Iraq: Halliburton Reaping Huge Profits

[zimv20]

http://www.corpwatch.org/news/PND.jsp?articleid=8228

One in Three US Military Dollars Spent Goes to Contractors

By_Michael Dobbs
Washington Post
August 28, 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.

(more)

[mactastic]

Well you didn't expect $4 billion a month to just dissappear did you? And when Rummy says he wants to transfer more military jobs to civilian contractors, guess who's gonna get them?

[Desertrat]

The alternative is having sufficient military personnel and equipment to do the work. However, after the completion of the work, you still have to pay for maintenance of the construction equipment and pay the salaries of the soldiers.

Bob Armstrong was Land Commissioner of Texas when the consulting firm I worked for was hired to do the research and planning for the Coastal Zone Management Program. When he was asked why he didn't do it with state employees, he said, "Because I can use them and throw them away when I'm done. I don't have to keep them on the payroll when I don't need them."

We're doing the same thing in the Balkans. I don't know the company name. A friend's son is working for one of the logistics support companies. He's an enterprising soul; as a "side job", he got franchises for two KFC restaurants, which he put at the gates to two of our bases there.

Oh, zimv20: I agree the contract is for a large amount of money. But, how do you know the % profit margin for "large profits"?

'Rat

[mactastic]

Alternative to what 'Rat? Competitive bidding?

[Maclarny]

The infuriating thing is that most of these contracts were just given away with no other bids from other companies. This means it's likely that millions of dollars of tax money were just given away to Halliburton. A free market? Yeah right.

[IJ Reilly]

So D-rat, when exactly does this cross the line into crony capitalism? Hasn't George W. Bush started looking even a little bit like Ferdinand Marcos, handing out juicy government contracts to his old pals?

[Sayhey]

Always, thought there should be some sort of independant "ombudsmen" that can look into this kind of process for corruption. Something with a term of office that doesn't coincide with the term of a President.

[zimv20]

Originally posted by Sayhey
Always, thought there should be some sort of independant "ombudsmen" that can look into this kind of process for corruption. Something with a term of office that doesn't coincide with the term of a President.

short of that, congress should be looking into it.

[Sayhey]

Originally posted by zimv20
short of that, congress should be looking into it.

Congress should, but as an inherently political body it seldom does the kind of investgation it should. Either it uses its power to go after the other party's President or protect its own. In general, Congressional investigations should be about finding out what new laws if any should be passed to prevent abuses, breakdowns, and failures of past laws. I think the whitewater and HUAC investigations proved how congressional powers to investigate can be and often are abused.

[Desertrat]

Well, somebody make up their mind: The thrust of the initial post was that somehow it's wrong for a private corporation to be doing this work.

I have no problem with requiring competitive bidding.

One point: Halliburton is one of the few U.S. corporations with the requisite capabilities. The situation is much like that of LBJ and Brown&Root/Raymond Morrison Knudsen (RMK) in Vietnam. And, it was stated early on that foreign corporations would not be allowed any of the post-war goodies in Iraq.

Halliburton started out as a Texas-based "doodlebug"* outfit, doing geologic surveys for oil. It grew into a full-bore oilfield service company, and finally bought out Brown & Root. They can design and build roads, dams, bridges, pipelines and nuclear power plants as well as run drilling operations. It is one of the world's largest engineering/construction corporations.

'Rat

* "Doodlebugging" is where a crew goes out with a seismograph rig in their truck, and sets off dynamite charges at various locations to record the changes in frequencies within different geologic strata--thus creating an underground map. Nowadays, they use compressed-air "thumpers".

EDIT: Something that just bubbled up while watching football; a guest column in the Houston Kronk (Chronicle) a couple of months back by some big wheel at Halliburton. He claimed that Halliburton had been doing work in Iraq before Cheney came on board; some legally-proper work had been going on after Cheney left. (He gave pertinent dates.) Further, this present work is an extension of existing contract(s), not new contract--IIRC. As to this last, I don't know, myself, as to fact.

