The practice of delegating a vast array of logistics operations to a single contractor dates to the aftermath of the 1991 Persian Gulf War and a study commissioned by Cheney, then defense secretary, on military outsourcing. The Pentagon chose Brown and Root to carry out the study and subsequently selected the company to implement its own plan. Cheney served as chief executive of Brown and Root's parent company, Halliburton, from 1995 to 2000, when he resigned to run for the vice presidency. 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. Halliburton's Deals Greater Than Thought By Michael Dobbs, Washington Post Staff Writer 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. Specific work orders assigned to the subsidiary under Operation Iraqi Freedom include $142 million for base camp operations in Kuwait, $170 million for logistical support for the Iraqi reconstruction effort and $28 million for the construction of prisoner of war camps, the Army spreadsheet shows. The company was also allocated $39 million for building and operating U.S. base camps in Jordan, the existence of which the Pentagon has not previously publicly acknowledged. Over the past decade, Halliburton, a Houston-based company that made its name servicing pipelines and oil wells, has positioned itself to take advantage of an increasing trend by the federal government to contract out many support operations overseas. It has emerged as the biggest single government contractor in Iraq, followed by such companies as Bechtel, a California-based engineering firm that has won hundreds of millions of dollars in U.S. Agency for International Development reconstruction contracts, and Virginia-based DynCorp, which is training the new Iraqi police force. The government said the practice has been spurred by cutbacks in the military budget and a string of wars since the end of the Cold War that have placed enormous demand on the armed forces. But, according to Rep. Henry A. Waxman (D-Calif.) and other critics, the Iraq war and occupation have provided a handful of companies with good political connections, particularly Halliburton, with unprecedented money-making opportunities. "The amount of money [earned by Halliburton] is quite staggering, far more than we were originally led to believe," Waxman said. "This is clearly a trend under this administration, and it concerns me because often the privatization of government services ends up costing the taxpayers more money rather than less." Wendy Hall, a Halliburton spokeswoman, declined to discuss the details of the company's operations in Iraq, or confirm or deny estimates of the amounts the company has earned from its contracting work on behalf of the military. In an e-mail message, however, she said that suggestions of war profiteering were "an affront to all hard-working, honorable Halliburton employees." Hall added that military contracts were awarded "not by politicians but by government civil servants, under strict guidelines." Daniel Carlson, a spokesman for the Army's Joint Munitions Command, said Brown and Root had won a competitive bidding process in 2001 to provide a wide range of "contingency" services to the military in the event of the deployment of U.S. troops overseas. He said the contract, known as the Logistics Civil Augmentation Program, or LOGCAP, was designed to free uniformed personnel for combat duties and did not preclude deals with other contractors. Carlson said the money earmarked for Brown and Root was an estimate, and could go "up or down" depending on the work performed. The Joint Munitions Command provided The Washington Post with an updated version of a spreadsheet the Army released to Waxman earlier this month, giving detailed estimates of money obligated to Brown and Root under Operation Iraqi Freedom. Estimates of the company's revenue from Iraq have been increasing steadily since February, when the Corps of Engineers announced the company had won a $37.5 million contract for pre-positioning fire equipment in the region. In addition to its Iraq contracts, Brown and Root has also earned $183 million from Operation Enduring Freedom, the military name for the war on terrorism and combat operations in Afghanistan, according to the Army's numbers. Waxman's interest in Halliburton was ignited by a routine Corps of Engineers announcement in March reporting that the company had been awarded a no-bid contract, with a $7 billion limit, for putting out fires at Iraqi oil wells. Corps spokesmen justified the lack of competition on the grounds