PIRRO STEERED D.A. CONTRACT TO KERIK By FREDRIC U. DICKER State Editor , New York PostOctober 5, 2006 -- ALBANY - While she was Westchester district attorney, Jeanine Pirro steered a no-bid contract to Bernard Kerik and Rudy Giuliani's security firm, rebuffing protests about the arrangement, The Post has learned. The 2004 contract was ordered despite Pirro being warned by a lawyer in the DA's Office that it might be illegal or unethical to award a contract in that way. It also came in the face of protests over the cost of the deal by the private company that had to pay Kerik and Giuliani, a source close to the case told The Post. "Jeanine insisted that Kerik get the contract. She was working hard to do favors for him," said the source. Pirro's awarding of the business to the firm, known as Giuliani/Kerik, a subsidiary of Giuliani Partners, came a little over a year before she turned to him for a favor - to find out if her husband, Al, was cheating on her. Kerik, who by that time had left Giuliani to set up his own security company, had Al Pirro tailed and discussed with Jeanine planting a bug on his boat. There is now a federal investigation over possible illegal wiretapping. Kerik discouraged Jeanine Pirro from the bugging because it might be illegal and she says she never followed through with it. The contract with Giuliani/Kerik was entered into by A & P, the supermarket chain, as part of deal with Pirro's office to allow the company to settle a criminal charge resulting from the illegal sale of alcoholic beverages to minors. The company, fearing a conviction could endanger its right to sell alcoholic beverages in other states, agreed to a plea bargain. The charge would eventually be dropped if A & P hired an independent private-sector inspector general, or IPSIG, to monitor its policies for restricting sales to minors. Pirro directed that Kerik was the one who must be hired for the job, the source told The Post. But during talks over the selection of the inspector general, one of the lawyers representing A & P, Kathleen Plunkett O'Connor, objected that the firm was very expensive, the source said. The cost of the contract with Giuliani/Kerik could not be learned last night. The source said that because of the expense of Giuliani/Kerik, the lawyer for A & P wanted to know if the supermarket giant could hire another firm to do the work or if the contract could be put out to bid. But Pirro would have none of it - and again demanded that Kerik get the contract, saying otherwise there would be no deal, the source explained. Pirro said that O'Connor should be told that the DA had put the contract out to bid, the source continued. Reached by The Post, O'Connor confirmed that she had worked on the A & P case but repeatedly refused to discuss specifics. Pirro, who has described Kerik in recent days as a friend, conceded to The Post that she directed A & P to hire Giuliani/Kerik. "In order to guarantee that A & P met her high standards, she wanted to use a best-in-class firm to monitor A & P's compliance with the law," said her spokesman, John Gallagher. "Like many others around the world, she selected Rudy Giuliani and Bernard Kerik's firm for this purpose," he added. Another Pirro spokesman, responding to specific questions from The Post, also contended that Pirro had directed the assistant district attorney handling the case "to seek quotes from several other firms to make sure that Giuliani's price was competitive." But The Post's source - who has provided detailed knowledge of the case - insisted that no such request for price quotes was ever made. During her 12 years as DA, Pirro only once directed that an outside monitor be hired in a case - and that was Giuliani/Kerik, her spokesman said. Pirro's selection of Giuliani/Kerik to serve as the A & P monitor is in sharp contrast to the practice of Manhattan District Attorney Robert Morgenthau, whose office pioneered the use of independent inspector generals. Morgenthau's office, which has used IPSIGs about 50 times in recent years, directs that companies choose their own monitors, as long as they meet professional standards. "We think it is a conflict for us to impose a particular monitor on a business," said Daniel Castleman, chief of Morgenthau's investigations division, speaking generally and not about the Pirro case. "We think the appearance of that is problematic, if it appeared we were picking our friends or former colleagues, that is not an appearance we want," Castleman added. Castleman said another reason for not forcing a company to hire a favored monitor is that "some are more expensive than others." Manhattan lawyer Neil Getnick, president of the International Association of IPSIGs, said law-enforcement agencies usually identify qualified monitors by issuing "requests for proposals" or "requests for qualifications" from companies providing such services. "The important thing is for the governmental agency to go through a fair and open selection process," he said. A & P didn't return calls seeking comment. Kerik's lawyer, Joseph Tacopina, refused to comment. Sunny Mindel, a spokesman for Giuliani Partners, called the size of the contract "relatively small" but would not reveal the amount and she said Giuliani wasn't aware that Pirro had personally directed that his firm be hired. Pirro's crackdown on A & P came after a series of highly publicized accidents and incidents in which underage intoxicated Westchester youths were hurt or killed. "Jeanine wanted to make it clear that her office was responding to the problem and A & P was a case where she wanted to make an example," the source said. fredric.dicker@nypost.com

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FEMA goes back on pledge to reopen no-bid contracts for Katrina recovery work
By Hope Yen, Associated Press | March 25, 2006

WASHINGTON -- The Federal Emergency Management Agency has broken its promise to reopen four multimillion-dollar no-bid contracts for Hurricane Katrina work, including three that federal auditors say wasted significant amounts of money.
Officials said they awarded the four contracts in October to speed recovery efforts that might have been slowed by competitive bidding. Some critics, however, suggested they were rewards for politically connected firms.
R. David Paulison, acting FEMA director, pledged last fall to rebid the contracts, which were awarded to Shaw Group Inc., Bechtel Corp., CH2M Hill Inc., and Fluor Corp. Later, the agency acknowledged the rebidding wouldn't happen until February.
This week, FEMA said the contracts wouldn't be rebid after all. In fact, they have been extended, in part because of good performance, said Michael Widomski, a FEMA spokesman.
''They are continuing the work," Widomski said, and the agency is now focused on competitive bids for disaster relief contracts for the next hurricane season, beginning June 1.
''We looked at the lessons learned from Katrina," Widomski said. ''We're painstakingly looking at what best fits the needs of disaster victims and taking bids for future work."
An additional $1.5 billion in work promised to small businesses also has yet to be awarded.
A review by the Government Accountability Office of 13 major contracts said last week the government had wasted millions of dollars, due mostly to poor planning by FEMA.
Among the 13 were three of the four no-bid contracts for temporary housing, worth up to $500 million each, that went to three major firms with extensive government ties.
The preliminary review did not address the validity of no-bid contracts issued immediately after the Aug. 29 storm. The fourth housing contractor, Shaw Group, was not included in the audit.
Shaw Group's lobbyist, Joe Allbaugh, is a former FEMA director and a friend of President Bush. Riley Bechtel, Bechtel CEO, served on Bush's Export Council from 2003 to 2004, and CH2M Hill Inc. and Fluor Corp. have done extensive work for the government in the past.
The companies have rebutted allegations that political connections played a factor. ''Our work was awarded based on performance," said Brad Jones, spokesman for CH2M Hill, which is based in Englewood, Colo.
The latest disclosure has brought complaints from some lawmakers, who say the Bush administration has not done enough for small businesses. Democrats, in particular, have urged limits on no-bid contracts, which they say are unfairly handed to large companies with political connections.
A House panel chaired by Representative Tom Davis, Republican of Virginia, plans to hold at least one hearing next month on Katrina contracting. That was announced after the GAO's audit results were released.
''The administration has promised to help local and small businesses get contracts to help rebuild the Gulf Coast, but they keep letting them down," said Senator John F. Kerry of Massachusetts, the top Democrat on the Committee on Small Business and Entrepreneurship.
FEMA had promised in October to boost the number of contracts given to small and minority businesses, partly by setting aside up to $1.5 billion worth of work to maintain trailers housing Katrina evacuees. It said those contracts would be awarded by Feb. 1.
Yet those 15 contracts -- eight of which are designated for minority-owned businesses -- have yet to be awarded because of the high volume of applications, according to Widomski. He said the agency hoped to announce the winners by early next month.
On Oct. 6, Paulison pledged in a congressional hearing to reopen the four deals. But after the firms contended that they hadn't been told, officials with the Homeland Security Department -- which oversees FEMA -- pushed the timeframe back to February.
Widomski said FEMA now will allow the four major firms to complete their Katrina work.
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U.S. to correct no-bid contract abuses

