Cheney's Halliburton Loses Its Iraq Cash Cow

By Charlie Cray, TomPaine.com. Posted July 31, 2006.

Recently, the Army announced  with much fanfare that it was canceling the monopoly logistics contract that Halliburton/KBR has used to bilk U.S. taxpayers since the occupation of Iraq began. The contract will be broken up and divided among at least three different companies, but it’s not clear that this will make much difference to taxpayers, or even that Halliburton will stop making a killing.

The new policy is, in effect, tacit recognition of the epidemic of waste, fraud and poor contract oversight that have plagued the Iraq occupation from the start. It vindicates key congressional critics, such as Sen. Byron Dorgan, D-N.D., and Rep. Henry Waxman, D-Calif., whose dogged persistence has exposed a cornucopia of corruption associated with contracts like Halliburton’s. Yet, if the history of the Iraq contracts so far is any indication, that’s about as much as can be read into the policy.

The history of Halliburton’s other major contract in Iraq -- the oil contract -- indicates the need for skepticism. It is well known that Halliburton received its first oil contract (RIO I) as the result of a dubious no-bid contract ordered by top Pentagon officials (including Paul Wolfowitz) -- a decision that was “coordinated with the vice president’s office,” according to a Pentagon e-mail uncovered by Judicial Watch.

The rest, as they say, is history. After getting a leg up on all potential competitors, KBR also used its incestuous relationship with the Army Corps of Engineers to extract a second no-bid oil contract (RIO II).

The fix was in, according to the Corps’ top civilian contracting expert, Bunnatine Greenhouse: "I can unequivocally state that the abuse related to contracts awarded to KBR represents the most blatant and improper contract abuse I have witnessed during the course of my professional career." Greenhouse exposed the collusive relationship at an unofficial congressional hearing held by the Democrats last June (no official committee has yet chosen to invite her to testify), before she was demoted for speaking out.

As was the case with the oil contracts, Halliburton remains eligible to bid for the new logistics contracts in Iraq, despite a horrendous record of dubious cost overruns, waste, employees who took kickbacks, the torching of $85,000 trucks that required only minor repairs, $45 cases of soda, $100 per bag of laundry, and evidence that Halliburton served contaminated water to the troops. All of this and so much more have been uncovered by the Pentagon’s auditors, the Inspector General for Iraq Reconstruction, numerous whistleblowers, Waxman and Dorgan, and plenty of outside investigators, including my colleagues at Halliburton Watch. The point is that in Halliburton’s case, there is more than enough basis for suspension or debarment from future contracts.
 

Yet the fact remains that with weak oversight, it's impossible to imagine anything will change. In fact, it could get worse, especially if the responsibility for oversight itself is outsourced. With the network of contract cronyism and subcontracting ties in Iraq and elsewhere, it will be hard to find any contractor to conduct such oversight that does not have a significant conflict of interest. Waxman, Dorgan and other members have already identified this conflict of interest in other Iraq-related contracts.

Meanwhile, the powerful Republicans who control key committees in Congress have staunchly resisted all calls for in-depth investigations, while rebuffing numerous attempts by Sen. Dorgan to establish a special Senate investigative committee on war profiteering, modeled after a similar committee established by Harry Truman in World War II. The last time Dorgan raised his proposal was in May, when it was shot down in a strict partisan vote.

Charlie Cray is the director of The Center for Corporate Policy in Washington, D.C.

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