that the operation was part of a classified war plan and the Army did not have time to secure competitive bids for the work. The corps said the oil rehabilitation deal was an offshoot of the LOGCAP contract, a one-year agreement renewable for 10 years. Individual work orders assigned under LOGCAP do not have to be competitively bid. But Waxman and other critics maintain that the oil work has nothing to do with the logistics operation. The practice of delegating a vast array of logistics operations to a single contractor dates to the aftermath of the 1991 Persian Gulf War and a study commissioned by Cheney, then defense secretary, on military outsourcing. The Pentagon chose Brown and Root to carry out the study and subsequently selected the company to implement its own plan. Cheney served as chief executive of Brown and Root's parent company, Halliburton, from 1995 to 2000, when he resigned to run for the vice presidency. At the time, said P.W. Singer, a Brookings Institution scholar and author of "Corporate Warriors," it was impossible to predict how lucrative the military contracting business would become. He estimates the number of contract workers in Iraq at 20,000, or about one for every 10 soldiers. During the Gulf War, the proportion was about one in 100. Brown and Root's revenue from Operation Iraqi Freedom is already rivaling its earnings from its contracts in the Balkans, and is a major factor in increasing the value of Halliburton shares by 50 percent over the past year, according to industry analysts. The company reported a net profit of $26 million in the second quarter of this year, in contrast to a $498 million loss in the same period last year. Waxman aides said they have been told by the General Accounting Office that Brown and Root is likely to earn "several hundred million more dollars" from the no-bid Corps of Engineers contract to rehabilitate Iraqi oil fields. Waxman, the ranking minority member on the House Government Reform Committee (news - web sites), had asked the GAO to investigate the corps' decision not to bid out the contract. After a round of unfavorable publicity, the corps explained that the sole award to Brown and Root would be replaced by a competitively bid contract. But the deadline for announcing the results of the competition has slipped from August to October, causing rival companies to complain that little work will be left for anybody else. Bechtel, one of Halliburton's main competitors, announced this month that it would not bid for the corps contract and would instead focus on securing work from the Iraqi oil ministry. In addition to the Army contracts, Halliburton has profited from other government-related work in Iraq and the war on terrorism, and has a $300 million contract with the Navy structured along similar lines to LOGCAP. Pentagon officials said the increasing reliance on contractors is inevitable, given the multiple demands on the military, particularly since Sept. 11, 2001. Defense Secretary Donald H. Rumsfeld is a champion of "outsourcing," writing in The Post in May that "more than 300,000 uniformed personnel" were doing jobs that civilians could do. Independent experts said the trend toward outsourcing logistic operations has resulted in new problems, such as a lack of accountability and transparency on the part of private military firms and sometimes questionable billing practices. A major problem in Iraq, Singer said, has been the phenomenon of "no-shows" caused by the inhospitable security environment, including the killing of contract workers, including a Halliburton mail delivery employee earlier this month. "At the end of the day, neither these companies nor their employees are bound by military justice, and it is up to them whether to show up or not," Singer said. "The result is that there have been delays in setting up showers for soldiers, getting them cooked meals and so on." A related concern is the rising cost of hiring contract workers because of skyrocketing insurance premiums. Singer estimates that premiums have increased by 300 percent to 400 percent this year, costs that are passed on to the taxpayer under the cost-plus-award fee system that is the basis for most contracts. The LOGCAP contract awarded to Brown and Root in 2001 was the third, and potentially most lucrative, super-contract awarded by the Army. Brown and Root won the first five-year contract in 1992, but lost the second to rival DynCorp in 1997 after the GAO criticized the Army for not adequately controlling contracting costs in Bosnia.
