Halliburton in the News
(scroll down to see Democrats ask probe of Halliburton)
Halliburton unit could make $7b
4/11/2003
By Stephen Glain, Boston Globe Staff
WASHINGTON -- A subsidiary of oil giant Halliburton Co., the company formerly chaired by Vice President Dick Cheney, won a contract that could run as high as $7 billion to put out oil-well fires in Iraq, according to a Pentagon official. The potential payout is 10 times what it cost to douse the inferno of burning Kuwaiti wells at the end of the Gulf War.
In a letter to Representative Henry A. Waxman, a US Army Corp of Engineers officer said the Halliburton subsidiary, Kellogg Brown & Root Services of Houston, was awarded the two-year contract to extinguish oil-well fires and to evaluate the state of Iraq's petroleum fields.
The contract was designed to cover a ''worst-case estimate'' of wartime damage and ''those services necessary to support the mission in the near term,'' wrote Lieutenant General Robert Flowers. Those services include assessments of how badly damaged the oil wells will be in the immediate aftermath of the war, Flowers wrote.
Wendy Hall, a spokeswoman for Kellogg Brown & Root, said the company would not necessarily receive the full $7 billion, much of which could go to smaller companies as subcontracting work. Hall said the company will work under the contract for an ''interim period, until the US Army Corps of Engineers procures additional contracts to provide a broad range of services required to support full execution'' of the project.
Hall said the company would not necessarily be tapped to provide the services requested beyond the interim period, which she said was impossible to quantify at this early date. Halliburton said it has been given orders for $50.3 million of work so far.
Among the many follow-up questions Waxman, a California Democrat, submitted in response to Flowers's letter was how long after hostilities end would the Army Corps expect to replace the Kellogg Brown & Root contract with contracts issued through competitive bids.
So far, the conflict in Iraq has produced minimal harm to the country's oil wells. By contrast, it took engineers nine months and about $700 million to put out the petroleum fires in Kuwait torched by retreating Iraqi forces at the end of Operation Desert Storm in 1991.
''There's gotta be something more to this than putting out a few wells,'' said Ed Porter, a senior researcher at the American Petroleum Institute. ''I've never seen a contract [summary] like this. There's really not much information there.''
Waxman and Representative John D. Dingell, a Michigan Democrat, are leading an investigation into the contract in addition to other deals relating to post-Iraq war construction. The US Agency for International Development, the chief agency responsible for Iraqi reconstruction, is reviewing bids from companies for rebuilding projects worth billions of dollars that will include the development of everything from seaports and airports to telecommunications, power grids, and water facilities.
Several of the bidding companies, including Halliburton and Bechtel Group Inc., have close ties to the Bush White House or were major contributors to the Bush presidential campaign. According to the Washington-based Center for Responsive Politics, Bechtel, which has not won a contract for the rebuilding campaign, gave $1.3 million of campaign donations to Republican candidates between 1999 and 2002. Cheney was Halliburton chairman until 2000.
A White House spokesman declined to comment on whether these factors pose potential conflicts of interest.
The process for the tender was conducted in secret, which USAID officials have said would expedite a complex process under emergency circumstances. Spokesmen for Halliburton and Bechtel stressed that their size and reputation in the development industry are far more important factors in the bidding process than whatever ties they may have with the White House.
''Bechtel is one of the world's largest and most respected construction companies,'' said company spokesman Jonathan Marshall. ''It would be inconceivable that anyone would not at least consider it for this kind of work.''
The congressional investigation was launched in part to shed light on the details of an unusual tender that is allowed under federal procurement laws in times of a national crisis. Most government contracts require competitive bids in what is usually a public process.
In a March 26 letter to Flowers, Waxman singled out the contract to Kellogg Brown & Root for having ''no set time limit and no dollar limit and is apparently structured in such a way as to encourage the contract to increase its costs and, consequently, the costs to the taxpayer.''
