority on construction progress payments, but KBR will not be handling the payments themselves, Curtis said.
And, the contract also requires KBR to keep careful records of billing and expenses, which will be available for inspection by the airport. Curtis said airport officials will be watching those records.
“All of us take our responsibility to oversee this project very seriously,” he said.

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