Published: THURSDAY, OCTOBER 6, 2005

WASHINGTON: U.S. government contracts for Hurricane Katrina recovery efforts that were handed out with little or no competition will be rebid to prevent any waste or abuse, the acting FEMA director, R. David Paulison, said Thursday.
"I've been a public servant for a long time, and I've never been a fan of no-bid contracts," Paulison told a Senate panel investigating the Federal Emergency Management Agency's response to the hurricane.
"Sometimes you have to do them because of the expediency of getting things done."
"And I can assure that you we are going to look at all of those contracts very carefully," he added.
"All of those no-bid contracts, we are going to go back and rebid," he said of pacts that were worth millions of dollars.
In
the weeks after the storm, more than 80 percent of at least $1.5 billion in FEMA contracts were awarded with little or no competition, or had open-ended or vague terms that previous audits have cited as being highly prone to abuse.
Senator Joe Lieberman of Connecticut, the top Democrat on the Senate Homeland Security Committee, questioned whether FEMA should look at having contracts for services - including housing and supplies - already in place before a disaster strikes.
"It sure looks with hindsight that FEMA would have been in a much better position if it had had a lot of contracts in place that had been bid that were standby contracts to provide exactly the kind of services that FEMA rushed in to provide on a no-bid basis - and which we fear the taxpayers may have ended up paying more money for than they should have," said Lieberman.
"Hopefully we can put things in place for the future where we won't have to depend on no-bid contracts for future use," Paulison said.
The FEMA chief was one of a bevy of Bush administration officials appearing before a half-dozen hearings to update Congress about the government's long- and short-term concerns in Katrina's aftermath.
Housing assistance is a top priority as the administration grapples with finding homes for evacuated victims.

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Bush Buddies Get No-Bid Contracts While Workers Get the Shaft
Sept. 14—Some of the first large-scale Hurricane Katrina relief and recovery contracts awarded by the Bush administration were awarded on a no-bid basis to corporations with strong ties to the administration and the Republican Party, according to news stories in The Wall Street Journal and other media. At the same time, the administration is using the catastrophe to push a reactionary anti-worker agenda, gutting federal regulations that protect worker safety and ensure quality work and living wages.

The no-bid deals include $100 million contracts to the Fluor Corp., a major donor to the GOP, and the Shaw Group, which is client of Joe M. Allbaugh, President George W. Bush’s campaign manager in 2000 and the former director the Federal Emergency Management Agency (FEMA).

Meanwhile Halliburton Co., subsidiary Kellogg, Brown & Root Services received a $29.8 million clean-up contract, while Halliburton, formerly run by Vice President Dick Cheney, is doing repair work at three Navy facilities in Mississippi under an existing contract. The company also has been awarded billions of dollars of federal contracts for work in Iraq and that work and the Bush administration’s Iraq procurement policies have been heavily criticized in recent years.
Bush Cuts Workers’ Wages, Suspends Safety Regulations
The Bush administration also is using the disaster to attack federal standards ensuring quality work and worker safety. Last week, the administration announced it was eliminating the high-quality work standards set by the federal Davis-Bacon law for hurricane reconstruction contracts work, allowing contractors to pay substandard wages to construction workers in the affected areas, and the administration also is lifting many affirmative action rules for reconstruction contracts.

Bush now wants to suspend wage supports for service workers in the hurricane zone as it did for construction workers on federal contracts last week, according to The Washington Post.

The administration also has suspended regulations limiting the number of hours truckers can drive when transporting fuel. In addition, Bush has weakened restrictions giving contracting preferences to small and minority-owned businesses and has suspended the Jones Act, which requires transport of petroleum, gasoline and other petroleum products on U.S.-flagged ships while operating in U.S. coastal waters.

The no-bid contracts “guarantee profits regardless of how much those companies spend or waste,” says AFT President Edward J. McElroy. “This is happening at the same time that the local hires of these firms will, in many cases, not earn a living wage. It is unconscionable that our national government would act to hurt those most in need while delivering a windfall to wealthy contractors. These decisions must be reversed.”
Bush Handling of Federal Contracts ‘Costly Mismanagement’
House Democratic leaders have requested that the Government Accountability Office (GAO) investigate the hurricane reconstruction deals.
In a letter to the GAO, Democrats wrote: “The history of this administration’s handling of federal contracts is one of persistent and costly mismanagement. Oversight of federal contracts has been turned over to private companies with blatant conflicts of interest. In Iraq, billions have been appropriated for the reconstruction effort, yet oil and electricity production remain below prewar levels.…The contracting strategy adopted by the administration suppressed competition on thousands of reconstruction projects, while favored companies like Halliburton received special treatment and lucrative monopoly contracts.”
During a tour of hurricane-ravaged Mississippi, the Rev. Jesse Jackson slammed the no-bid deals.
“We still got families that don’t know if people are dead or missing. While the disconnected and the needy are running from shelter to shelter, the connected and greedy are getting FEMA contracts.…It’s almost like white-collar looting,” he said.

Bob Geiger.com

Report: Defense Department's No-Bid Contracts Put "Troops In Iraq At Risk"
A study completed in late June by the Pentagon's Inspector General concludes that the Department of Defense (DoD) has risked the lives of U.S. troops in Iraq due to malfeasance in awarding and monitoring contracts for badly-needed armored vehicles.

The study, which was requested by Democratic Congresswoman Louise Slaughter of New York, found that since 2000 the DoD has awarded "sole-source" contracts valued at $2.2 billion to just two companies, Force Protection, Inc.(FPI) and Armor Holdings, Inc (AHI).

Inspector General auditors found that the Marine Corps Systems Command (MCSC) made these two companies the sole providers of armored vehicles and armor kits for troops, despite knowing that other suppliers may have produced the equipment so desperately needed in Iraq substantially faster. Both manufacturers fell far behind delivery schedules, while AHI also produced inadequate and faulty equipment.

