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.

No Bid And No Problem
by Charlie Cray
July 07, 2004


There may have been a transfer of sovereignty in Iraq last week, but on the ground things look much the same: most Iraqis without reliable utility service and no-bid contractors scooping up billions of Iraq's oil money without producing any measurable improvements. Here, Center for Corporate Policy Director Charlie Cray traces the connections between the Bush administration and corporate interests and explains how no-bid contracts are undermining democracy in Iraq—and at home.

Charlie Cray is the director of the Center for Corporate Policy and a collaborator on Halliburton Watch. His book, The People’s Business: Controlling Corporations and Restoring Democracy, (co-authored with Lee Drutman) will be published by Berrett-Koehler in November.

The U.S. occupation of Iraq may be entering a new phase with the nominal transference of sovereignty, but reports issued from and about Iraq in recent days suggest that the promised reconstruction is far from done. And while many well-connected cronies rush home to reinforce their friends’ re-election efforts, it’s not clear that those left behind will ever finish the job—a circumstance that is bound to aggravate existing tensions in the country.

According to the Government Accounting Office (GAO) and The New York Times , more than a year after the first infamous no-bid contracts were given out Halliburton and Bechtel, only a fraction of the projected construction projects have been carried out. Supplies of electricity and water are no better for most Iraqis, and in some cases utilities are much worse than they were before the invasion in the spring of 2003.

A report put out by Christian Aid last week suggests that the mess left behind by the CPA may be much worse than the well-known abuses associated with the reconstruction money allocated by Congress. The UK-based group—which has closely monitored the CPA’s handling of Iraq’s oil-related revenues—reports that CPA officials left the country after spending nearly $20 billion out of the Development Fund of Iraq (derived from oil revenues) with virtually no accountability or transparency.

“For the entire year that the CPA has been in power in Iraq, it has been impossible to tell with any accuracy what the CPA has been doing with Iraq’s money,” said Helen Collinson, a policy analyst with Christian Aid.

The CPA’s hasty exit strategy will remind some observers of the stampede of greedy executives who cashed out their options a few years ago before leaving others to deal with the mess they left behind. In the run up to the handover, Christian Aid reports, CPA officials spent nearly $2 billion of the “Iraqi people’s” money. The transitional government will be in place just two weeks before an initial KPMG audit of the CPA’s handling of the development fund is due.

Meanwhile, although U.S.-funded reconstruction work will continue, festering resentments over unfulfilled promises of a Marshall Plan-scale reconstruction and refurbishment of the country’s infrastructure will likely continue to fuel support for the resistance. The resistance itself all but guarantees that a significant portion of the money earmarked for reconstruction will have to be spent on private security protection for reconstruction personnel (GAO estimates the current fraction is 18 percent), while the projects themselves will be prime targets for sabotage.

It’s also unclear if the private military firms providing the security could be held accountable in the event of human-rights violations or whether the contractors themselves can be held to account for shoddy work. A new contract to coordinate contractor security was awarded in May to the British firm Aegis, whose founder Tom Spicer’s resumé includes a history of arms smuggling in countries like Sierra Leone. As the result of a parting gift to the contractors, CPA chief Paul Bremer signed a final order on June 28 which guarantees that U.S. contractors will be exempted from prosecution by the country's new interim government for anything that happens while they are performing official duties.

Despite the transference of sovereignty, the CPA’s other various orders (including those that open up certain state-owned businesses to foreign investors, which critics say violate international norms restricting an occupying power’s right to restructure the occupied country’s economy) will also remain in effect during the coming transition.

Meanwhile, more than 100,000 U.S. troops will be forced to stay and occupy the country through the hot summer and for the foreseeable future, while many of the Bush administration’s war-profiteering cronies will be coming home—as reinforcements for the Bush/Cheney re-election campaign. In fact, a few are Bush/Cheney “Pioneers” and “Rangers.” (They could just as well have called them “rocketeers” for taking fundraising to new levels, but someone must have noticed how close to “racketeer” that sounded).

