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Date Posted: 09:44:15 04/13/03 Sun
Author: Alice
Author Host/IP: adsl-63-206-92-114.dsl.snfc21.pacbell.net / 63.206.92.114
Subject: Have you barfed today?

This makes me want to vomit

http://www.boston.com/dailyglobe2/101/nation/Halliburton_unit_could_make_7b+.shtml

Halliburton unit could make $7b

By Stephen Glain, Globe Staff, 4/11/2003

ASHINGTON -- 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.

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