"We determined the MCSC justification for awarding the sole-source contracts was questionable because MCSC officials knew that viable competition was available and were aware of significant concerns with FPI’s delivery capability," said the report about the MCSC's rationale for looking at no suppliers other than FPI. "In addition, Marine Corps officials did not pursue competition as contracts continued to be awarded, which raises concerns about the recurring justification for urgency."

"The Marine Corps Systems Command continued to award contracts for armored vehicles to Force Protection, Inc., even though Force Protection, Inc., did not perform as a responsible contractor and repeatedly failed to meet contractual delivery schedules for getting vehicles to the theater," the report continued.

Representative Slaughter has long been active in pursuing explanations for why equipment shortages have dogged American forces in Iraq and she kicked off this lengthy study of military procurement with a letter to the Inspector General in April 2006.

"I am concerned with the DoD's procurement history for armored vehicles," wrote Slaughter in the letter. "As with body armor, the DoD failed at the outset of the Iraq war to equip our troops with the armored vehicles to protect them from improvised explosive devices (IEDs)."

And Slaughter responded on Wednesday to the report's findings, which shine a bright spotlight on how no-bid defense contracts are one of the reasons the troops have fared so poorly under the Bush administration.

"This report indicates that contracts were given to companies that were unable to deliver vital equipment to our soldiers in the field, unnecessarily putting their lives at risk. These sole-source contracts were handed out even though serious questions were being raised at the time about the wisdom of such decisions.

"The Inspector General found that Armored Holdings sent cracked equipment that had been painted over, and even two left doors for the same vehicle, instead of one right and one left. Furthermore, FPI was unable to meet production deadlines even after the Pentagon paid $6.7 million to build up their capability. It was completely unacceptable.

"Our troops were put in harm's way by delayed and faulty equipment that was let into the system by questionable contracts. For the sake of our troops in the field, now and in the future, we need to learn more about who knew what, and why military officials who were aware of other competitors were overruled."
The report also noted significant problems with the up-armor kits manufactured by AHI subsidiary, Simula, and said that the DoD did not review and verify the company's production capabilities and quality control processes before awarding the no-bid contract. Military officials could not provide documentation of any market research or investigation of Simula’s production to support sole-sourcing the contract to that company.

Simula failed to deliver approximately 34 percent of the kits in accordance with contract delivery schedule. The DoD issued 64 corrective action requests to Simula documenting discrepancies found in the kits.

“The increase kit installation time, the addition re-inspection of kits in theater, and the late deliveries increased risks to soldiers’ lives," wrote the Inspector General of the situation with faulty armor kits.

The Inspector General's study also found that "survivability performance characteristics" so important to armored vehicles used in combat, were not known for the FPI products before that company was given an exclusive contract to produce the equipment for American troops.

"MCSC officials did not provide any documentation to support the survivability performance characteristics of the Cougar [vehicle]," the report said. "Given that this was the first contract with FPI for this vehicle, we do not believe such data existed, and it could not be provided by MCSC officials to justify a sole-source award."

Slaughter says the whole mess is not surprising and raises far more questions than answers.

"I want to know if there is more influence-peddling involved" in awarding the contracts without competition," said the New York Democrat. "We have to make sure a lesson was learned here."

"It's been business as usual. The lives of our soldiers took a back seat to who got the contracts."

A blueprint for a nation

The Pentagon leans on San Diego's SAIC in rebuilding Iraq; the sole-source contracts are lucrative and controversial

By Dean Calbreath
STAFF WRITER

July 4, 2004

CRISTINA MARTINEZ / Union-Tribune


As U.S. soldiers gathered in the Kuwaiti desert for their assault on Baghdad 15 months ago, Deputy Defense Secretary Paul Wolfowitz was hastily pulling together about 150 Iraqi exiles to plan a new government for when Saddam Hussein fell.

Under a $33 million contract from the Pentagon, the exiles were placed on the payroll of Science Applications International Corp. The San Diego company flew them to Washington, D.C., leased apartments for them in Northern Virginia and set them up in a heavily guarded office building not far from the Pentagon, where they sketched blueprints for a new Iraq.

Once Baghdad fell, SAIC began flying the exiles back to Iraq. As members of the newly formed Iraqi Reconstruction and Development Council, or IRDC, the exiles were stationed in key government positions while still on SAIC's payroll.

Even after last week's transition to a new homegrown government in Iraq, many of those exiles hold power today, ranging from the telecommunications minister to governor of the war-torn province of Najaf.

The IRDC project is a prime example of the behind-the-scenes role SAIC has played in rebuilding post-Saddam Iraq.

Since the war began, SAIC has been awarded contracts to help train Iraqi soldiers and police officers, reshape the oil industry, rebuild the prison system, advise on democracy, act as liaison with the United Nations and analyze intelligence.

SAIC contracts with the Pentagon for Iraq

Work by SAIC's subcontractors range from creating an Iraqi TV network to advising Iraqis on how to set up a democracy.

Contract / total value including options / Current value / Projects

Iraqi media $82,350,557 $82,350,557 Created Iraq's first post-Saddam TV network

Program management $41,324,597 $20,662,298 Monitored how contractors perform their work

Iraqi expatriates (IRDC) $33,348,742 $24,811,853 Brought 150 Iraqi advisors to the occupation government

Democracy advisors $834,784 $235,231 Hired three advisors to talk to Iraqis about governance

Oil consultants $745,261 $532,458 Hired VIPs from Exxon Mobil and SAIC to advise on oil

Intelligence analysis $394,000 $201,011 Hired Washington military analyst to advise occupation

UN liaison $218,857 $84,628 Hired ex-U.S. ambassador to coordinate relief work

Industrial consultant $87,461 $87,461 Hired ex-U.S. ambassador to help revamp industries

Source: The Coalition Provisional Authority of Iraq



SAIC even launched and ran Iraq's first post-Saddam television network, although that task – under an $82 million contract headed by the Pentagon's psychological warfare division – ended last December amid complaints that the network was mainly a propaganda tool for the occupying forces.

SAIC declined to comment on its work in Iraq.

"Our executives refrain from comment out of concern for the security of our other forces over there," spokesman Jared Adams said.

SAIC's work in Iraq bolstered a bottom line that has become increasingly reliant on government contracts.

SAIC's government-related revenue hit $5.4 billion last year – a $1 billion jump from the previous year. The government work, which included other defense and homeland security work as well as work in Iraq, made up for a decline in civilian contracts.

But critics question why SAIC has been getting such lucrative assignments, many of which have come as sole-source contracts that are not subject to competitive bidding.

Last month, the U.S. General Accounting Office – echoing an earlier investigation by the Defense Contract Audit Agency – found that the Pentagon had "overstepped the latitude provided by competition laws" by not requiring competitive bidding on some of the Iraq projects.

The Pentagon defends its use of sole-source contracts for SAIC, saying the company is a "fully qualified contractor who has the unqualified support and confidence of the Pentagon leadership and who was prepared to begin work and deploy as soon as possible."

Despite such praise, however, problems have arisen in a few of SAIC's Iraqi reconstruction contracts.

