Study finds cronyism in Iraq, Afghanistan contracts

By Bryan Bender, Globe Correspondent, 10/31/2003


WASHINGTON -- Many of the companies that have received government contracts to rebuild Iraq and Afghanistan have collectively contributed more money to President Bush's election campaigns than to any other candidate in more than a decade, according to a study released yesterday.

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In one of the most detailed studies of postwar contracts, the Center for Public Integrity, a nonprofit government watchdog, found that at least 70 companies have been awarded a total of $8 billion in contracts in the past two years.

While some of the contractors were previously known to have ties to White House officials -- such as Halliburton, formerly headed by Vice President Dick Cheney -- the group found several lesser-known firms that also are linked to senior government officials. One small company's sole employee is married to a deputy assistant secretary of defense, the study found.

Allegations of cronyism were quickly denied yesterday by government officials and company spokesmen. But the report raised new questions about whether political allies of the White House or Congress are being repaid for their support with lucrative, taxpayer-funded contracts. Most of the 70 contracts -- for tasks ranging from restoring electricity to rebuilding ports and schools -- were put out to bid, but some were not.

"Most of the companies that won contracts in Iraq and Afghanistan were political players," said Charles Lewis, the center's executive director. "Those companies contributed more money to the presidential campaigns of George W. Bush -- more than $500,000 -- than to any other politician over the last dozen years. These two wars in two years and their aftermaths have brought out the Beltway Bandit companies in full force, and there is a stench of political favoritism and cronyism surrounding the contracting process in both Iraq and Afghanistan."

The report, entitled "Windfalls of War," is the result of a six-month review of information collected through 73 requests filed under the Freedom of Information Act and through appeals to the US Agency for International Development, the Department of Defense, and the State Department.

More than 7 million federal contracting actions maintained in a General Services Administration database also were reviewed.

The center described the report as "cautious and conservative," noting that the center was not given access to all the documentation it requested and that it filed suit Wednesday against the State Department and the Army for not complying fully with its information requests.

Government officials and company spokesmen insisted that postwar contracts have been awarded on merit and cost and according to strict federal contracting guidelines that require that politics be kept out of the selection process.

J. Edward Fox, assistant administrator of USAID, told the researchers in a letter Wednesday that there are procedures in place to keep political appointees both inside and outside the agency out of the decision-making process -- what he called "strict firewalls" -- so that career government specialists can award contracts on an objective basis and are not pressured to favor a particular firm. "This firewall was in place for all Iraq procurements," he wrote on the eve of the report's release.

Jonathan Marshall, a spokesman for Bechtel, the second-largest recipient of postwar contracts, said yesterday that "there was no cronyism involved and no access to civil servants other than under very strictly-controlled federal procedures." As for political contributions, "we are not ashamed of that," he said. "They were legal and proper, and the conclusion that that is why we were awarded the contracts is flatly untrue and grossly unfair."

But the report outlined a pattern of political contributions and personal links to senior government officials overseeing the agencies responsible for parceling out the postwar work.

Framingham-based Perini Corp., which has electricity contracts in Iraq and Afghanistan worth as much as $525 million, is owned by a group of investors that includes Richard Blum, husband of Senator Dianne Feinstein, a Democrat of California who is a member of the Appropriations Committee.

The center's report identified several companies based in New England among the contractors, including Abt Associates, a public health consulting firm; Camp, Dresser & McKee Inc., an engineering consulting business; and Red River Computer Co., a reseller of computer equipment.

Fourteen of the 70 companies gave $23 million in political contributions to Republican and Democratic campaigns since 1990, and 13 of them employ former government officials or have other ties to various US government agencies and departments, according to the report. "Among individual candidates, President George Bush received more money from these companies than any other," Lewis said.

Topping the list, with more than $2.3 billion in contracts, was Kellogg Brown & Root, a subsidiary of Halliburton, the energy services conglomerate. Bechtel, a major construction and engineering firm that landed more than $1 billion worth of contracts for a variety of capital projects in both Iraq and Afghanistan, counts among its board members former secretary of state George Shultz and retired Marine Corps general Jack Sheehan, also a member of the Pentagon's advisory Defense Policy Board.

Science Applications International Corp., a major defense contractor, employs many former high-ranking government officials. SAIC is assisting in Iraq's reconstruction but also has been awarded a contract to operate US-funded media outlets in Iraq, which it has no experience doing.

"SAIC is setting up a news station in Iraq, and it is not generally [known] in Washington for doing that kind of work," Lewis told reporters at the National Press Club.

Chemonics International, another of the top contractors, is principally owned by Scott Spangler, a senior agency official in the administration of George H.W. Bush.

A firm called Sullivan Haave Associates was hired as a subcontractor to provide advice to various Iraqi ministries. The center's researchers found that the firm's only employee, Terry Sullivan, is married to Carol Haave, who since November 2001 has been the deputy assistant secretary of defense for security and information operations.

They both denied to the report's authors that their situation constitutes a conflict of interest.

Another contractor, the Center for Afghanistan Studies at the University of Nebraska, is directed by Thomas E. Gouttierre, a longtime friend of Zalmay Khalilzad, Bush's nominee for ambassador to Afghanistan.





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