To name a few of the war profiteers wired into the Bush/Cheney patronage system:

In 2003, a few of Bush’s closest political allies created New Bridge Strategies to help corporations “evaluate and take advantage of business opportunities in the Middle East following the conclusion of the U.S.-led war.” New Bridge shares its Washington, DC offices with Barbour, Griffith & Rogers—the high-powered Republican lobbying firm founded by Haley Barbour, former head of the Republican National Committee and current governor of Mississippi. The firm’s CEO is Joe Allbaugh, the Bush/Cheney 2000 national campaign manager (and subsequent head of FEMA), and others involved include Ed Rogers (a top aide to Bush Sr.) and Lanny Griffith (who held several top advisory positions under Bush Sr., and is a 2004 Pioneer). Allbaugh recently registered as a lobbyist with Lockheed Martin. Looks like he finally figured out where the big money is.
Top GOP strategist Charlie Black’s clients have included Fluor, which received a big public works contract in Iraq to reconstruct the country’s water and electricity. Black is chairman of BKSH, an affiliate of global public relations giant Burson-Marsteller, and a big backer of Ahmed Chalabi before the war. In June, the London-based Telegraph reported that an arrest warrant was issued by the Iraqi police for Francis Brooke, a BKSH consultant who attempted to block a recent raid on Chalabi’s Iraqi headquarters, after Chalabi was accused of passing American secrets to Iran.
In the administration’s drive to create a beacon for democracy for the entire Middle East, another outstanding example of “do as we say and not as we do” has been the way the contract to develop a “competitive private sector” in Iraq has been handled. In this instance, the U.S. Agency for International Development allowed BearingPoint to help write the specifications for the $240 million contract, which in effect knocked its competitors out of the running, according to AID’s own inspector general. BearingPoint (formerly KPMG Consulting) and its employees have given more than $117,000 to the 2000 and 2004 Bush election campaigns. In 2003, an $80 million BearingPoint contract in Florida was withdrawn after critics complained about the company’s close ties to Gov. Jeb Bush.
Former Rep. Bob Livingston, R-La., runs a lobbying firm that has represented well-placed Iraqi families seeking to form business alliances with U.S. and foreign companies wishing to do business in Iraq. Livingston has also gained some notoriety in Washington for lobbying against provisions that would ban tax-dodging companies that have incorporated offshore from being eligible for federal contracts. Recently he was part of an effort that succeeded in convincing Congress to drop an attempt to block the Department of Homeland Security’s from giving Bermuda-based Accenture a $10 billion contract for, of all things, “border control.” (U.S. taxpayers who don’t have any offshore accounts might not be happy to learn that Accenture also has a contract to help the IRS upgrade its website.)
In 2003 Coalition Provisional Authority chief Paul Bremer issued a decree that Iraq’s 200 state-owned companies would be privatized and that foreign owners would be allowed to expatriate 100 percent of the profits. This looting of Iraq’s state-owned businesses—disguised as “private-sector development” was stalled by worker protests and skepticism among wary investors concerned about the strength of the insurgency. Thomas Foley—a former Citigroup banker assigned by the CPA to oversee the privatization process, returned to Greenwich, Conn. in early 2004, where he is the state co-chair for the Bush/Cheney re-election campaign.
Three weeks after construction and engineering firm Washington Group was awarded a contract to rebuild water projects in Iraq, 31 company employees gave $27,750 to Bush. By the end of April 2004, CEO Stephen Hanks had become a Bush campaign “Pioneer” (by raising more than $100,000). Washington Group spokesman Jack Hermann was unconcerned about any appearance of impropriety. "You either participate in the system or you don't," Hermann told a Bloomberg reporter. "People can draw ulterior motives. We understand the baggage that comes with that."
The kingpin of corporate cronies, of course, is Vice President Cheney’s old firm, Halliburton. Recent revelations that a political appointee working under Douglas Feith made the decision to override objections from career Pentagon contract experts to award Halliburton a key oil-related contract which provided the company an inside track for no-bid billion-dollar contracts has given partisan critics plenty of ammunition to criticize the administration’s bending of contract rules to benefit their friends. The fact that Cheney’s chief of staff was notified of the decision contradicts the vice president’s claim that he has had no involvement in the decision and, along with his televised assertion that he has no “ongoing financial interest” in the company (while continuing to receive more than $150,000 in deferred compensation payments) has made his connection to the king of corporate cronies a significant potential liability for the administration’s credibility and the upcoming election.

“The entire Halliburton affair represents the worst in government contracts with private companies: influence peddling, kickbacks, overcharging and no-bid deals," charged Sen. Frank Lautenberg, D-N.J. in a March 2004 Associated Press article. But the vice president’s old firm is by no means the only war profiteer that has close ties to top administration officials. In fact, just as the U.S. media failed to objectively cover the war after being em-bedded with the troops, they have mostly failed to map out how thoroughly inbedded this network of contractors is with the Bush family, friends and campaign cronies.