The police and army training, for instance, has so far failed to produce a strong security force. The TV project suffered from SAIC's lack of experience in mass media operations. And despite the success of a few alumni of the IRDC, the group never lived up to its intended role as a backbone for the U.S. occupation.

Even SAIC's harshest critics say most of the problems involved with its Iraq work emanated from the government's side of the contract rather than SAIC's. But they add that relying on a private contractor to aid in the sensitive role of nation-building adds confusion to an already chaotic situation.

Landing the jobs

Following is a list of the top contractors for the Coalition Provisional Authority. It does not include contracts issued by other government agencies or work that the companies performed as subcontractors

Current value / Contractor / Total value including options

Kellogg Brown & Root (Halliburton) $8,787,988,533 $1,801,475,000

Parsons Energy and joint ventures 923,361,340 106,850,000

Fluor Corp. 464,660,0004 64,660,000

Washington Int'l Corp. 352,940,000 352,940,000

Perini Corp. 288,670,000 288,670,000

SAIC 159,304,259 128,965,497

Source: The Coalition Provisional Authority of Iraq


"There were too many competing levels of authority in Iraq, including the Pentagon and its advisers, the civilians hired by SAIC, the Coalition Provisional Authority (the occupying government) and the State Department," says Pratap Chaterjee, who heads CorpWatch, a watchdog group that has been monitoring contracts in Iraq. "Everybody was fighting each other."

For nearly 25 years, SAIC has been active in the Persian Gulf region, mostly through its work on the command, control and communications systems of the Saudi Royal Navy.

During the first Gulf War in 1991, SAIC stationed 25 employees in Saudi Arabia, where they provided technical assistance for U.S. and Saudi forces. After the war, the firm hired a number of military officials who had played key roles in Desert Storm.

Adm. William Owens, who headed the Sixth Fleet during the war, briefly served as SAIC's president and chief executive before taking a job at Teledyne. Gen. Wayne Downing, who commanded special operations forces in the war, was tapped as a part-time staffer for domestic and international business development as well as being named to the company's board of directors.

Shortly after he was hired by SAIC in 1996, Downing became a vocal advocate for overthrowing Saddam Hussein, becoming a part-time lobbyist and military planner for Iraqi dissident Adnan Chalabi's Iraqi National Congress.

In 1997, Downing drafted a detailed plan for invading Iraq, spearheaded by Iraqi insurgents with the help of 5,000 or 6,000 U.S. special operations forces.

The Downing Plan, as it became known, had its detractors. Gen. Anthony Zinni, who once oversaw U.S. forces in the Middle East, mocked it as "the Bay of Goats," a reference to the disastrous Bay of Pigs invasion of Cuba in 1961.

After the Sept. 11 attack, Downing got a chance to float the plan in the White House when President Bush appointed him to his anti-terrorism task force. But he quit a year later, and the White House adopted another attack strategy.

Another SAIC employee was David Kay, a former member of Hans Blix's weapons inspection team in Iraq who had clashed with Blix over whether Hussein possessed weapons of mass destruction.

While working as a vice president in charge of counterterrorism initiatives at SAIC, Kay warned Congress that Saddam was just months away from developing nuclear missiles. His most famous prediction was that invading forces in Iraq would not just find a "smoking gun" when searching for banned weapons but a "smoking arsenal."

Kay, who has since left SAIC, told a Senate panel in January that "we were almost all wrong, and I certainly include myself here."

As a corporation, SAIC did not actively lobby for the country to go to war.

In fact, in its public statements, it downplayed the amount of military contracts that the war might generate. In its 2003 proxy statement, SAIC warned that the war might be bad for the company, because it might cause delays in new contracts or funding of contracts not directly related to the conflict.

Yet, the Iraq war produced far much more work for SAIC than Desert Storm. On the eve of the war, SAIC had 150 employees on the Iraqi frontier, compared with just five at the beginning of the last conflict.

Among other things, SAIC's workers were processing data from U-2 and Global Hawk spy planes, monitoring bomb-loading on the USS Constellation and using dolphins to check for mines in Iraqi waterways.

"Long support for the U.S. military prepared SAIC employees to work side by side with American troops," the company's corporate literature noted.

While SAIC was deploying its own workers to Iraq, the Pentagon tapped the firm for the last-minute job of supporting the formation of the IRDC.

Though the Bush administration had been eyeing war with Iraq for more than a year, it was not until the eve of the invasion that Deputy Defense Secretary Wolfowitz began forming an Iraqi team to help prepare Iraq for democracy.

It was a diverse group, including entrepreneurs, physicians, real estate developers, academics, associates of Adnan Chalabi and former officials of Hussein's government.

Rather than employ the exiles directly, the Pentagon hired SAIC to put the exiles on its payroll and administer the program under a no-bid contract.

For the next two months, the exiles formed what was essentially a shadow government for Iraq out of two floors of the Taylor Building, a high-rise in Crystal City, Va., surrounded by the offices of government contractors. They say neither SAIC nor the Pentagon provided much coordination of their activities.

"To a great extent, SAIC operated to pay the IRDC's salaries, and that was it," said Hasan Al-Khatib, a Silicon Valley entrepreneur with close ties to the IRDC. "I don't know why the government needed to hire them to do that."

Last month's GAO report noted that to qualify the IRDC contract for sole-source bidding, the Pentagon had used a form designed for management services that SAIC was not providing.

The GAO found that because SAIC's services were more limited, the Pentagon should have either put the job out for bids or showed proof that SAIC was uniquely capable of filling the job.

The IRDC contract was not the only sole-source contract that SAIC won. Seven of the eight contracts awarded by the occupying government were on a sole-source basis.

Each of the contracts were under the purview of Undersecretary of Defense Douglas Feith, whose right-hand deputy, Christopher Ryan Henry, had headed strategic development at SAIC just four months before the war began.

Under the IRDC contract, SAIC had no responsibility for the IRDC members once they hit the Baghdad airport, except for writing their paychecks.

But once they arrived in Baghdad, many IRDC members fell between the cracks, since the occupying government was not sure how to use them. Because they were outside the chain of command, they were often shunted aside by the authorities.

"There was no clear idea as to who was in charge," said IRDC member Ramsey Jiddou, a biotech entrepreneur from Detroit.

Many quit in frustration.

Muhammad Ali Zainy, an IRDC member who had once been a high-ranking official in the Oil Ministry, quit his post as an IRDC consultant to the ministry after determining that his views were not being taken seriously by the former U.S. oil executives who had taken charge: Philip Carroll, former president of Shell Oil, and Gary Vogler, former executive at Exxon Mobil.

"It was a hoax for us to be told that Iraqis would be in charge of the ministry," Zainy said. "I was really disappointed. It gave me the impression as if there was no regard to the feelings of Iraqis."

Vogler – a 1973 West Point classmate of Gen. John Abizaid, who headed U.S. forces in Iraq – had himself been placed in the Oil Ministry under a separate Pentagon contract with SAIC. His support staff included SAIC executive Matthew Amitrano, working under contract with the Pentagon.

Despite such snafus, many of the IRDC members think they were able to help turn the country around, although they often had to fight against the occupation forces to do it.

