We all know that companies like Halliburton and its subsidiary, KBR, routinely overcharge the US government for services they render, and stories like this document the practice:
"There was no regard for spending limits," says former [KBR] employee Marie DeYoung.
She recently told Congress that while troops rough it in tents, hundreds of preferred Halliburton KBR employees reside in five-star hotels like the Kempinski in Kuwait with fruit baskets and pressed laundry delivered daily.
"It costs $110 to house one KBR employee per day at the Kempinski, while it costs the Army $1.39 per day to bunk a soldier in a leased tent," DeYoung said.
That article dates back to 2004. Almost 4 years ago. So you'd figure that by now, we've tightened it up a little. Right? Naw - you know better. Seems like there's been no change at all. Meet me over the fold for the story of a $500,000-dollar washer. That's "washer" as in "cheap little round circle of metal."
You can read the Bloomberg article here.
Some choice excerpts, in case you're in a rush:
A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to a Texas base, U.S. officials said.
Now that's what I call a hefty markup!
OK, they got away with that once, but they wouldn't dare try it again, right? Rhetorical question.
The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent split washer to Patrick Air Force Base in Cape Canaveral, Florida, Pentagon records show.
In Yiddish, they have a word, "chutzpah," which means "audacity," or "charging the US government a gazillion dollars for something that costs a penny." And when I was growing up, everybody went ballistic when we discovered a contractor charged the Pentagon $500 for a toilet seat. Those guys were amateurs.
Here's Cynthia Stroot, the Pentagon investigator who uncovered this malfeasance:
"The majority, if not all of these parts, were going to high-priority, conflict areas -- that's why they got paid."
So if the part in question was stamped "priority," and being sent to Iraq, Afghanistan, or "certain other locations," then according to Stroot, "there was no oversight." As motivational speaker Matt Foley would have said, "Well la de freakin' da!"
A little disclosure here. I once worked for a military contractor, and our invoices were highly creative and imaginative works of fiction. The way you bill the Pentagon is, first you pick a big number and get them to agree to pay it. Then you submit invoices against that number and draw the checks. So you have 100,000 bucks to account for and you got nothin' - what do you do? Well, you start listing "coordination" this and "office supplies" that and pretty soon you get there. (I quit the job over this, btw.)
And everybody in the business I came into contact with was doing that. Everybody. That company that got busted for hiring felons to provide private security to US military bases? I once had lunch with the CEO. He boasted how he was able to find an Eskimo in his lineage and on that basis got a minority set aside for the contract. The entire contractor-procurement system is, in my opinion, broken and corrupt and one gigantic gravy train of free money. Good work if you can get it.
Oh, and the scam I quoted above? It was run by two sisters. One is dead, the other is looking at 20 years. Can we please get some Halliburton and KBR execs in the dock? Because you and I are paying some heavy taxes so that these people can buy yachts. Big yachts.
Really big yachts.