Everything about Kbr Company totally explained
KBR, Inc. (formerly
Kellogg Brown & Root) is an
American engineering and construction company, formerly a subsidiary of
Halliburton, based in
Houston. After Halliburton acquired
Dresser Industries in 1998, Dresser's engineering subsidiary, The M. W. Kellogg Co., was
merged with Halliburton's construction subsidiary, Brown & Root, to form Kellogg Brown & Root. KBR and its predecessors have won many contracts with the
U.S. military during the
2003 invasion of Iraq, as well as during
World War II and the
Vietnam War.
KBR is the largest
non-union construction company in the United States.
On
April 15,
2006, Halliburton filed a registration statement with the
United States Securities and Exchange Commission to sell up to 20 percent of its KBR stock on the
New York Stock Exchange (NYSE). On
November 16,
2006, KBR shares were offered for the public in an
Initial Public Offering with shares priced at $17. The shares closed on the first day up more than 22 percent to $20.75 a share. Halliburton announced on
April 5 2007 that it had finally broken ties with KBR, which has been its contracting, engineering and construction unit as a part of the company for 44 years.
History
M.W. Kellogg
In 1901 Morris Kellogg founded The M. W. Kellogg Company in
New York City. The company was incorporated in 1905 and the headquarters were moved to
Jersey City, New Jersey. Initially Kellogg’s main business was power plant construction and fabrication of power plant components, but the development of hammer
forge welding techniques helped ready the company to move into refining as the petroleum industry developed.
Kellogg’s entry into process engineering initially focused on the Fleming cracking process, but in the 1920s Kellogg partnered with The Texas Company (
Texaco) and
Standard Oil of Indiana to purchase the Cross
thermal cracking process. Kellogg set up one of the first petroleum laboratories in the country in 1926 to commercialize and then license the technology. This led to Kellogg building some 130 units in the US and abroad.
In the 1930s and '40s Kellogg worked with leading refiners on various technologies. For the war effort, these developments led to the construction of six hydroreformer units twenty
fluid catalytic cracking units and the only complete
refinery built during World War II. Even bigger than the refining work was the
gaseous diffusion plant at
Oak Ridge, Tennessee built as part of the
Manhattan project. This period also included the development of the
Benedict-Webb-Rubin (BWR) equation of state which has since become an industry mainstay and provided the basis for Kellogg’s lead in
cryogenics.
The 1950s Kellogg technology expanded into steam
pyrolysis, Orthoflow
fluid catalytic cracking,
phenol-from-
cumene and
coal-to-synthetic fuels technologies and the '60s saw the growth in
helium recovery,
ethylene and the development of Kellogg’s
ammonia process.
In 1970 Kellogg moved from
New York City to
Houston, Texas and in 1975, they completed the move by relocating the research and development lab as well. The '70s saw Kellogg become the first American contractor to receive contracts from the
People’s Republic of China. Kellogg’s international work expanded with the major ammonia complexes in
China,
Indonesia and
Mexico as well as
LNG liquefaction plant in
Algeria and 2 receiving terminals in the
U.S., the world’s largest
LPG plant in
Kuwait and four
fluid catalytic cracking units in Mexico. The '80s saw continuation of global activity in
LNG and
ethylene with millisecond furnaces starting up in the
U.S.
Brown & Root
Brown & Root and Habakkuk & Augustine & Edward Fomabah was founded in
Texas in 1919 by two brothers,
George R. Brown and Herman Brown with money from their brother-in-law, Dan Root. The company began its operations by supervising the building of warships for the
United States Navy.
One of its first large-scale projects, according to the book
Cadillac Desert, was to build a dam on the
Texas Colorado River near
Austin during
the Depression years. For assistance in federal payments, the company turned to the local
Congressman,
Lyndon B. Johnson. Brown & Root was the principal source of campaign funds for Johnson's initial run for Congress in 1937 in return for persuading the Bureau of Reclamation to change its rules against paying for a dam on land the federal government didn't own, a decision that had to go all the way to President
Franklin Delano Roosevelt, according to
Robert A. Caro's book
The Path to Power. After other very profitable construction projects for the federal government, such as building the Corpus Christi Naval Station, Brown & Root gave massive sums of cash for Johnson's first run for the U.S. Senate in 1941. Brown and Root violated
IRS rules over campaign contributions, largely in charging off its donations as deductible company expenses, again according to Robert Caro. A subsequent IRS investigation threatened to bring criminal charges of illegal campaign donations against Brown & Root as well as Johnson and others. It wasn't quashed until Roosevelt himself told the IRS to back off and allowed Brown and Root to settle for pennies on the dollar.
During World War II, Brown & Root built the
Naval Air Station Corpus Christi and its subsidiary
Brown Shipbuilding produced a series of
warships for the
U.S. Government.
In 1947, Brown & Root built one of the world's first offshore
oil platforms.