[pseudobrit]

Originally posted by Desertrat
And, it was stated early on that foreign corporations would not be allowed any of the post-war goodies in Iraq.

But now the administration wants the UN to help out, but only under US command?

Which is it? "We don't need your help and you're not getting a slice of the cake" or "maybe we'll let you in, but we're still in control of everything?"

[Desertrat]

UN? Does the UN do construction?

If somehow a UN presence reduces the hostility toward the Iraqi infrastructure on the part of the various Al Qaida types coming in, as well as the leftover Saddamites, great! If somehow it reduces Sunni/Shia hostility, great!

But the UN presence would have damnall to do with what Halliburton is doing. Halliburton would be doing the logistics for the UN as well as for the US people. It's not just construction; it's food and spare parts as well. "Full service", doncha know...

'Rat

[pseudobrit]

Originally posted by Desertrat
But the UN presence would have damnall to do with what Halliburton is doing.

Oh really? Foreign, non-US troops patrolling US-occupied Iraq under US command to protect (exclusively) US interests (inlcuding oil pipelines) isn't related to Halliburton making a profit?

[IJ Reilly]

Originally posted by Desertrat
And, it was stated early on that foreign corporations would not be allowed any of the post-war goodies in Iraq.

Yes, it was naked crony capitalism from the start. So...?

[Sayhey]

Originally posted by Desertrat
Well, somebody make up their mind: The thrust of the initial post was that somehow it's wrong for a private corporation to be doing this work.

'Rat, did get a little off the point before, but I think the idea of the first post is the corruption inherent in giving over these contracts to a firm so closely tied to the administration without any competitive bid. Not just a problem with private corporations in general.

[mactastic]

The problem is that Halliburton just "happens" to be the biggest moneymaker over there. I'd like to know if that is because they have a former CEO as vice president. The only way to find out if they really are the best choice is to bid the job competitively like the government is supposd to.

[Desertrat]

mac, I agree. The thing is, extension and/or expansion of existing contracts is quite commonplace, since the move-in and setup costs are greatly reduced.

If all additional work is indeed called new work and competitive bids are taken, even the low bid will include the costs of creating a new company infrastructure in-country. This amount can be quite appreciable.

An extreme example would be where you only need one hour of $50/hr bulldozer work. The dozer man will charge you $200 just to come to the job and unload, plus $50 for that hour. (Two full days, it's not so bad.)

Time is also a factor. Send out bid proposals, which take time to prepare. Then the companies review the proposals and run estimates in order to submit bids. Bids are received, and the low three are reviewed. Finally, the selection. This takes probably at least six months, if not more. And the taxpayer foots the bill.

Oh, well. At least we're not having to do an EIS.

'Rat

[zimv20]

Originally posted by Desertrat

Time is also a factor. Send out bid proposals, which take time to prepare. Then the companies review the proposals and run estimates in order to submit bids. Bids are received, and the low three are reviewed. Finally, the selection. This takes probably at least six months, if not more. And the taxpayer foots the bill.

you're making arguments about not having bidding at all. is that your real position?

do you find _anything_ stinky about the fact that cheney's old company is getting high-reward, no-bid contracts? does that violate the principle of avoiding even the appearance of impropriety?

[IJ Reilly]

Keep in mind, the White House created artificial deadlines for this entire affair. Also as I've pointed out before, the timing of the war always appeared to be more political then technical and I think the steady march of events over the last six months has only hammered that point home.

Even so, the administration had ample opportunity to open bidding for reconstruction contracts had they wished to -- but once again, this was just not part of their planning. As you've said yourself, the plan was to feather the nests of US corporations, and particularly those corporations with cozy connections to the administration. Making cronyism a part of the planning effort isn't an excuse or a rationale for it. In fact, this only makes the brazenness even more inexcusable, and even more jaw-droppingly shameless.

[Desertrat]

I'm not advocating a danged thing. I'm just pointing out the way "bidness" has been done for some 40 years of my own direct observation.

