Senior vice presidents of Kellogg Brown & Root visited Guam in the second week of June at the conclusion of the company’s construction capability project on the Naval base and in relation to security upgrades at the base.
The group consisted of Virginia-based executives Robert L. Herndon vice president for operations maintenance and logistics; Louis J. Martinez vice president for facilities modification and repair; and David W. Swindle Jr. vice president for business development.
The visit to Guam followed a stopover in Honolulu to meet with U.S. Navy Pacific Division officials and the group met with Rear Adm. Arthur J. Johnson to update progress on the work at the base. Herndon and Swindle spoke exclusively with the Journal on June 11 and made some pertinent comments at the conclusion of their visit.
Herndon said he had additional reasons for the visit to Guam. “I also wanted to meet with subcontractors that we have for our BOS contract and to see the island because hopefully I’m going to have the opportunity to come back in the next few years as the contractor.”
Swindle referred to KBR’s earlier links to Guam. “KBR built the governor’s residence the first power plant and many of the early naval facilities. We have a history here that no one else has. We plan to return with the BOS contract.” He said KBR’s experience on the naval base had proved helpful. “We’ve been very fortunate that the ConCap project has given us an opportunity to demonstrate what we can deliver. We’ve very pleased that our clients — the Navy — have got an opportunity to see how we can deliver for the future as well.”
KBR had been able to demonstrate its capabilities Swindle said. “One of the major strengths of our company is reacting to contingencies or emergencies in an almost instantaneous manner. In fact we did that in the ConCap work we’ve done here on Guam immediately after the first typhoon and have demonstrated that in our response to all the requests from the Navy.”
Herndon said the company had formed relationships with small businesses — subcontractors — since its arrival on Guam. “That’s been the modus operandi for almost all of our contracts. We are very much aware of the need of having good quality subcontractors execute a lot of our work. We have found that some of the best happen to be the local and small disadvantaged businesses.”
Swindle said the company was not just paying lip service. “We truly believe that we can make a difference in local communities and their economies by fostering those types of relationships and providing them as much work as possible.” He said the KBR team on Guam had exemplified company involvement in a community and during the visit to group had received an update on community involvement of Guam-based personnel which contributed to assessment of personnel.
KBR will be submitting a proposal for the Guam Base Operating Support services proposal as part of Pacific American Support Services a joint venture with CH2M Hill. Herndon said “Every joint venture is targeted to a particular contract. We have joint ventures with companies that we compete against for other contracts. We consider that there is a definite advantage to partnering with CH2M Hill for this contract and potentially in the future there might be some other things that we would also like to work with them on but this is specifically for the BOS contract and I would not like to take it further than that right now.”
Swindle said the group had already considered other opportunities in Guam. “We have already as part of another small-business initiative a bid with Eagle Support Services Inc. for the [Defense Logistics Agency] supply services contract. That’s in evaluation right now. We expect a decision on that by the end of June based on the government’s announced schedule. We feel very solid about that.”
He said there were at least three other opportunities the company was considering one of them being the privatization of the Port of Guam.
“While that is not necessarily for the military it’s fairly integral for the supply function here. We are positioned in construction work. KBR is the world’s largest logistics company and if you just look at what we are doing in the Middle East today we are the army’s largest contractor worldwide.
“We look at each opportunity not only for its business case but how we can further deliver the best services to the U.S. Department of Defense — the Navy the Air Force whoever is here on Guam. We’re going to make a significant investment in the Pacific Theater and right now Guam is key to that.”
Swindle said KBR had not yet targeted the privatization of the Guam Waterworks Authority. “Water is not one of our core competencies. When we do water site operations we typically partner with an entity not unlike what we just did with CH2M Hill. It is situation-specific. We have made no decision to pursue or not to pursue the waterworks business.”
National and international media have reported in recent weeks that parent company Halliburton is considering selling sectors of Kellogg Brown & Root. The possible sale is attributed to a potentially higher stock price were the construction and outsourcing areas of the company to be divested. Reports suggested Halliburton was unlikely to part with its U.S. contracting business despite adverse publicity concerning its presence in Iraq and its relationship with Vice President Dick Cheney who was chief executive officer of the company from 1995 to 2000. On May 10 a bankruptcy court gave Halliburton permission to proceed with plans to reorganize DII Industries and KBR. Halliburton’s acquisition by KBR of DII brought with it asbestos and silica litigation. A $4.3 billion settlement took DII and KBR into bankruptcy in December.
Swindle said the reports were not accurate. “Halliburton has never made any suggestion we should sell KBR. That’s an important distinction. We the leadership of KBR are in frequent communication with the leadership of Halliburton. They have given us no indication of a sale. We have not been made aware of any plans — it’s not a topic of conversation.”
He said the subject was not raised during meetings with the U.S. Navy’s Pacific Division.
The two divisions function as separate entities he said. “Halliburton and KBR operate from a standpoint of two totally independent organizations. Even should something come about it would have no impact on our delivery.”
Swindle said the company was not new to the Pacific region. “We have over 7 000 personnel in the Pacific. We look at our presence in Australia Singapore as basically East Asia. Without revealing any features of our proposal you can rest assured that the government of Guam and the people of Guam will see more returns to the local community from our proposal than from anybody else.”
He said “This is going to be a very tough environment. If even half of the expectations for Guam happen it’s going to be a very demanding program and being cost effective and maximizing the use of local Guam resources will be very important.”
The company also hosted a June 11 party at Top O’ The Mar for invited guests to celebrate the completion of its Guam Base Operating Support services proposal.
Those present included E. Michael Leonard project general manager for government operations for KBR; Wayne Hooten project manager; John M. Robertson general manager of AmOrient Contracting Inc.; Monty M. McDowell president of Advance Management Inc. ; William H. Craig director of operations and marketing for Pacific Security Alarm Inc.; Ross Morrison director of Morrico Equipment Corp.; Paul E.R. Packbier president of PCR Environmental Inc.; and Tara Perez-Steffy chief executive officer and general manager of PCR. Also attending were Sen. Antoinette P. “Toni”. Sanford assistant majority leader and chairwoman of the Committee on Appropriations and Budgeting General Government Operations Reorganization and Reform of the 27th Guam Legislature; and David N. Sanford vice president of the Sanford Technology Group LLC and the senator’s husband; Joaquin Perez chief of staff to Madeleine Z. Bordallo Guam’s delegate to Congress; Marvin M. Dodge former commander and Cincpac representative for Naval Forces Marianas; Clifford A. Guzman consultant; and Maureen N. Maratita editor of Guam Business and the Marianas Business Journal. MBJ