According to
Tracy Kidder's
Pulitzer Prize-winning book
Mountains Beyond Mountains, Brown & Root was a contractor in the
Péligre Dam project. The project was designed by the
U.S. Army Corps of Engineers and financed by the
Export-Import Bank of the United States.
Following the death of Herman Brown,
Halliburton Energy Services acquired Brown & Root in
December 1962. According to Dan Briody, who wrote a book on the subject, the company became part of a consortium of four companies that built about 85 percent of the
infrastructure needed by the Army during the Vietnam War. At the height of the
anti-war movement of the 1960s, Brown & Root was derided as "Burn & Loot" by protesters.
The extent of their services included a vast array of logistical operations, historically under the jurisdiction of the military. Such operations included laundry services, meal services (
Burger King,
Subway,
Papa John's Pizza), entertainment (
Internet and
cable access), and recreation (basketball courts and gym equipment).
From 1995-2002, Halliburton KBR has been awarded at least $2.5 billion to construct and run military bases, some in secret locations, as part of the Army's Logistics Civil Augmentation Program (LOGCAP).
In
September 2005, under a competitive bid contract it won in July 2005 to provide debris removal and other emergency work associated with natural disasters, KBR started assessment of the cleanup and reconstruction of
Gulf Coast Marine and
Navy facilities damaged in the aftermath of
Hurricane Katrina. The facilities include:
Naval Station Pascagoula,
Naval Station Gulfport, the
John C. Stennis Space Center in
Mississippi, two smaller U.S. Navy facilities in
New Orleans, Louisiana and others in the Gulf Coast region. KBR has had similar contracts for more than 15 years.
On
May 7,
2008 the company announced that it would acquire
Birmingham, Alabama-based engineering and construction firm
BE&K for $550 million. BE&K plans to remain headquartered in Birmingham.
Kosovo
In 1996, President
Bill Clinton awarded Brown & Root a contract to support U.S. and
North Atlantic Treaty Organization (NATO) troops as part of the
SFOR operation in the
Balkan region. This contract was extended to also include
KFOR operations in
Kosovo starting in 1999.
Camp Bondsteel in
Kosovo was constructed by the 94th Engineer Construction Battalion together with the private Kellogg Brown & Root (KBR) under the direction of the Army Corps of Engineers. KBR is also the prime contractor for the operation of the camp. The camp is built mainly of wooden, semi permanent SEA (South East Asia) huts and is surrounded by a 2.5 meter high earthen wall. To construct the base two hills were lopped off and the valley between them was filled with the resulting material.
Activities in Afghanistan
KBR was awarded a $100 million contract in 2002 to build a new U.S. embassy in
Kabul,
Afghanistan, from the State Department.
KBR has also been awarded 15 Logistics Civil Augmentation Program (LOGCAP) task orders worth more than $216 million for work under
Operation Enduring Freedom, the military name for operations in
Afghanistan. These include establishing base camps at
Kandahar and
Bagram Air Base and training foreign troops from the
Republic of Georgia.
Activities in Iraq
KBR employs more American private contractors and holds a larger contract with the
U.S. government than does any other firm in
Iraq. The company's roughly 14,000 U.S. employees in Iraq provide
logistical support to the
U.S. armed forces.
The United States Army hired KBR to provide housing for approximately 100,000 soldiers in Iraq in a contract worth $200 million, based on a long-term contract signed in
December 2001 under the Logistics Civil Augmentation Program (LOGCAP). Other LOGCAP orders have included a pre-invasion order to repair oil facilities in Iraq; $28.2 million to build
POW camps; and $40.8 million to accommodate the
Iraqi Survey Group, which was deployed after the invasion to find
weapons of mass destruction.
The Army's actions came under fire from
California Congressman
Henry Waxman, who, along with
Michigan Congressman
John Dingell, asked the
General Accounting Office to investigate whether the
U.S. Agency for International Development and
The Pentagon were circumventing government contracting procedures and favoring companies with ties to the
Bush administration. They also accused KBR of inflating prices for importing gasoline into Iraq. In June 2003, the Army announced that it would replace KBR's oil-
infrastructure contract with two public-bid contracts worth a maximum total of $1 billion, to be awarded in October. However, the Army announced in October it would expand the contract ceiling to $2 billion and the solicitation period to December. As of
October 16,
2003, KBR had performed nearly $1.6 billion worth of work. In the meantime, KBR has subcontracted with two companies to work on the project: Boots & Coots, an oil field emergency response firm that Halliburton works in partnership with (CEO Jerry L. Winchester was a former Halliburton manager) and Wild Well Control. Both firms are based in Texas.
KBR's maintenance work in Iraq has been criticized after reports of soldiers electrocuted from faulty wiring.