"We did a lot of good things over there," says Jiddou, who takes credit with helping restart a handful of Iraqi factories. "But there were a lot of things we could have done better."

Dean Calbreath: (619) 293-1891; dean.calbreath@uniontrib.com

Link to Halliburton Watch

More on No-Bid Contracts and Bid Contracts

www.halliburtonwatch.org/

Here are some more background articles on the problem of No-Bid Contracting as done by our own Federal Government.

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Published on Monday, May 26, 2003 by CommonDreams.org
Another Scandalous No-Bid Contract Makes Us Look Like Fools
by Pat Gerber

Critics have been howling since the announcement that the Department of Defense gave a no-bid contract for cell phone service in Iraq to a disgraced company called WorldCom. And with good reason. Competitors in the telecommunications business pointed out that WorldCom has no experience in building cell phone systems and objected to the fact that industry leaders were not even informed that such a contract was contemplated, much less given the opportunity to bid on it. Reform-minded watchdogs were appalled that any contract of any description was given to a bankrupt company whose $11 billion accounting fraud scandal was the largest in history, a company that is regarded as the poster child for everything that is dysfunctional about American corporations today. Budget-watchers were aghast at the outrageous cost. And then there is the sheer stupidity of it all.

Satellite phones make sense in a place like Baghdad, but cell phones do not. Satellite phones are reliable, though slightly cumbersome. They work everywhere, even in the roughest conditions, which is why Afghan warlords use them. They can be depended on when other means of communication have failed. Cell phones, by contrast, cannot even be relied on in major U.S. cities, where the networks are as good as the still-evolving technology allows.

The contract is for a small, temporary network. Its price tag is $45 million for 5,000 to 10,000 phones, if there are no cost overruns. That works out to $4,500 to $9,000 per phone. Since many people carry two or three phones, the cost per user is higher. These figures are so grotesque that they make clean government advocates yearn for the good ol’ days when the Pentagon confined its spending excesses to $640 ash trays. Had this contract been put out for open bidding, companies that have actually done this type of work before would not only have been interested but would probably have agreed to a more reasonable dollar figure.

The notion of plunking down any cell phone equipment amid the rubble and chaos of a devastated, crime-ridden city like Baghdad is foolish. The 19 antennas and base stations that will form the backbone of the network will quickly become tempting targets to every Iraqi who is angry with Americans, and even if soldiers are diverted from their regular duties and used to provide tight security for the equipment, it is highly probable that a few antennas will get hit from time to time and cause the phones to go dead. Moreover, cell phone networks run on electricity, a commodity that is likely to remain scarce in Iraq for some time. The amount of electricity needed just to keep the base stations cool enough to operate in the summer heat is unlikely to be available, and blackouts pose their own special problems for cell phone systems. Installing generators to power the equipment will only add more targets for irate Iraqis to attack. The bottom line is that even if the proposed system were built out, the best case scenario is that it would provide intermittent phone service in some parts of the city. Aid workers, military personnel and others who need dependable phone service would be out of luck.

Finally, there is the question of whether WorldCom should be eligible for any government contracts. Last year, when the Government Accounting Office reviewed another contract between the Department of Defense and WorldCom, it concluded that the DoD "relied on grossly inaccurate financial information in making a determination that WorldCom was a responsible contractor." That is a polite way of saying that WorldCom lied. Groups from the left, right and center have lobbied Congress to exclude WorldCom from all government work. They have not forgotten that WorldCom’s spectacular bankruptcy reamed investors’ portfolios when its stock price dropped 99%, put thousands of employees out of work and wiped out their retirement accounts, cheated suppliers who will never be paid what they are owed and wracked other economic mayhem, and they continually remind us that its purported culture of deceit has not yet been supplanted with a culture of fairness and decency. The fact that the company recently paid a record $500 million penalty to the SEC has not quieted critics, who claim that this fine is merely a slap on the wrist, is not in proportion to the damage done and serves as further evidence that the current administration shows favoritism.

Our government looks like – and is – a hypocrite when it encourages other nations to have a free and open economy while practicing exactly the opposite. Deals such as this only provide additional ammunition to those who would disparage us.

Pat Gerber ( patpatsf@yahoo.com ) lives in San Francisco.




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Halliburton's Deals Greater Than Thought
By Michael Dobbs
Washington Post

Thursday 28 August 2003

Halliburton, the company formerly headed by Vice President Cheney, has won contracts worth more than $1.7 billion under Operation Iraqi Freedom and stands to make hundreds of millions more dollars under a no-bid contract awarded by the U.S. Army Corps of Engineers, according to newly available documents.

The size and scope of the government contracts awarded to Halliburton in connection with the war in Iraq are significantly greater than was previously disclosed and demonstrate the U.S. military's increasing reliance on for-profit corporations to run its logistical operations. Independent experts estimate that as much as one-third of the monthly $3.9 billion cost of keeping U.S. troops in Iraq is going to independent contractors.

Services performed by Halliburton, through its Brown and Root subsidiary, include building and managing military bases, logistical support for the 1,200 intelligence officers hunting Iraqi weapons of mass destruction, delivering mail and producing millions of hot meals. Often dressed in Army fatigues with civilian patches on their shoulders, Halliburton employees and contract personnel have become an integral part of Army life in Iraq.

Spreadsheets drawn up by the Army Joint Munitions Command show that about $1 billion had been allocated to Brown and Root Services through mid-August for contracts associated with Operation Iraqi Freedom, the Pentagon's name for the U.S.-led war and occupation. In addition, the company has earned about $705 million for an initial round of oil field rehabilitation work for the Army Corps of Engineers, a corps spokesman said.

Specific work orders assigned to the subsidiary under Operation Iraqi Freedom include $142 million for base camp operations in Kuwait, $170 million for logistical support for the Iraqi reconstruction effort and $28 million for the construction of prisoner of war camps, the Army spreadsheet shows. The company was also allocated $39 million for building and operating U.S. base camps in Jordan, the existence of which the Pentagon has not previously publicly acknowledged.

Over the past decade, Halliburton, a Houston-based company that made its name servicing pipelines and oil wells, has positioned itself to take advantage of an increasing trend by the federal government to contract out many support operations overseas. It has emerged as the biggest single government contractor in Iraq, followed by such companies as Bechtel, a California-based engineering firm that has won hundreds of millions of dollars in U.S. Agency for International Development reconstruction contracts, and Virginia-based DynCorp, which is training the new Iraqi police force.

The government said the practice has been spurred by cutbacks in the military budget and a string of wars since the end of the Cold War that have placed enormous demand on the armed forces.

But, according to Rep. Henry A. Waxman (D-Calif.) and other critics, the Iraq war and occupation have provided a handful of companies with good political connections, particularly Halliburton, with unprecedented money-making opportunities. "The amount of money [earned by Halliburton] is quite staggering, far more than we were originally led to believe," Waxman said. "This is clearly a trend under this administration, and it concerns me because often the privatization of government services ends up costing the taxpayers more money rather than less."