For example, last year, the Financial Times reported that Neil Bush has been involved in the Iraq contract gravy train through his association with John Howland and Jamal Daniel of New Bridge Strategies. The president's brother wrote letters to push businesses established by Howland and Daniel, including Crest Investment Corporation, which in turn employs Bush as co-chairman. The FinancialTimes reported that Bush receives the equivalent of $60,000 a year from Crest for working an average of three or four hours a week. The failure of the U.S. media to report this story is amazing. Imagine if the story involved Roger Clinton.

The blame also falls on Congress for not passing many proposed amendments to the Iraq appropriations that would have brought a higher standard of oversight and accountability to the contracts. As Sen. Dorgan and other members have suggested, the outsourcing of the oversight process itself is another way that the Bush administration has insulated the contractors from any real level of accountability.

In January 2004, Rep. Jim Leach, R-Iowa, introduced a resolution calling for the creation of a bipartisan committee to “investigate the awarding and carrying out of contracts” in Iraq, Afghanistan and elsewhere. Leach’s proposal is modeled after Harry Truman’s World War II committee—which saved taxpayers billions by rooting out corruption. It’s worth noting that Truman’s commission was created by a Congress controlled by the same party as the president.

Just as it was then, oversight should not be considered partisan,” Leach asserted. “It should be viewed solely in the context of protecting and preserving public resources and bolstering people’s confidence in their government.”
Of course, Leach’s bill was quietly quashed by Republican leaders who clearly understood that any investigation of Halliburton would be political suicide during an election year.

Federal No-Bid Contracts On Rise
By Robert O'Harrow Jr.
The Washington Post
Wednesday 22 August 2007

Use of favored firms a common shortcut.
Under pressure from the White House and Congress to deliver a long-delayed plan last year, officials at the Department of Homeland Security's counter-narcotics office took a shortcut that has become common at federal agencies: They hired help through a no-bid contract. And the firm they hired showed them how to do it.


Scott Chronister, a senior official in the Office of Counternarcotics Enforcement, reached out to a former colleague at a private consulting firm for advice. The consultant suggested that Chronister's office could avoid competition and get the work done quickly under an arrangement in which the firm "approached the government with a 'unique and innovative concept,' " documents and interviews show.

A contract worth up to $579,000 was awarded to the consultant's firm in September.

Though small by government standards, the counter-narcotics contract illustrates the government's steady move away from relying on competition to secure the best deals for products and services.


A recent congressional report estimated that federal spending on contracts awarded without "full and open" competition has tripled, to $207 billion, since 2000, with a $60 billion increase last year alone. The category includes deals in which officials take advantage of provisions allowing them to sidestep competition for speed and convenience and cases in which the government sharply limits the number of bidders or expands work under open-ended contracts.

Government auditors say the result is often higher prices for taxpayers and an undue reliance on a limited number of contractors.
"The rapid growth in no-bid and limited-competition contracts has made full and open competition the exception, not the rule," according to the report, by the House Oversight and Government Reform Committee.


Keith Ashdown, chief investigator at Taxpayers for Common Sense, a nonpartisan watchdog group, said that in many cases, officials are simply choosing favored contractors as part of a "club mentality."
"Contracting officials are throwing out decades of work to develop fair and sensible rules to promote competition," Ashdown said. "Government officials are skirting the rules in favor of expediency or their favored contractors."


In the case of the counter-narcotics office, a spokesman for the Homeland Security Department said it was not unusual for a contractor to tell agency officials how to arrange no-bid contracts because contractors sometimes know federal procurement regulations better than federal program managers.


Chronister and the former colleague, consultant Ron Simeone, declined to be interviewed for this article. The director of the counter-narcotics office, Uttam Dhillon, defended his office's decision to use the consultants, saying ethics officials at the Department of Homeland Security had been informed of the arrangements and approved them, as long as Chronister did not supervise his former colleagues.


Contracting officials at the department also determined that the no-bid arrangement was okay because Simeone and his subcontractor were uniquely qualified to do the work, in part because they intended to replicate some work they had done for the White House drug office, he said.


"Every step of the way, we followed the advice and guidance of our ethics officer," Dhillon said. "We did everything we're required to do by law and then some."

Dhillon said he was comfortable hiring Simeone after Chronister and another office official described the consultant as a counter-narcotics expert. He said the firm performed well.