I guess what I rather object to is the whining about Bush, when Halliburton has been doing some sort of business in Iraq through several presidencies. It's one thing to gripe and bitch about cronyism, but don't act as though any of the Bush clan invented it.

Hell's bells, I don't like "cronyism", but it's been going on since before I was born--and I don't have an answer for it. Apparently, given the amount of complaint over several decades, nobody else does, either. (I'm talking about a real-world, politically acceptable answer, not the ideal.)

'Rat

[Sayhey]

Originally posted by Desertrat
...Oh, well. At least we're not having to do an EIS.

'Rat

SOMEBODY better do a environmental impact study in Iraq! Given all the toxic crap that has been spilled over there as a result of the war, the looting, and the general chaos we may be trying to deal with the environmental consequences for years to come. If we don't care about the Iraqi people, how about the soldiers who it appears will be stationed there for over ten years?

[mactastic]

Originally posted by Desertrat
I guess what I rather object to is the whining about Bush, when Halliburton has been doing some sort of business in Iraq through several presidencies. It's one thing to gripe and bitch about cronyism, but don't act as though any of the Bush clan invented it.

Hell's bells, I don't like "cronyism", but it's been going on since before I was born--and I don't have an answer for it. Apparently, given the amount of complaint over several decades, nobody else does, either. (I'm talking about a real-world, politically acceptable answer, not the ideal.)

'Rat

Hmmm... you mean Halliburton has been doing business there since the first Bush administration? And that's your excuse for it? Geez.

And don't think for a second that I wouldn't call a liberal polititian on cronyism either. Just because I'm griping about this particular episode doesn't mean I excuse it in pols who's positions I more closely identify with.

I'm pretty much of the opinion that all of Washington is a pay to play system. It is the rare polititian who's vote is not for sale to the highest bidder. If you don't have money or connections, you don't get a seat at the table. This just happens to be such a glaring example of cronyism that it just might be provable, and as such help to cut down on sweetheart deals in the future. Or don't you think that human nature has anything to do with politics?

[IJ Reilly]

Originally posted by mactastic
Hmmm... you mean Halliburton has been doing business there since the first Bush administration? And that's your excuse for it? Geez.

And don't think for a second that I wouldn't call a liberal polititian on cronyism either. Just because I'm griping about this particular episode doesn't mean I excuse it in pols who's positions I more closely identify with.

I'm pretty much of the opinion that all of Washington is a pay to play system. It is the rare polititian who's vote is not for sale to the highest bidder. If you don't have money or connections, you don't get a seat at the table. This just happens to be such a glaring example of cronyism that it just might be provable, and as such help to cut down on sweetheart deals in the future. Or don't you think that human nature has anything to do with politics?

Well yes, and you are being even more generous then I might be. Handing out billions in no-bid contracts to the Vice President's company is such an egregious example of the old-boy network in action, I find it just impossible to ignore or excuse. What's worse, they seem expect us not to notice or care!

Whether this can be called "business as usual," or not, can anyone cite an example even half as glaring under a previous recent president?

[mactastic]

Originally posted by IJ Reilly
Well yes, and you are being even more generous then I might be. Handing out billions in no-bid contracts to the Vice President's company is such an egregious example of the old-boy network in action, I find it just impossible to ignore or excuse. What's worse, they seem expect us not to notice or care!

Whether this can be called "business as usual," or not, can anyone cite an example even half as glaring under a previous recent president?

Well the whole Lincoln bedroom fiasco and the pardoning of Mark Rich stunk of cronyism. It's a little different I suppose, but not enough to make me happy.

[IJ Reilly]

Originally posted by mactastic
Well the whole Lincoln bedroom fiasco and the pardoning of Mark Rich stunk of cronyism. It's a little different I suppose, but not enough to make me happy.

The Lincoln bedroom business was tacky fundraising and Mark Rich was a tacky use of executive authority. Nothing to like there, but also nothing equivalent handing out billions in taxpayer dollars to your pals.