No. 7: KBR adds it up

Skills plus experience equals success under pressure

KBR Inc.

Top 100 revenue: $4.1 billion

2007 revenue: $8.7 billion

2007 earnings: $302 million

2006 revenue: $9.6 billion

2006 earnings: $168 million

Number of employees: 52,000

http://www.kbr.com

It might seem counterintuitive ? the jobs at KBR Inc. involve long hours, they're often far from home, safety and loved ones. The environment and working conditions likely are, to put it mildly, austere.

And yet, said Bruce Stanski, president of KBR's Government and Infrastructure business unit, "people seek us out."

"The culture, once you get inside, has an energy ? I tell you, the enthusiasm is addictive," he said. "You're surrounded by all these impressive people. You should see them in action. A customer will come to visit, bringing us an impossible task. Then our people start brainstorming, and next thing you know, we make the impossible possible. That's exhilarating."

The company's success landed it at No. 7 on the Top 100 with $4.1 billion in prime contracting revenue.

A major 2007 milestone for KBR was the wrap-up of its separation from Halliburton Co. and, during the third quarter, a reorganization into six business units: government and infrastructure, upstream, services, downstream, technology and ventures.

"But those have been changes at the corporate level, there's been no change for the customer," Stanski said.

For example, as sole provider under the Army Logistics Civil Augmentation Program III, KBR "handled all the support operations throughout the troop surge in Iraq," he said. "With the military making snap decisions about where they were deploying troops, there was no break in our delivery of services to the existing coalition forces nor to the new troops coming in."

In June, KBR was named one of three winners of the Army's new $150 billion LogCAP IV. In July, the award was protested. Stanski immediately wrote to the presidents of the other two winners: DynCorp International LLC and Fluor Intercontinental Inc. KBR would compete aggressively for the contract, he told them, but when the award was decided, it would be most important "for there to be a seamless handoff, no interruption in services. That kind of transparency, even with competitors, is absolutely necessary," he said.

In October, the Government Accountability Office sustained the protest. On April 17, the Army confirmed its original award to the three companies, which are expected to start bidding on task orders shortly.

In March, two months ahead of its six-month schedule and at the peak of the winter storm season in the Persian Gulf, KBR finished building facilities for coalition forces on Iraqi oil transfer platforms.

KBR's experience building and maintaining all kinds of infrastructure gives it
the ability to successfully handle such high-risk projects, Stanski said.

"Reliance of government on contractors is going to continue forever," Stanski said. "We are past the point where government could reasonably take back responsibility for these operations."

Alan Chvotkin, executive vice president and counsel at the Professional Services Council of Arlington, Va., largely agrees. Even discounting spending in Iraq and Afghanistan, "baseline federal spending has seen significant growth since 9/11, with spending for services far exceeding spending for hardware," he said. Much of that spending is for skills that the federal government never had and is unlikely to acquire, he said.

The reality is that "for agencies to execute their mission ? and it's fair to ask if the mission needs to be performed ? they have to contract for it." The Defense Department made the right decision in having military service personnel fight wars, not do laundry or cook meals, he added.

Work for contractors in Iraq is diminishing, but opportunities in the area remain, notably with the United Arab Emirates, Stanski said. As a result, a new product service line in the G&I unit will be based in the Middle East. The company is looking to civil infrastructure opportunities globally and homeland security domestically, but defense will continue to be strong in Australia, the United Kingdom and Africa, Stanski said. In fact, "DOD is setting up a new command, the Africa Command, just to deal with it."

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