Lawmakers Seek Halliburton Probe

With billions of taxpayer dollars at stake, lawmakers on Tuesday called for investigations into the awarding of reconstruction contracts for postwar Iraq and whether Halliburton Co. got a helping hand from the Bush administration.

Reps. Henry A. Waxman (D-Los Angeles) and John D. Dingell (D-Mich.) singled out the Texas energy giant in a letter to the General Accounting Office, Congress’ investigative arm. The letter suggested that Halliburton’s ties to Vice President Dick Cheney may have afforded it “special treatment ... in the awarding of Defense Department contracts.”

Cheney served as Halliburton’s chief executive for five years before he resigned in August 2000 to be George W. Bush’s running mate. The congressmen’s letter said the administration had awarded one of the company’s subsidiaries “a string of lucrative contracts over the last two years.”

Halliburton spokeswoman Wendy Hall said the Houston firm has not benefited from its former ties to Cheney or any connections to the Bush administration.

“The vice president has absolutely nothing to do with the awarding of the defense contracts, the bidding process or the current work orders,” Hall said.

But Waxman and Dingell told the GAO that Cheney continues to receive $180,000 a year in deferred payments from Halliburton and that “ties between the vice president and Halliburton have raised concerns about whether the company has received favorable treatment from the administration.”

Hall said the vice president is paid only deferred compensation that he earned while working at the company, having elected years before not to receive a lump-sum payment when he resigned.

Separately, the two legislators asked the GAO to investigate the eight contracts being awarded by the U.S. Agency for International Development to rebuild and run key institutions in Iraq after the war.

Agency officials have said requests for bids on those contracts were sent secretly to a select group of U.S. companies in February and March, using a streamlined process for urgent work involving national security. This method -- which limited the bids to companies that held security clearances and had done work for the agency -- exempted the development agency from standard government procurement rules, including a public request for bids.

In requesting the GAO probe, the congressmen asked, “What, if any, national security considerations were involved in light of the facts that the government’s contingency plans to invade Iraq were not secret and that these contracts were announced while American troops were on the ground in Iraq?”

The GAO routinely does not comment on legislators’ requests for investigations. It is rare, however, for such a request to be refused.

The investigation request is the latest move to heighten scrutiny of the reconstruction contracting process. The emergency war-funding bill passed by the Senate last week included an amendment by Sen. Christopher J. Dodd (D-Conn.) setting aside $4.3 million for the agency’s inspector general specifically for “monitoring and auditing expenditures for reconstruction and related activities in Iraq.”

Three other senators unsuccessfully pushed an amendment that would require the agency “to make public the justification and approval documents it recently used to exempt $1.7 million in contracts from full competition.”

Sens. Susan Collins (R-Maine) and Ron Wyden (D-Ore.) plan to introduce legislation this week seeking to mandate those requirements in a separate law.

Collins said Tuesday that the legislation is meant “to bring some much-needed accountability and transparency” to the agency’s contracting process.

The contracts involve at least $1.7 billion worth of postwar work -- from rebuilding Iraq’s roads, bridges, airports, schools, hospitals and government ministries to running them.

The agency has awarded just two of the contracts, including one to manage the seaport of Umm al Qasr. The winner of another contract, to rebuild Iraq’s primary and secondary education system, is expected to be announced this week. The biggest of those contracts by far is the $600-million physical reconstruction job, and at least three California companies -- Bechtel Group Inc., Parsons Corp. and Fluor Corp. -- have bid on it. An agency spokeswoman said that although there is no deadline to announce the winners, it hopes to award all the contracts soon.

The agency said Halliburton was not among the finalists for the big construction contract. The company said it chose not to seek the work, but its Kellogg Brown & Root subsidiary could still serve as a major subcontractor on the reconstruction job.

That subsidiary already has won an exclusive, no-bid contract from the Army Corps of Engineers to extinguish oil well fires in Iraq. Kellogg Brown & Root hired Boots & Coots International Well Control Inc. and Wild Well Control Inc. to handle the work at $50,000 each a day.

“The contract, which is potentially worth tens of millions of dollars or more, was awarded without any competition or even notice to Congress,” Waxman and Dingell wrote.

A corps spokesman said the company got the contract because it had done a study on putting out the well fires under a broad logistics contract won in December 2001.

On Tuesday, Halliburton said its subsidiary was selected because it is “the only contractor that could commence implementing the plan on extremely short notice.”

The lawmakers, citing GAO reports on earlier Kellogg Brown & Root contracts for the Army, also asserted that the company had billed the military for questionable costs in the past -- including a contract to build bases and support troops in the Balkans, which ballooned to $2.2 billion in the mid-1990s.

The GAO study found that the Halliburton subsidiary and its subcontractors were cleaning some offices at one Balkans base four times a day, that the subsidiary was charging the Army $85.98 for plywood sheets that cost $14.06 on the open market and that 40% of its workforce was idle at various times the GAO observed them.

The company had denied those findings by the GAO at the time.