"My goal was to get this done as quickly and efficiently as possible," he said. "He obviously had experience with this and was knowledgeable about this."


Homeland Security's counter-narcotics office was formed in 2004 to develop policies that unify various drug-enforcement programs. With fewer than a dozen employees, the office has struggled with deadlines for its budget, annual reports and the development of a system for measuring the effectiveness of drug-control efforts, Dhillon said.


After Dhillon was confirmed as the office's director in May 2006, he made the development of the measure system "one of my highest priorities," he said. He said Congress and the White House had made multiple requests for information that the office could not provide.


A senior manager at the counter-narcotics office had been assigned to the task. But Dhillon said he "came to the conclusion the office was not really in a position" to finish the work.

In July, Chronister asked Simeone for help in developing a system to measure the impact of government interdiction efforts. Simeone in turn decided to hire another consultant, John Carnevale, for help.


Chronister, Simeone and Carnevale had worked together over the years, including at the White House's Office of National Drug Control Policy. Chronister later worked as a senior policy analyst at Carnevale Associates, a policy consulting firm owned by Carnevale, before joining the counter-narcotics office.


Simeone, too, worked at Carnevale Associates. He is listed as chief scientist, on the firm's Web site. At the same time, Simeone ran his own company, Simeone Associates. Carnevale is listed on that company's Web site as a senior associate.


Carnevale said Chronister sought the meeting with Simeone last July "to explain the problems they were having related to pulling together a performance-measurement system and asked him for advice."
"Simeone suggested an approach, which he turned into a sole-source proposal," Carnevale said in an e-mail.

On Sept. 20, about a week before the contract was awarded, Chronister was given responsibility for overseeing the work, according to an e-mail obtained by The Washington Post. That changed five days later, when Chronister first told Dhillon about his ties to the consultants, Dhillon said in an interview. On advice from ethics officials at the department, Dhillon told Chronister not to work with Carnevale.


"Chronister was walled off from dealing with the contractor and subcontractor before the contract was signed," Dhillon said. "We made the decision with an abundance of caution."

But contact didn't cease between Chronister and the contractors.
Dhillon eased the prohibition on Chronister's contact with Simeone when the office expanded the demands of the contract, and Dhillon asked the contractor to also help prepare the office's annual report to Congress, which was months overdue. He said an ethics official approved the arrangement.


An Oct. 18 e-mail shows that Chronister was also included in communication involving the original project and a planned conference that included Simeone and Carnevale.

In November, the office organized a meeting with other drug enforcement agencies to present an outline of its plan, called "Performance Measures for United States Counternarcotics Enforcement Efforts." Both Simeone Associates and Carnevale Associates are listed on the documents.


Carnevale said he did not answer to Chronister for his work, which focused on budget matters. "Technically and legally speaking, Simeone was my supervisor," Carnevale said.

Chronister and Carnevale also maintained a close professional tie outside the office: They are listed as the authors of a March 2007 paper, "An Assessment of the U.S. Drug Control Budget." Chronister is listed on the paper as working at Carnevale Associates, and it includes an e-mail address for him at the firm.

Carnevale said the paper was actually written in 2004. He said Chronister was listed as a Carnevale employee because that was his job at the time. Carnevale said Chronister is no longer a paid employee.

Federal Times.com

House panel votes to strengthen protections for whistleblowers
Bill doesn’t go far enough, advocates say
By TIM KAUFFMAN
October 05, 2005
The House Government Reform Committee approved a bill Sept. 29 to strengthen whistleblower protections for federal employees and expand coverage to airport screeners and federal contract employees.
Lawmakers didn’t go as far as some advocates wanted, however. The Republican-led committee struck down an amendment by two Democrats that would have extended whistleblower protections to employees at intelligence agencies and the FBI, who are not covered under current law.
“If a whistleblower has information on our national security, we need to do everything we can to have them come forward,” said Rep. Carolyn Maloney, D-N.Y., who offered the amendment with Rep. Diane Watson, D-Calif. “The way it is now . . . we’re basically telling them to shut up, go away and be quiet.”

