The U.S. military has paid Halliburton subsidiary KBR about $12 billion so far for so-called logistics support to U.S. military personnel in Iraq, the largest contract of its kind ever. Around 80,000 troops are served meals at dining facilities every day under the contract -- the other 60,000 or so fend for themselves in field kitchens or by eating military issue "Meals Ready to Eat."
KBR in turn hires that work out entirely to subcontractors whose job it is to recruit, transport, house, feed and pay "third-country" nationals to stock, prepare, serve and clean up at the dining facilities at 43 bases across Iraq.
Those workers are recruited from countries with already low wages, where jobs are scarce. And as pressure to keep the logistics contract cost down has increased, subcontractors have moved from country to country in search of cheaper labor markets.
That is what brought around 770 workers from Sierra Leone, Africa, to Iraq in July to work for ESS Support Services Worldwide, A British-based food service company specializing, according to its Web site, in "remote site, defense and off-shore locations."
Most of the workers are deemed unskilled and work seven days a week for 12 hours a day, according to their contracts, one of which was obtained by United Press International. In practice, workers said in interviews, most only work six days a week.
There is no provision for sick leave. Any employee who threatens a strike or attempts to organize is subject to immediate dismissal and the employee required to pay for his return plane ticket.
For this they are paid $150 a month, roughly 45 cents an hour.
Salaries are deposited in bank accounts in Africa so the money is available to the workers' families.
The workers also get a $40 a month cash allowance on top of that, but the contract states the money is a gift, and the amount discretionary and may be eliminated. Their housing -- three to a standard size trailer -- laundry, food and uniforms are provided free.
Employees are prohibited from discussing the contract and "ESS internal issues or complaints" with anyone outside the company, including the military and media. A copy of the contract was provided to UPI by an ESS employee via e-mail, with the assistance of a U.S. military officer. The worker quit Iraq and has now returned to Sierra Leone.
Neither the U.S. military nor prime contractor KBR sets a minimum wage standard for workers employed by any sub-contractor under the Logistics Civilian Augmentation Program -- known as LOGCAP. Jana Weston, the deputy program director of LOGCAP, told UPI in September she was unaware that some workers were being paid $150 a month.
"KBR's subcontractors are required to comply with all applicable labor laws and provisions in the country in which they work. KBR's non-U.S. subcontractors operate within industries and geographic regions that are highly competitive in regard to recruiting and retaining employees. As such, the subcontractors are driven to pay market wages and benefits," said Melissa Norcross, a spokeswoman for Halliburton in Houston, Texas.
The dining services subcontracts, like LOGCAP overall, are cost-plus arrangements, meaning the contractor is reimbursed for its costs and then paid a percentage on top of that for profit.
As a result, the sub-contractors' costs are closely guarded propriety information and no details of wages and contract arrangements for other LOGCAP sub-contractors could be obtained to compare them to those paid by ESS.
Previous to the Sierra Leone contract, ESS employed workers from Sri Lanka who were paid about $400 a month for the same work, according to a U.S. military officer who oversees the logistics contract at one of the bases where ESS provides dining services.
Paul Kelly, ESS group corporate affairs director, acknowledged previous workers were paid more in an interview in October with UPI. He tagged the higher wages to less competition for the LOGCAP subcontract. When more companies entered the fray, ESS found cheaper labor to improve its pricing to the government.
"Initially wage rates were higher because there were fewer companies bidding (on the subcontract)," said Kelly, declining to confirm the old wage. "As more companies competed for contracts -- labor is one of those areas companies have been targeting" to drive down the bids.
The switch to cheaper labor came as Gen. George Casey, the commander of U.S. forces in Iraq, launched an effort to drive down the costs of LOGCAP.
"Increasing expenditures in theater ... jeopardize our ability to maintain public support as the costs associated with our operations continue to rise," he wrote in a memo issued to commanders this summer, and exclusively reported by UPI. "Our spending in theater not only affects us directly, it has a ripple effect throughout all of the services."
"When we started there were a handful of companies competing. Now there are probably 20 or 30, which does drive price down, and of course that's what LOGCAP wants," said Kelly.
Kelly said the monthly wage offered to the Sierra Leoneans is far higher than what they would earn at home. According to the Sierra Leone worker, some 7,000 candidates showed up to apply for the 750 jobs ESS offered in June 2005.
"The important thing to bear in mind here is that it is a little bit too simplistic to compare pay scales as we might look at them from a U.S. or U.K. perspective," Kelly said. "You have to look at job type and how does this compare with what an employee would earn it in its own country."
"What we don't do is pay them less than what they earn in their own country," Kelly said. "We take employee welfare very seriously."
Sierra Leone is an extremely poor country, with a market-based economy and a per capita income of less than $100 per year. For the last decade a violent insurgency has destroyed the local economy. The government approved a minimum wage of about $4 a week for a 40-hour work week, according to the State Department's 2004 human rights report.
Kelly added that even mid-level government officials in the country earn only about $40 a month, although that would be a for a 40 hour week.
Kelly said, however, that ESS' recruiting of workers in Sierra Leone does not only have to do with competition under LOGCAP and low labor costs. Geo-politics has played a role as well.
"The catalyst for having to go to Sierra Leone to recruit in the first was that the respective governments of India, Pakistan, Sri Lanka, Thailand and the Philippines have all put an official ban on their nationals working or traveling in Iraq," states an e-mail sent to Kelly from the Sierra Leone recruiter.
According to Kelly, the Iraq LOGCAP subcontract is not profitable enough to warrant the risk and difficulty of fulfilling it, especially given the fact the company must insure its workers in a very hazardous war zone.
"We've already flagged that we are very heavily scaling down our presence in the Middle East simply because the margin we can earn does not justify the logistical complexities and the risk," Kelly said. "The question is do you want to put employees into a position where it's still very dangerous out there and logistically very complicated?"
Acknowledging the Sierra Leonean workers agreed to work for the advertised pay, military personnel interviewed in Iraq still expressed surprise and discomfort at the wages paid to those feeding and cleaning up after them every day, with whom many say they are quite friendly. Two Army officers alerted UPI to the issue and arranged the first meeting with the Sierra Leone worker.
Workers' living conditions on bases with dining facilities in Iraq are inherently hazardous, owing to the violent insurgency, but materially good -- most have hot showers, electricity and air-conditioned sleeping quarters.