Wendy Hall, a Halliburton spokeswoman, declined to discuss the details of the company's operations in Iraq, or confirm or deny estimates of the amounts the company has earned from its contracting work on behalf of the military. In an e-mail message, however, she said that suggestions of war profiteering were "an affront to all hard-working, honorable Halliburton employees."

Hall added that military contracts were awarded "not by politicians but by government civil servants, under strict guidelines."

Daniel Carlson, a spokesman for the Army's Joint Munitions Command, said Brown and Root had won a competitive bidding process in 2001 to provide a wide range of "contingency" services to the military in the event of the deployment of U.S. troops overseas. He said the contract, known as the Logistics Civil Augmentation Program, or LOGCAP, was designed to free uniformed personnel for combat duties and did not preclude deals with other contractors.

Carlson said the money earmarked for Brown and Root was an estimate, and could go "up or down" depending on the work performed.

The Joint Munitions Command provided The Washington Post with an updated version of a spreadsheet the Army released to Waxman earlier this month, giving detailed estimates of money obligated to Brown and Root under Operation Iraqi Freedom. Estimates of the company's revenue from Iraq have been increasing steadily since February, when the Corps of Engineers announced the company had won a $37.5 million contract for pre-positioning fire equipment in the region.

In addition to its Iraq contracts, Brown and Root has also earned $183 million from Operation Enduring Freedom, the military name for the war on terrorism and combat operations in Afghanistan, according to the Army's numbers.

Waxman's interest in Halliburton was ignited by a routine Corps of Engineers announcement in March reporting that the company had been awarded a no-bid contract, with a $7 billion limit, for putting out fires at Iraqi oil wells. Corps spokesmen justified the lack of competition on the grounds that the operation was part of a classified war plan and the Army did not have time to secure competitive bids for the work.

The corps said the oil rehabilitation deal was an offshoot of the LOGCAP contract, a one-year agreement renewable for 10 years. Individual work orders assigned under LOGCAP do not have to be competitively bid. But Waxman and other critics maintain that the oil work has nothing to do with the logistics operation.

The practice of delegating a vast array of logistics operations to a single contractor dates to the aftermath of the 1991 Persian Gulf War and a study commissioned by Cheney, then defense secretary, on military outsourcing. The Pentagon chose Brown and Root to carry out the study and subsequently selected the company to implement its own plan. Cheney served as chief executive of Brown and Root's parent company, Halliburton, from 1995 to 2000, when he resigned to run for the vice presidency.

At the time, said P.W. Singer, a Brookings Institution scholar and author of "Corporate Warriors," it was impossible to predict how lucrative the military contracting business would become. He estimates the number of contract workers in Iraq at 20,000, or about one for every 10 soldiers. During the Gulf War, the proportion was about one in 100.

Brown and Root's revenue from Operation Iraqi Freedom is already rivaling its earnings from its contracts in the Balkans, and is a major factor in increasing the value of Halliburton shares by 50 percent over the past year, according to industry analysts. The company reported a net profit of $26 million in the second quarter of this year, in contrast to a $498 million loss in the same period last year.

Waxman aides said they have been told by the General Accounting Office that Brown and Root is likely to earn "several hundred million more dollars" from the no-bid Corps of Engineers contract to rehabilitate Iraqi oil fields. Waxman, the ranking minority member on the House Government Reform Committee, had asked the GAO to investigate the corps' decision not to bid out the contract.

After a round of unfavorable publicity, the corps explained that the sole award to Brown and Root would be replaced by a competitively bid contract. But the deadline for announcing the results of the competition has slipped from August to October, causing rival companies to complain that little work will be left for anybody else. Bechtel, one of Halliburton's main competitors, announced this month that it would not bid for the corps contract and would instead focus on securing work from the Iraqi oil ministry.

In addition to the Army contracts, Halliburton has profited from other government-related work in Iraq and the war on terrorism, and has a $300 million contract with the Navy structured along similar lines to LOGCAP.

Pentagon officials said the increasing reliance on contractors is inevitable, given the multiple demands on the military, particularly since Sept. 11, 2001. Defense Secretary Donald H. Rumsfeld is a champion of "outsourcing," writing in The Post in May that "more than 300,000 uniformed personnel" were doing jobs that civilians could do.

Independent experts said the trend toward outsourcing logistic operations has resulted in new problems, such as a lack of accountability and transparency on the part of private military firms and sometimes questionable billing practices.

A major problem in Iraq, Singer said, has been the phenomenon of "no-shows" caused by the inhospitable security environment, including the killing of contract workers, including a Halliburton mail delivery employee earlier this month.

"At the end of the day, neither these companies nor their employees are bound by military justice, and it is up to them whether to show up or not," Singer said. "The result is that there have been delays in setting up showers for soldiers, getting them cooked meals and so on."

A related concern is the rising cost of hiring contract workers because of skyrocketing insurance premiums. Singer estimates that premiums have increased by 300 percent to 400 percent this year, costs that are passed on to the taxpayer under the cost-plus-award fee system that is the basis for most contracts.

The LOGCAP contract awarded to Brown and Root in 2001 was the third, and potentially most lucrative, super-contract awarded by the Army. Brown and Root won the first five-year contract in 1992, but lost the second to rival DynCorp in 1997 after the GAO criticized the Army for not adequately controlling contracting costs in Bosnia.

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US: No-Bid Contracts Win Katrina Work

White House uses practices criticized in Iraq rebuilding for hurricane-related jobs.

by Yochi J. Dreazen, The Wall Street Journal
September 12th, 2005



WASHINGTON -- The Bush administration is importing many of the
contracting practices blamed for spending abuses in Iraq as it begins
the largest and costliest rebuilding effort in U.S. history.

The first large-scale contracts related to Hurricane Katrina , as in
Iraq, were awarded without competitive bidding, and using so-called
cost-plus provisions that guarantee contractors a certain profit
regardless of how much they spend.

Contracts for temporary housing have been awarded to politically
connected companies like Fluor Corp. and Bechtel National Inc., a unit
of Bechtel Group Inc., leading congressional Democrats to renew charges
of cronyism they first leveled when the firms won lucrative work in Iraq.

In response, there have been bipartisan calls in Congress to establish a
new government agency to manage the Louisiana rebuilding, and possibly
have it run by a prominent figure such as former New York Mayor Rudolph
Giuliani or former Secretary of State Colin Powell.

Separately, House Minority Leader Nancy Pelosi (D., Calif.) yesterday
said she supported the creation of an "antifraud commission" to oversee
government contracts issued in response to the disaster.

Some are questioning as well whether the Federal Emergency Management
Agency -- which has a small procurement staff responsible for spending a
relatively tiny amount of federal money each year -- is capable of
effectively disbursing tens of billions of dollars.

In Iraq, several audits found that contracting problems were exacerbated
by overworked and inexperienced government procurement officers who
weren't up to the difficult work they were entrusted to carry out.

"You can easily compare FEMA's internal resources to what you saw in the
early days of the Coalition Provisional Authority in Iraq: a small,
underfunded organization taking on a Herculean task under tremendous
time pressure," said Steven Schooner, a contracting expert at George
Washington University law school in Washington. "That is almost by
definition a recipe for disaster."