Committee Chairman Tom Davis, R-Va., said he didn’t know enough about the issue to vote on extending coverage to national security employees and felt that doing so could prompt objections by the White House that would make it harder to pass the larger bill.
That drew an irate response from the National Security Whistleblowers Coalition, whose members include dozens of current and former civil service and contract employees who lost their jobs or were otherwise retaliated against for making whistleblower allegations.
Coalition president Sibel Edmonds, who was fired from her job as an FBI language specialist in March 2002 after reporting security breaches and other violations to her bosses, said Davis rejected the coalition’s repeated requests for a hearing to explain why national security employees need full whistleblower protections.
“The message they are sending to these national security whistleblowers is, ‘We don’t want to hear from you,’” Edmonds said in an interview.
Despite the failure to expand protection to national security employees, good government groups praised the committee’s action to expand coverage to contract employees and airport screeners and to strengthen existing whistleblower protections.
TSA, contractor protections
The committee agreed in principle to two Democratic amendments that would expand coverage to the 45,000 passenger and baggage screeners at the Transportation Security Administration and the more than 1 million private-sector employees under contract to civilian agencies.
Questions over the exact wording of the amendments kept them from being included in the final bill approved by the committee, although Davis said the provisions would be added when the bill goes before the full House. It was unclear at press time when the House would consider the bill.
Providing full whistleblower protections to TSA screeners would give them the same rights afforded to all other employees at the Homeland Security Department, which was established after TSA was created, said Del. Eleanor Holmes Norton, D-D.C., who introduced the amendment. TSA whistleblowers currently can have their retaliation claims reviewed by Office of Special Counsel under a memorandum of understanding between the two agencies but can’t appeal those claims to the Merit Systems Protection Board, which is empowered to issue rulings that are legally binding on the agency.
Providing whistleblower protections to contract employees would close a significant loophole in the current law, said Henry Waxman, D-Calif., who introduced the measure. Waxman said the large amount of work being funneled to contractors in the aftermath of hurricanes Katrina and Rita heightens the importance of providing those employees protection for blowing the whistle on corrupt or incompetent management.
“As literally billions of federal dollars flood into Louisiana and Mississippi, the potential for waste, fraud and abuse is enormous,” Waxman said. “Federal contractors will be doing most of this work, and we need to encourage their employees to report wasteful spending.”
The Waxman amendment would allow contract employees who have submitted whistleblower complaints to agency inspectors general to file complaints in the U.S. District Court where they live if agency leaders fail to act on the complaint within 180 days.
The bill passed by the House Government Reform Committee contains provisions also found in a Senate bill that cleared the Homeland Security and Governmental Affairs Committee in April.
Stronger protections for all
Both bills are intended to strengthen whistleblower protections that advocates say have been weakened through a series of judicial rulings. The bills would clarify that employees are protected for any disclosures — no matter who they are made to or whether the employee was on the job at the time. This would reverse a narrow interpretation of the law by the courts, which says only disclosures made outside an employee’s normal job or to people outside the employee’s chain of command are covered.
Both bills also would:
• Ensure coverage for disclosures that the whistleblower reasonably believes are valid. This would erase a much harsher test imposed by the courts that requires proof of waste, fraud or abuse that cannot be contested or denied.
• Codify the so-called anti-gag provision, which makes it illegal for agencies to use nondisclosure policies or agreements to block employees from making whistleblower disclosures. Congress has added this provision to an unrelated bill each year since 1988.
• Prohibit managers from investigating an employee or job applicant in retaliation for a whistleblower disclosure.
The House bill, introduced in March by Rep. Todd Platts, R-Pa., also would allow federal whistleblowers who believe they have been retaliated against to have their case heard by a jury before the U.S. District Court where they live. That provision isn’t included in the Senate bill.
Whistleblowers would be able to file lawsuits in federal court only if OSC fails to act on their complaints within 180 days and in lieu of having their cases heard by the Merit Systems Protection Board. As with MSPB decisions, employees could appeal court rulings to the U.S. Court of Appeals for the Federal Circuit.
Although the Senate bill doesn’t expand coverage to contract employees or airport screeners, many of its provisions go further than the House bill in expanding the types of disclosures that are protected under the law and giving employees new appeals rights.
Specifically, the Senate bill would:
• Prohibit managers from revoking an employee’s security clearance or investigating an employee or job applicant in retaliation for a whistleblower disclosure.
• Protect employees who disclose classified information to lawmakers or other congressional employees who are authorized to receive such information.
• Allow whistleblowers, under a five-year pilot project, to appeal final decisions or orders by MSPB to the U.S. Court of Appeals in the circuit where they live or to the U.S. Court of Appeals for the Federal Circuit. Currently, employees can appeal only to the federal circuit.
• Allow OSC to litigate cases on behalf of federal employees in court. OSC currently can appeal cases only to MSPB.