Employee safety
As of
February 9,
2007, 98 American KBR employees and subcontractors have been killed, and more than 430 have been wounded by hostile action while performing services under the company's government contracts in Iraq, Afghanistan and
Kuwait.
KBR is currently alleged to have covered up a
gang rape of
Jamie Leigh Jones, one of its contractors, by several other KBR employees in Iraq in July,
2005. Jones was allegedly drugged and raped by her coworkers, then confined to a security container without food, water, or medical treatment for a full day before a guard allowed her to call her father. Jones' father then contacted Representative
Ted Poe, who approached the
State Department regarding the matter. Because of contractual restrictions, Jones is barred from suing her employer.
Recently, KBR has come under the spotlight when several female employees in Iraq purportedly have been raped by co-workers. One of the women, identified by the pseudonym “Lisa Smith,” says two colleagues raped her at a southern Iraqi military base in January. She says a supervisor told her to “keep quiet” or face danger. Karen Houppert broke the story of Lisa Smith’s rape allegations for
The Nation magazine. The article is called “Another KBR Rape Case."
Political connections and controversy
Brown and Root had a well-documented relationship with U.S. President
Lyndon Johnson, which began when he used his position as a Texas congressman to assist them in landing a lucrative dam contract. In return they gave him the funds for his 1948 Senate race against
Coke R. Stevenson. The relationship continued for years, with Johnson awarding military construction contracts to B&R.
Following the end of the first
Gulf War, the Pentagon, led by then Defense Secretary
Dick Cheney, paid Halliburton subsidiary Brown & Root Services over $8.5 million to study the use of private military forces with American soldiers in combat zones.
Cheney was
chairman and
chief executive officer of Halliburton from 1995 to 2000. He has been accused of providing work to KBR under contingency contracts to financially benefit himself and his business associates.
However, the Army contract which has been so controversial — LOGCAP — has, since its inception, been issued under competitive solicitations; of the three LOGCAP contracts, KBR won the first,
DynCorp the second, KBR the third, and also the current one, dubbed "LOGCAP IV". LOGCAP is a contingency-based contract which is invoked at the convenience of the US Army as needed; the
Task Orders under the contract are not competitively bid as the overall contract is.
Although DynCorp had won LOGCAP II in 1994, Clinton instead chose KBR, and thus the Balkans Support Contract was created for and awarded to KBR in
February 1999. Even though the LOGCAP program is specifically for contingency operations such as the Balkans, there was little media coverage about KBR picking up that contract; the Balkans work is sometimes mistakenly mentioned as being part of LOGCAP, however.
Most media controversy involves the LOGCAP III contract which KBR successfully, and competitively, bid for and won in 2001. While it's by far the most profitable of their contracts, the functions of that contract are often mixed with the RIO contract in which KBR was given in a no-bid process. RIO, or Restore Iraqi Oil, was awarded to KBR when the
United States Department of Defense determined that KBR was "
the only contractor that could satisfy the requirement for immediate execution of the plan". As of
September 2006, hearings are still being conducted into the RIO project over possible billing, management, and procurement violations.
One common theme is to use the term LOGCAP while using the dollar amounts from RIO, which
was using LOGCAP funding for the initial staging and startup,
(see reference #4).
Jamie Leigh Jones, a 23-year-old former employee of KBR, testified at a Congressional hearing in December that she'd been gang-raped by up to as many as seven co-workers in Iraq in 2005.
http://www.nytimes.com/2008/02/13/world/middleeast/13contractors.html?_r=1&bl&ex=1203051600&en=bf8812ecc5524a95&ei=5087%0A&oref=slogin
Another prime topic of interest is the
Defense Contract Audit Agency (DCAA) report on billing-methods for meals. The auditors knew about, but disregarded, the Army's requirement, whereas KBR was directed to have varying amounts of meals prepared at certain locations regardless of how many people actually used the service. Although KBR was paying for the food, the DCAA didn't believe they should be able to charge the DoD for meals prepared but not served.
Shell companies in Cayman Islands
In March 2008, the
Boston Globe reported that KBR had avoided paying hundreds of millions of dollars in federal
Medicare and
Social Security taxes by hiring workers through
shell companies based in the
tax haven of the
Cayman Islands. More than 21,000 people working for KBR in Iraq - including about 10,500 Americans - are listed as employees of two companies, Service Employers International Inc., and Overseas Administrative Services, which exist on the island only in
computer files in an office. KBR acknowledged that the companies were set up "in order to allow us to reduce certain tax obligations of the company and its employees." But KBR does claim the workers as its own with regards to the legal immunity extended to employers working in Iraq. A new piece of legislation may halt KBR's use of the Cayman subsidiaries
Legacy in Houston
Houston's convention center was named after company founder and namesake George R. Brown.
Rice University's Brown College is also named for members of Brown's family, who have made significant monetary contributions to Rice and other Houston schools.
Further Information
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