Who cares? everything changed on 911. Actually this is a disgrace the way there is not an investigation into war profiteering among Administration insdiders, their friends and relatives. Abolish the for profit arms industry. Giving those in power the incentive of making money off of war leads to unnecessary deaths of other people's children. ************** Military Privatization By P.W. Singer The New York Times It is often said that war is too important to be left to the generals. But what about the CEOs? The Pentagon's plan to hire a private paramilitary force to guard sites in Iraq may have surprised many Americans, but it was really just another example of a remarkable recent development in warfare: the rise of a global trade in hired military services. Known as "privatized military firms," these companies are the corporate evolution of old-fashioned mercenaries -- that is, they provide the service side of war rather than weapons. They range from small consulting firms that offer the advice of retired generals to transnational corporations that lease out battalions of commandos. There are hundreds of them, with a global revenue of more than $100 billion a year, operating in at least 50 countries. Even the world's most dominant military has increasingly become reliant on them. From 1994 to 2002, the Pentagon entered into more than 3,000 contracts with private military firms. Companies like Halliburton, Vice President Dick Cheney's former employer, now provide the logistics for every major U.S. military deployment. Corporations have even taken over much of military training and recruiting, including the Reserve Officer Training Corps programs at more than 200 American universities. (Yes, private employees now train U.S. military leaders of tomorrow.) Perhaps nothing better illustrates the industry's growing role than the campaign against Iraq. Private employees worked on everything from feeding and housing coalition troops to maintaining weapons systems like the B-2 bomber. Indeed, there was roughly one private military worker in the region for every 10 soldiers fighting the war (as opposed to one for every 100 troops in the 1991 Gulf War). And companies will play an even greater role in the occupation. In addition to the proposed security force, the new Iraqi military will be trained by corporate consultants. Washington has also contracted DynCorp, whose pilots have long helped the Pentagon destroy coca fields in Colombia, to train the new police force. In many cases, privatizing war has allowed for greater military capacities and cost efficiency. A problem, however, is that while the industry has developed at a breakneck pace, governments and global bodies have responded at a bureaucratic crawl. There are almost no international laws or national regulations that have significant bearing on the industry. This mix of profit motive with the fog of war raises several concerns. First, the good of private companies may not always be to the public good. All the normal worries one has with contractors (overcharging, overbilling of hours, poorly trained workers, quality assurance) raise their ugly head; but in this case one is not dealing with a new plumber -- lives are at stake. For example, a former DynCorp employee has accused the company of cutting costs by hiring former waiters and security guards to work as mechanics on Army helicopters. Second, just like lawyers, some military contractors work only for ethical clients while others choose to make money from less savory types. As a result, some companies have helped save democratic regimes and aided humanitarian groups while others have supported dictators, rebel groups, drug cartels and terrorists. In addition, foreign and military affairs are the government's domain. Undertaking public policy through private means can mean that some initiatives that might not pass public approval -- such as the increasing U.S. involvement, outside congressional oversight, in Colombia's civil strife -- still get carried out. Also, privatized operations do not always go as planned. In 1998 the Colombian air force, working from intelligence supplied by an American company, mistakenly bombed a village, killing 17. In 2001, a plane carrying missionaries was shot down over Peru after private workers under contract to the CIA alerted the Peruvian military that the plane seemed suspicious. International and national laws must be updated so that governments gain some control over whom military firms are allowed to work with and so that they can be certain the companies are held accountable when things go wrong. Likewise, as governments come to rely more on private help, they must become more business-savvy, establishing good competition and oversight in their outsourcing. This is the only way to ensure that the public, not just the industry, enjoys the benefits of military privatization. url
Defense Spending Drives Economy By Anna Willard WASHINGTON (Reuters) - Soaring defense spending is driving the U.S. economy, but not doing too much for the unemployment picture as Americans still struggled to find jobs and corporations saw their profits fall, government reports on Thursday showed. The Commerce Department said the economy grew at a revised 3.1 percent pace in the second three months of 2003, boosted by defense spending, business investment and consumers. Within the gross domestic product report, government spending on defense -- much of it to pay for the U.S.-led war in Iraq -- soared 45.9 percent, the strongest gain since the third quarter of 1951, during the Korean War. The war in Iraq is driving the US economy and bringing profit to companies directly related to the Bush/Cheney administration.
If they get the job done, I don't give a crap what they are getting paid. Our efforts in Iraq seem from my perspective way short of a "Marshal Plan" . The money we spend with Haliburton, benefits Houston workers and US suppliers. Their salaries and profits are taxed by the US and the state through sale's taxes. Their efforts go to logistic support for our troops, humanitarian aid and the rebuilding of the infrastructure of Iraq which could someday help keep your gas prices stable. Full disclosure of the charges should certainly made public but there just isn't time for a bureaucratic, spec loaded bidding process for what needs to be done now. There are a lot of ways the US government wastes money but just because it's the vice presidents former company, this isn't the one I'd choose to get in a wad about.