Flowers wrote that the $7 billion ceiling reflected the difficulty in predicting the extent of the damage to Iraqi wells and stressed that the actual value of the deal will depend on the cost of the orders placed under it. Awarding the contract, he wrote, ''was justified and approved under laws providing exceptions to full and open competition.''
By 2010, Iraq is expected to have the capacity to produce 3.8 million barrels of oil per day compared with Kuwait's 3.5 million barrels, up from the 2.2 million barrels and 1.7 million barrels the two countries could produce respectively on the eve of Iraq's invasion of its neighbor.
In a related move, Senator Susan Collins, a Maine Republican and chairwoman of the Governmental Affairs Committee, introduced a bill to require USAID to explain publicly how it is issuing contracts for postwar rebuilding work, which she said could be worth as much as $100 billion.
''I am concerned that, right off the bat, USAID is limiting competition,'' Collins said. ''Fair and full competition would ensure the best value for American taxpayers.''
Collins was joined in introducing the ''Sunshine in Iraq Reconstruction Contracting Act of 2003'' by Senator Joseph I. Lieberman of Connecticut, the ranking Democrat on her committee, along with Democratic senators Hillary Rodham Clinton of New York, Ronald L. Wyden of Oregon, and Robert C. Byrd of West Virginia.
This story ran on page A1 of the Boston Globe on 4/11/2003.
© Copyright 2003 Globe Newspaper Company.
Democrats ask probe of Halliburton
4/9/2003
By Larry Margasak, Associated Press
WASHINGTON - Questioning whether Vice President Dick Cheney's former company has received favored treatment from the Pentagon, two House Democrats asked the investigative agency of Congress yesterday to delve into contracts awarded Halliburton Co. in the last two years.
In a letter to the General Accounting Office, Representatives Henry A. Waxman of California and John D. Dingell of Michigan contended that Halliburton's KBR subsidiary has a record of gouging the government in contracts awarded without competition.
The Houston-based firm employed Cheney as chief executive officer from 1995 to 2000 and still pays him deferred compensation for his services during that period.
Halliburton spokeswoman Wendy Hall said the lawmakers have ignored the firm's exemplary record. ''With more than 60 years of government experience, KBR has a proven track record on military contracts, such as production of Navy warships for World War II, construction of the Phan Rang air base in Vietnam in 1965, and designation as the premier logistics service provider for US troops in the Balkans,'' she said.
The lawmakers said federal procurement data showed that the government awarded KBR more than $624 million in contracts from October 2000 through March 2002.
Waxman is the senior minority member of the House Government Reform Committee, and Dingell holds the same position on the House Energy and Commerce Committee.
Hall said Halliburton does not comment on the amounts of its contracts but contended that KBR had competed for its government work during the period cited, which disputes the letter's contention.
The lawmakers cited these previous problems with KBR, formerly Kellogg, Brown & Root:
A GAO finding in 1997 that the company billed the US Army for questionable expenses for work in the Balkans, including charges of $85.98 per sheet of plywood that cost $14.06.
A 2000 follow-up report on the Balkans work that found inflated costs, including charges for cleaning some offices up to four times a day.
Fines of $2 million paid in February 2002 to resolve fraud claims involving work at Fort Ord, Calif. The Defense Department inspector general and a federal grand jury had investigated allegations by a former employee that KBR defrauded the government of millions of dollars by inflating prices for repairs and maintenance.
The Securities and Exchange Commission is already investigating Halliburton's accounting practices, looking into an accounting change made in 1998, during Cheney's tenure as the firm's chief executive.
Halliburton announced last week that it had decided not to enter a bidding process open only to a few experienced and well-connected firms for major postwar reconstruction projects in Iraq. Instead, the company said it would focus on becoming a secondary contractor.
KBR already has work in Iraq under a previous Defense Department contract to extinguish oil well fires.
This story ran on page A25 of the Boston Globe on 4/9/2003.
© Copyright 2003 Globe Newspaper Company.
Page created April 10, 2003 by Charlie Jenks
