GAO backs dispute on $150B Army deal

GAO backs dispute on $150B Army deal

	Published : Wed, 31 Oct 2007 20:39 By : Agencies Print this Story

WASHINGTON (AP) - A federal watchdog agency backed two private firms in their dispute over the Army's decision to award three $5 billion contracts to KBR Inc., DynCorp International Inc. and Fluor Corp. to provide food and shelter to U.S. troops overseas.

The bundled contracts, considered to be one of the largest military deals awarded by the Army, could be worth up to $150 billion, if the Pentagon extends the deal on a yearly basis over a 10-year span.

The deal has been on hold since July, after Cape Canaveral, Fla.-based IAP Worldwide Services and Newville, Pa.-based Contingency Management Group filed protests with the Government Accountability Office calling into question the Army's evaluation.

The GAO sided with both companies in its Oct. 5 decision, Michael Golden, a GAO spokesman, said Wednesday. The agency is recommending the Army reopen talks with all of the competitors and request revised proposals from each to make a new award.

The Army will have 60 days following the GAO's decision to respond to the agency's nonbinding recommendations.

The Army selected Falls Church, Va.-based DynCorp International, Houston-based KBR Inc. and Irving, Texas-based Fluor Corp. in June to provide a range of logistics and support services for one year to U.S. and Allied forces in Iraq.

KBR, formerly a division of Halliburton Co., which was once headed by Vice President Dick Cheney, has been the prime contractor on the deal since Dec. 2001. DynCorp had the contract from 1997 through 2001.

The agency, which released publicly its decision this week, found that the Army had improperly evaluated Fluor's and KBR's proposals compared with the other three bidders. KBR has requested that the GAO reconsider its decision.

Heather Browne, a KBR spokeswoman, expressed disappointment with the GAO's decision, but said the company would continue to provide services under its previously awarded contract.

At the time of the award, the Army agreed to select multiple contractors in order to increase oversight and accountability on the contract, which has been plagued by allegations made by Congress of contract abuse.

In August, the Army announced it would examine as many as 18,000 contracts over the past four years to support forces in Iraq, including those received by KBR, to determine how many had been tainted by waste, fraud and abuse.

Shares of KBR added 70 cents to $41.82 in midday trading, while shares of Fluor fell 99 cents to $158.60. Shares of DynCorp added 27 cents to $22.99.