You make a really good point, I just wish all these dealings weren't always so backdoor. They never seem to just come straight out and tell the public what needs to be done and who is going to do it and at what cost. Along with why the particular company assigned to do the job was selected (i.e.)why they are best for the job. I don't think public hearings on the multi-billion dollar rebuilding of Iraq is something that is out of the question for the world public. Particularly since the current administration has so many ties to the companies that are leading the infrastructure rebuilding effort.
suggestions of war profiteering were "an affront to all hard-working, honorable Halliburton employees." This is what the pr spokesperson says for Halliburton.. This is complete bs. Nobody is saying the employes. e.g. the secretaries or the guys putting out fires aren't hard working. We're talking about the owners/ top management. Cheny for instance owned or had stock options for 1,000,000 shares of Halliburton as an example of how these groups are often the same. This whole affair is quite disgusting and so obviously open to conflicts of interest. Lawyers and judges for instance are required in many cases to avoid the appearance of conflict of interest. This doesn't pass the smell test. In addition it is part and parcel of the whole busines for campaign contributions that makes the governmental process so corrupt and not necessarily in the public's interest, but in the interest of private profit. There are other ways of "just getting the job done". Disgusting. This isn't even taking into account that the troops in the field are suffering due to the fact that these companies can't cut it like the old time army supply lines.
Is Halliburton receiving so many contracts in Iraq, because of their qualifications or to help pay for Asbestos lawsuits, which will in turn will increase their stock value again? Halliburton Iraq Work Booms but Profit Seen Small By Carolyn Koo NEW YORK (Reuters) - Halliburton Co.'s business may be booming in Iraq (news - web sites) because of reconstruction, but the small profit margins there and the lingering asbestos liabilities at home are a drag on the stock, analysts said on Thursday. The Houston company once headed by Vice President Dick Cheney (news - web sites) has so far won $1.7 billion in Iraq-related contracts. Halliburton's KBR engineering and construction division has been awarded a $705 million contract for oil field infrastructure repairs and is bidding on two contracts for work in Iraq worth up to a $1 billion. It has also been awarded a Logistics Civil Augmentation Program (LOGCAP) contract, estimated at over $900 million, to build base camps and provide non-combat services such as delivering mail. "The dollar values (of these contracts) are huge," said Rep. Henry Waxman, a California Democrat who has repeatedly criticized the amount of work going to Halliburton under LOGCAP. "There is an enormous potential for waste and abuse in the Halliburton contract," Waxman said in a statement. But although Halliburton's KBR unit is expected to win millions of dollars in additional contracts, the stock is down 4 percent since mid-June. The shares surged in May after President Bush (news - web sites) declared an end to major combat in Iraq and the beginning of reconstruction. U.S. officials were also weighing an increase to a $680 million infrastructure repair contract awarded to private engineering firm Bechtel. "There are discussions, obviously, on the need -- if there is a need -- to raise that (amount)," State Department spokesman Philip Reeker, without confirming a Wall Street Journal report that U.S. officials in Baghdad had decided on a $350 million increase. "While the dollar amount of the contracts is large, historically the profits (from) them have been very small," said Jim Carroll, portfolio manager of the Loomis Sayles Value Fund, which owns shares of Halliburton. "I don't know what the situation is in this particular contract, but I think investors have a fair amount of skepticism about hundreds of millions of dollars in profits." He added Halliburton's operating profit margins in the engineering and construction division are generally in the low single digits, as opposed to the low double-digit margins of its larger oilfield services business. "They'll be damned lucky to earn 5 percent (of the contract values in profit)," Jim Wicklund, an analyst at Banc of America Securities, noted. He has a "buy" rating on the company and does not own any of its shares. Halliburton is forecast to earn 87 cents a share this year, down from 89 cents a share in the year-ago quarter, according to Reuters Research, a unit of Reuters Group Plc. ASBESTOS UNCERTAINTY At the same time, Halliburton's asbestos liabilities have weighed down the stock. The second-largest oilfield services company, behind Schlumberger Ltd., agreed late last year to a $4 billion cash-and-stock deal to settle 200,000 asbestos lawsuits. Since then, Halliburton has asked for and received extensions and last month said it needed even more time to document claims and file prepackaged Chapter 11 bankruptcy plans for its DII Industries LLC unit and KBR. The latest postponement came as the U.S. Congress debated a plan that would limit the impact of asbestos litigation on companies and would reduce Halliburton's asbestos costs by an estimated $3.5 billion. Wicklund said uncertainty is the top issue for the stock. "You don't know how much it's going to cost them, how much insurance is going to pay them back, when they're going to get it done," he said. "And until they get it done, there's the question if they'll get it done." (Additional reporting by Susan Cornwell in Washington)