FEMA already is under fire for its poor initial response to Katrina. Its
chief, Michael Brown, was removed on Friday as head of the direct relief
effort. (See related article.)

Officials at the agency, a division of the sprawling Department of
Homeland Security, said they are up to the task of ensuring that the
money will be spent efficiently. "FEMA has extensive experience in
acquiring the products and services required to make sure that the
support needed in response and recovery operations is secured quickly to
meet the needs of disaster victims," said James McIntyre, a spokesman
for the agency.

In Iraq, audits have uncovered evidence that hundreds of millions of
dollars were misspent by some contractors willing to stretch or break
rules, while government officials were unwilling or unable to prevent
abuses. Government reports have detailed systemic management failings,
lax or nonexistent oversight and alleged fraud and embezzlement by
officials charged with administering the rebuilding, as well as
questionable activities by the contractors they employed. For example,
audits have found evidence of procurement officers paying contractors
twice for the same work and spending tens of millions of dollars with
little to no documentation.

Officials from Bechtel and Fluor declined to discuss comparisons between
their work in Iraq and the Gulf Coast. Bechtel spokesman Howard Menaker
said the company's deal with the government was still being finalized
and declined to comment further. A Fluor spokesman referred questions to
FEMA.

The administration has allocated more than $62 billion to the regions
hit by Katrina, and the final price tag is expected to soar to more than
$100 billion. Already, at least seven contracts have been awarded for
the post-Katrina effort. The Army Corps of Engineers late last week
announced a $100 million deal with Shaw Group Inc. of Baton Rouge, La.,
for relief operations including the pumping of flood water out of New
Orleans. Halliburton Co.'s Kellogg, Brown & Root unit, also prominent in
the Iraq reconstruction effort, is doing repair work at three U.S. Navy
facilities in Mississippi as part of an existing Pentagon contract.

FEMA, meanwhile, has announced four major contracts with firms charged
with providing emergency housing relief in storm-battered areas of
Louisiana, Alabama and Mississippi. The $100 million contracts with
Bechtel, Fluor, Shaw Group and Denver-based CH2M Hill Cos. were awarded
after what FEMA described as "limited competition." FEMA also recently
hired Houston-based Kenyon Worldwide Disaster Management to collect
human remains in the disaster zone. FEMA didn't announce the total of
that contract, and Kenyon didn't respond to requests to comment.

All the deals include cost-plus language, which means the companies can
pass along all their costs -- plus a predetermined profit -- to the
government. Similar provisions were routinely used in Iraq. Critics said
they encouraged waste by removing any incentive to control costs.

FEMA officials and outside contracting experts said no-bid contracting
and cost-plus language have been used in prior disasters to speed the
government's ability to get contractors on the ground and in place as
fast as possible. They said cost-plus, in particular, is required after
disasters like Katrina because it is difficult, if not impossible, for
the government to know exactly how big the relief and rebuilding efforts
ultimately will be.

FEMA has been given primary responsibility for spending the more than
$50 billion in aid approved by lawmakers last week, which means it will
be the lead contracting agency for months to come. That gives it a
responsibility well beyond its normal role in past disasters. The agency
has never before been asked to disburse money at the level that it will
for Katrina. Of the $305 billion spent on federal-government procurement
in fiscal year 2003, FEMA accounted for $87 million. The agency already
has spent many times that in the Katrina aftermath.

Unlike in Iraq, where an inspector general is tasked solely with probing
reconstruction contracts, FEMA has said oversight for the Katrina relief
effort will be provided by the Department of Homeland Security's
inspector general.

Several Democrats and outside experts have raised additional questions
about how the government spends the money allocated for Katrina relief.
A provision in the latest Katrina relief bill temporarily raised the
spending limit on government credit cards used for Katrina-related
purchases to $250,000 from $15,000 per transaction, to allow officials
to buy needed supplies more quickly than if they went through normal
procurement channels.

Numerous audits have found that the government lacks adequate controls
to prevent misuse of such cards. In 2000, for instance, a probe by the
General Accounting Office, now the Government Accountability Office,
found that government credit cards in two California Navy units had been
used for more than $660,000 in fraudulent or questionable purchases of
personal goods ranging from jewelry to pizza. The report by Congress's
investigative arm found that government employees bought numerous
objects of "questionable government need" like $2,500 flat-panel
computer monitors.

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(CBS) Almost as soon as the last bomb was dropped over Iraq, the United States began the business of rebuilding the country. As it turns out, it's very big business.

The U.S. will spend approximately $25 billion to repair Iraq by the end of next year - and billions will be needed after that.

Almost all of that money will go to private contractors who vie for lucrative government deals to rebuild Iraq's roads, retrain its police force and operate its airports.

Given all the taxpayer money involved, you might think the process for awarding those contracts would be open and competitive.

But, as 60 Minutes reported last spring, the earliest contracts were given to a few favored companies. And some of the biggest winners in the sweepstakes to rebuild Iraq have one thing in common: lots of very close friends in very high places. Correspondent Steve Kroft reports.
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One is Halliburton, the Houston-based energy services and construction giant whose former CEO, Dick Cheney, is now vice president of the United States.

Even before the first shots were fired in Iraq, the Pentagon had secretly awarded Halliburton subsidiary Kellogg, Brown & Root a two-year, no-bid contract to put out oil well fires and to handle other unspecified duties involving war damage to the country’s petroleum industry. It is worth up to $7 billion.

But Robert Andersen, chief counsel for the Army Corps of Engineers, says that oil field damage was much less than anticipated and Halliburton will end up collecting only a small fraction of that $7 billion. But he can't say how small a fraction or exactly what the contract covers because the mission and the contract are considered classified information.

Under normal circumstances, the Army Corps of Engineers would have been required to put the oil fire contract out for competitive bidding. But in times of emergency, when national security is involved, the government is allowed to bypass normal procedures and award contracts to a single company, without competition.

And that's exactly what happened with Halliburton.

“We are the only company in the United States that had the kind of systems in place, people in place, contracts in place, to do that kind of thing,” says Chuck Dominy, Halliburton’s vice president for government affairs and its chief lobbyist on Capitol Hill.

He says the Pentagon came to Halliburton because the company already had an existing contract with the Army to provide logistical support to U.S. troops all over the world.

“Let me put a face on Halliburton. It's one of the world's largest energy services companies, and it has a strong engineering and construction arm that goes with that” says Dominy.

“You'll find us in 120 countries. We've got 83,000 people on our payroll, and we're involved in a ton of different things for a lot of wonderful clients worldwide.”

“They had assets prepositioned,” says Anderson. “They had capability to reach out and get sub-contractors to do the various types of work that might be required in a hostile situation.”

“The procurement of this particular contract was done by career civil servants, and I know that it's a perception that those at the very highest levels of the administration, Democrat and Republican, get involved in procurement issues. It can happen. But for the very most part, the procurement system is designed to keep those judgments with the career public servants.”

But is political influence not unknown in the process? In this particular case, Anderson says, it was legally justified and prudent.

