Even the world's largest and certainly connected engineering firm is GIVING UP.....THE FIX IS IN....it's so blatant they can just walk all over every reasonable requirement for spending money....OUR money in Iraq....
Rivals Say Halliburton Dominates Iraq Oil Work
By Neela Banerjee
New York Times
Friday 08 August 2003
The Bechtel Group, one of the world's biggest engineering and construction companies, has
dropped out of the running for a contract to rebuild the Iraqi oil industry, as other competitors
have begun to conclude that the bidding process favors the one company already working in
Iraq, Halliburton.
After the United States Army Corps of Engineers quietly selected Halliburton in the spring to
perform early repairs of the Iraqi oil business in the aftermath of the war, other companies and
members of Congress protested that the work should have been awarded through competitive
bidding.
Halliburton's role in the rebuilding has been under political scrutiny because the company
was formerly headed by Vice President Dick Cheney. But the Bush administration and the
Corps of Engineers, which is overseeing the Iraqi oil reconstruction effort, have repeatedly said
that Halliburton has no inside track.
Preliminary plans for a new contract, which industry executives had thought might total $1
billion, were announced late in June by the Corps of Engineers. The bidding was meant, in part,
to introduce competition and a sense of fairness into the lucrative Iraqi reconstruction market,
an executive with a major engineering concern said. Like many industry executives, he would
speak only on condition of anonymity because his company does not want to jeopardize its
chances for future government contracts.
But in the last month, the corps, which is overseeing the reconstruction efforts, has specified
a timetable for the work that effectively means that the value of any contract companies other
than Halliburton could win would be worth only about $176 million, according to Corps of
Engineers documents and executives in the engineering and construction business.
Earlier this week, Bechtel cited the timetable as its reason for dropping out of the bidding.
The company now plans to deal directly with the Iraqi oil ministry for future reconstruction work,
a spokesman, Howard N. Menaker, said.
Although the oil ministry and the Army Corps of Engineers nominally cooperate, industry
analysts say the Americans have the upper hand.
Officials of the Corps of Engineers did not return numerous phone calls yesterday seeking
comment on the contract. But last month, in response to questions from other companies about
Halliburton's role, the corps said on its Web site that all potential bidders had received the same
information to "eliminate any competitive advantage" Halliburton might have from its involvement
in the Iraqi reconstruction work so far.
A spokeswoman for Halliburton, Wendy Hall, would not discuss whether its engineering unit,
Kellogg Brown & Root, would bid, saying only that "we will evaluate the opportunity."
After indicating in June that it planned to solicit bids, the Corps of Engineers held a
conference of prospective bidders in Dallas on July 14. Records of the meeting show that it was
attended by some of the most experienced engineering and construction companies in the world
- including, besides Halliburton and Bechtel, Fluor, the Parsons Group, Schlumberger and
Foster Wheeler.
Among those companies, only Fluor and Parsons have indicated so far that they plan to
make bids by the Aug. 14 deadline. A winner will be announced by Oct. 15, according to the
Corps of Engineers.
At the meeting and in the initial request for proposals, the Corps of Engineers put forth what
the industry calls "an indefinite quantity, indefinite delivery" contract. Industry executives said
they were told there could in fact be two principal contracts, one for the oil industry in northern
Iraq and the other for the south. The value of each contract could range from $500,000 to $500
million over several years, according to the Corps of Engineers, which cited the continued
instability in Iraq as a reason for keeping the terms so vague.
A transcript of the July meeting shows that bidders were concerned even then that
Halliburton would have a competitive advantage over other companies because it was already
working with the Corps of Engineers in Iraq and helping to assess the repairs needed at oil
production sites and pipelines after the war and years of an economic embargo.
The corps denied that such a conflict of interest existed, according to the transcript.
Over the last three weeks, however, the Corps of Engineers has provided additional
information to bidders indicating that by the July meeting, it and Halliburton already had a fairly
clear understanding of the scope and financial value of the work to be done and the timetable for
completing it.
The newly released information indicates that a week before the Dallas meeting, the Corps of
Engineers and Halliburton participated in a large workshop in Baghdad that also included
representatives of the Iraqi oil ministry and the ruling Coalition Provisional Authority to draw up a
detailed plan for rebuilding much of the Iraqi oil industry by the end of March 2004.
A week ago, the Corps of Engineers Web site carried an amendment to the contract
proposal, saying that 220 projects, mostly at installations above the ground, must be completed
for Iraq's oil production to reach prewar levels. The projects are divided into three phases, with a
total estimated cost of $1.14 billion.
But the corps notes in the plan that the first two phases, which together would require about
$967 million in investments, would have to be completed by Dec. 31.
Halliburton's competitors worry that if the winner of the new contracts is not announced until
Oct. 15, that company could not even begin the work before year's end. The only company that
could do the work based on that timetable is Halliburton, its competitors say.
Only the third and final phase, worth about $176 million and requiring the work to be
completed by March 31, could realistically be performed by a Halliburton competitor, its rivals
say.
"The feeling at our company was `Yes, Halliburton is the incumbent, but we had an
opportunity there,' " a representative of another engineering concern said. "But if we had believed
that from the beginning we had no chance of winning this, we wouldn't have bid."
Responding to pointed questions about the timetable by potential bidders, the Corps of
Engineers' Web site said the proposed schedule was "not intended to change anything" about
the bidding process.
For its part, the Kellogg Brown & Root unit of Halliburton will do whatever work the corps
gives it, Ms. Hall, the spokeswoman, said.
"It is not known at this time how or if the future award of another Corps of Engineers contract
will affect current K.B.R. operations or the terms and conditions of its contract," she said.
The first wave of Halliburton employees arrived in Iraq in March, to oversee the extinguishing
of several oil well fires near Basra. Since then, its responsibilities, under the direction of the
Corps of Engineers, have expanded from its initial job of making emergency repairs.
Working in Iraq has helped turn around Halliburton's financial performance, its
second-quarter results showed. The company made a profit of $26 million, in contrast to a loss
of $498 million in the period a year earlier. The company stated that 9 percent, or $324 million,
of its second-quarter revenue of $3.6 billion came from its work in Iraq.
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