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Details on halliburton contract { April 11 2003 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2003/04/11/business/11REBU.htmlhttp://www.nytimes.com/2003/04/11/business/11REBU.html
April 11, 2003
Details Given on Contract Halliburton Was Awarded
By ELIZABETH BECKER
WASHINGTON, April 10 — The Pentagon contract given without competition to a Halliburton subsidiary to fight oil well fires in Iraq is worth as much as $7 billion over two years, according to a letter from the Army Corps of Engineers that was released today.
The contract also allows Kellogg Brown & Root, the Halliburton subsidiary, to earn as much as 7 percent profit. That could amount to $490 million.
The corps released these new details in a letter to Representative Henry A. Waxman, Democrat of California and one of the two senior lawmakers who asked the General Accounting Office to investigate how the Bush administration is awarding contracts for the reconstruction of Iraq.
The reconstruction effort could cost up to $100 billion and become one of the most lucrative building programs in decades.
The contract to Kellogg Brown & Root was cited in the lawmakers' request to the G.A.O., the investigative arm of Congress. Mr. Waxman and Representative John D. Dingell, Democrat of Michigan, asked that special attention be paid to "allegations that Halliburton has received special treatment from the administration."
Vice President Dick Cheney was Halliburton's chief executive from 1995 until 2000. When he left the company to run for vice president, Mr. Cheney received over $30 million in compensation, Mr. Waxman said.
Since the attacks of Sept. 11, Kellogg Brown & Root has won significant additional business from the federal government and the Pentagon. It has built cells for detainees at Guantánamo Bay in Cuba and is the exclusive logistics supplier for the Navy and the Army, providing services like cooking, construction, power generation and fuel transportation.
Since the war with Iraq began, Mr. Cheney has been repeatedly questioned about his ties to his old employer and the oil industry.
But the administration said that these contracts and all other contracts to rebuild Iraq were awarded without any comment from Mr. Cheney or anyone else in the White House.
"The White House has no role in selecting individual contractors," said Michael Anton, spokesman for the National Security Council.
Lt. Gen. Robert B. Flowers, the commander of the Corps of Engineers, wrote in his letter that Kellogg Brown & Root was chosen because it was the only contractor considered capable of developing what he called "complex, classified contingency plans" and then to carry them out "on extremely short notice."
"No other contractor could satisfy mission requirements in the time available," General Flowers wrote.
He also said that the Defense Department could not follow public procedures for awarding the contract, including a public notice, because the war plans and the need to fight oil fires in Iraq were then classified information. In the future, however, General Flowers promised "ample opportunity for competition" to restore Iraq's oil infrastructure.
The most sought-after contract will be awarded by the United States Agency for International Development and will cover the initial work to rebuild Iraq's roads, water and power systems, schools and hospitals. Bidding was restricted to five American companies for the same reasons that Kellogg Brown & Root won its contract without any competition: the need for speed and for security clearances.
But government contract experts say that those needs have been exaggerated and that they may be violations of international trade agreements as well as federal rules.
Mr. Waxman responded to the letter from General Flowers with several new questions.
While accepting that the administration may have had valid reasons for giving the two-year contract to Kellogg Brown & Root for emergency work during the war, Mr. Waxman wrote, "It is harder to understand, however, what the rationale would be for a sole-source contract that has a multiyear duration and a multibillion-dollar price tag."
He asked General Flowers in a letter today how the Army determined the cost of the work to be done by Kellogg Brown & Root and when the Army would replace the current contract with one up for competition.
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