But not everyone thought it was prudent. Bob Grace is president of GSM Consulting, a small company in Amarillo, Texas, that has fought oil well fires all over the world. Grace worked for the Kuwait government after the first Gulf War and was in charge of firefighting strategy for the huge Bergan Oil Field, which had more than 300 fires. Last September, when it looked like there might be another Gulf war and more oil well fires, he and a lot of his friends in the industry began contacting the Pentagon and their congressmen.

“All we were trying to find out was, who do we present our credentials to,” says Grace. “We just want to be able to go to somebody and say, ‘Hey, here's who we are, and here's what we've done, and here's what we do.’”

“They basically told us that there wasn't going to be any oil well fires.”
Grace showed 60 Minutes a letter from the Department of Defense saying: "The department is aware of a broad range of well firefighting capabilities and techniques available. However, we believe it is too early to speculate what might happen in the event that war breaks out in the region."

It was dated Dec. 30, 2002, more than a month after the Army Corps of Engineers began talking to Halliburton about putting out oil well fires in Iraq.

“You just feel like you're beating your head against the wall,” says Grace.
However, Andersen says the Pentagon had a very good reason for putting out that message.

“The mission at that time was classified, and what we were doing to assess the possible damage and to prepare for it was classified,” says Andersen. “Communications with the public had to be made with that in mind.”

“I can accept confidentiality in terms of war plans and all that. But to have secrecy about Saddam Hussein blowing up oil wells, to me, is stupid,” says Grace. “I mean the guy's blown up a thousand of them. So why would that be a revelation to anybody?”

But Grace says the whole point of competitive bidding is to save the taxpayers money. He believes they are getting a raw deal. “From what I’ve read in the papers, they're charging $50,000 a day for a five-man team. I know there are guys that are equally as well-qualified as the guys that are over there that'll do it for half that.”

Grace and his friends are no match for Halliburton when it comes to landing government business. Last year alone, Halliburton and its Brown & Root subsidiary delivered $1.3 billion worth of services to the U.S. government.
Much of it was for work the U.S. military used to do itself.

“You help build base camps. You provide goods, laundry, power, sewage, all the kinds of things that keep an army in place in a field operation,” says Dominy.

“Young soldiers have said to me, ‘If I go to war, I want to go to war with Brown & Root.’"

And they have, in places like Afghanistan, Rwanda, Somalia, Kosovo and now Iraq.

“It's a sweetheart contract,” says Charles Lewis, executive director of the Center For Public Integrity, a non-profit organization that investigates corruption and abuse of power by government and corporations. “There's no other word for it.”

Lewis says the trend towards privatizing the military began during the first Bush administration when Dick Cheney was secretary of defense. In 1992, the Pentagon, under Cheney, commissioned the Halliburton subsidiary Brown & Root to do a classified study on whether it was a good idea to have private contractors do more of the military's work.

“Of course, they said it's a terrific idea, and over the next eight years, Kellogg, Brown & Root and another company got 2,700 contracts worth billions of dollars,” says Lewis.

“So they helped to design the architecture for privatizing a lot of what happens today in the Pentagon when we have military engagements. And two years later, when he leaves the department of defense, Cheney is CEO of Halliburton. Thank you very much. It's a nice arrangement for all concerned.”

During the five years that Cheney was at Halliburton, the company nearly doubled the value of its federal contracts, and the vice president became a very rich man.

Lewis is not saying that Cheney did anything illegal. But he doesn't believe for a minute that this was all just a coincidence.

“Why would a defense secretary, former chief of staff to a president, and former member of congress with no business experience ever in his life, not for a day, why would he become the CEO of a multibillion dollar oil services company,” asks Lewis

“Well, it could be related to government contracts. He was brought in to raise their government contract profile. And he did. And they ended up with billions of dollars in new contracts because they had a former defense secretary at the helm.”

Cheney, Lewis says, may be an honorable and brilliant man, but “as George Washington Plunkett once said, ‘I saw my … seen my opportunities and I took them."

Both Halliburton and the Pentagon believe Lewis is insulting not only the vice president but thousands of professional civil servants who evaluate and award defense contracts based strictly on merit.

But does the fact that Cheney used to run Halliburton have any effect at all on the company getting government contracts?

“Zero,” says Dominy. “I will guarantee you that. Absolutely zero impact.”

“In fact, I wish I could embed [critics] in the department of defense contracting system for a week or so. Once they'd done that, they'd have religion just like I do, about how the system cannot be influenced.”
Dominy has been with Halliburton for seven years. Before that, he was former three-star Army general. One of his last military assignments was as a commander at the Army Corps of Engineers.

And now, the Army Corps of Engineers is also the government agency that awards contracts to companies like Halliburton.

Asked if his expertise in that area had anything to do with his employment at Halliburton, Dominy replies, “None.”

But Lewis isn’t surprised at all.

“Of course, he’s from the Army Corps. And of course, he’s a general,” says Lewis. “I’m sure he and no one else at Halliburton sees the slightest thing that might look strange about that, or a little cozy maybe.”

Lewis says the best example of these cozy relationships is the defense policy board, a group of high-powered civilians who advise the secretary of defense on major policy issues - like whether or not to invade Iraq. Its 30 members are a Who's Who of former senior government and military officials.

There’s nothing wrong with that, but as the Center For Public Integrity recently discovered, nine of them have ties to corporations and private companies that have won more than $76 billion in defense contracts. And that's just in the last two years.

“This is not about the revolving door, people going in and out,” says Lewis. “There is no door. There's no wall. I can't tell where one stops and the other starts. I'm dead serious.”

“They have classified clearances, they go to classified meetings and they're with companies getting billions of dollars in classified contracts. And their disclosures about their activities are classified. Well, isn't that what they did when they were inside the government? What's the difference, except they're in the private sector.”

Richard Perle resigned as chairman of the defense policy board last month after it was disclosed that he had financial ties to several companies doing business with the Pentagon.

But Perle still sits on the board, along with former CIA director James Woolsey, who works for the consulting firm of Booz, Allen, Hamilton. The firm did nearly $700 million dollars in business with the Pentagon last year.

Another board member, retired four-star general Jack Sheehan, is now a senior vice president at the Bechtel corporation, which just won a $680 million contract to rebuild the infrastructure in Iraq.

That contract was awarded by the State Department, which used to be run by George Schultz, who sits on Bechtel's board of directors.

“I'm not saying that it's illegal. These guys wrote the laws. They set up the system for themselves. Of course it's legal,” says Lewis.

“It just looks like hell. It looks like you have folks feeding at the trough. And they may be doing it in red white and blue and we may be all singing the "Star Spangled Banner," but they're doing quite well.”
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Halliburton has done extremely well. So far, the company has earned almost a billion dollars on the oil well fire contract, and could earn another billion providing logistical support for U.S. troops stationed in Iraq.

As for Vice President Cheney, he says he had nothing to do with the Army Corp's decision to give the no bid contract to Halliburton. Cheney also insists he cut all financial ties to the company three years ago.

But this week, Senate democrats challenged that assertion. They say the vice president still gets hundreds of thousands of dollars from his former company each year - and they called for congressional hearings on Halliburton's contract.