Something Fishy about 'No-Bid' Contracts for Iraq
Reconstruction?
Fri Oct 10, 9:21 AM ET
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Gail Russell Chaddock, Christian Science Monitor
WASHINGTON, D.C., Oct. 10 (CSM) - Critics on Capitol Hill are taking a
hard look at several lucrative U.S. contracts to rebuild war-damaged Iraq
(news - web sites).
When Susan Collins was just a staffer in the
United States Senate, she used to worry
about fat government contracts being
awarded in secret. Now Collins is a US
Senator--and she can finally do something
about it.
Senator Collins is drawing a bead on
contracts in Iraq, where the US has begun
pouring in billions of dollars to repair war
damage and rebuild the country. There are
charges in the press that no-bid contracts
are squandering taxpayer funds.
"A tremendous amount of money will be
spent on contracts to rebuild Iraq," says the
soft-spoken Maine senator, a leading GOP
moderate. She wants Washington to avoid
even the appearance of cronyism or war
profiteering in these deals. "We have an
obligation to make sure that money is not
being wasted," Collins says.
Yet some key Iraq contracts already were
bid secretly, or on a sole-source basis, to
companies with strong ties to the Bush
administration. These included a $1.39
billion contract to a subsidiary of Halliburton,
an energy giant formerly chaired by Vice
President Dick Cheney (news - web sites).
Another $680 million contract for Iraq's
power grid, water system, and airport facilities went to Bechtel Group
Inc., after a secret bidding process. Together, the six companies invited
to bid on the Bechtel contract contributed $3.6 million to federal election
campaigns, two-thirds to Republicans, according to the Center for
Responsive Politics.
"These suspect contracts with Halliburton and other companies raise
questions about the awarding of contracts to friends of the
administration," says Sen. Richard Durbin (D) of Illinois. "Wasn't there
someone in the room who said, 'This just doesn't look right.'?"
It's that appearance of wrongdoing that most concerns Collins. In the
heat of war, there may be reasons that contracts for fighting oil fires or
rebuilding water systems should move quickly - or go to industry giants,
she says. Still, anything less than open competition also carries a risk:
the integrity of the process, she adds.
Such issues have been a nearly lifelong concern for Collins - one of the
rare lawmakers who can do the dog work of a tough investigation herself.
As staff director for the government management subcommittee from
1979 to 1987, she led an investigation that found "excessive reliance" on
sole-source contracting in Washington. The committee produced a bill
that required more competitive bidding, but the law left a loophole: No
one needs to account to Congress when they claim one of the seven
exceptions in that law, including one for national security.
"The problem is there is no oversight to see that these exceptions are
used appropriately," she says. As chairman of the committee she once
worked for, Collins wants those loopholes closed. Her "sunshine rule,"
cosponsored with Sen. Ron Wyden (D) of Oregon, was approved by the
Senate as an amendment to President Bush (news - web sites)'s $87
billion request for Iraq.
She claims another influence in this work: Sen. Harry Truman (D) of
Missouri, who was spotted by President Franklin D. Roosevelt as a
vice-presidential prospect for his work on war profiteering during World
War II. Truman, like Collins, was no grandstander. He said his aim was
"heading off scandals before they started." But his conclusions were
unambiguous: "The little manufacturer, the little contractor, and the little
machine shop have been left entirely out in the cold. The policy seems
to be to make the big man bigger and to put the little man completely
out of business," Truman said in 1941.
Historian Theodore Wilson wrote in 1975 that the Truman committee is
widely viewed as "the most successful congressional investigative effort
in United States history." It later evolved into the permanent
subcommittee on investigation, now a panel of the Senate Government
Affairs Committee that Collins chairs. "Our committee has a legacy of
being aggressive in protecting the taxpayer from contracting abuses,"
she says.
Many of the same Truman-like criticisms are surfacing in the
congressional debate over the contracts in Iraq. In all, some $79 billion
has already been allocated for war expenses in Iraq, and another $87
billion bill is working its way through Congress - a windfall for companies
that can make themselves part of it.
"We're overrelying on large umbrella contracts.... Halliburton has a
monopoly on the work in oil, and Bechtel has a monopoly on the
reconstruction work," says Rep. Henry Waxman (D) of California, the
ranking Democrat on the House Government Reform Committee (news -
web sites). "There is no incentive to lower costs," he adds.
No contract has riled critics as much as the first and most lucrative: to
Kellogg, Brown & Root, a subsidiary of Halliburton. It started as a 2001
contract for logistical support to the US military, wherever it went, and it
was competitively bid. But a decision to expand that contract - from
supporting troops to oil-well firefighting, repairing oil systems, and now
maintaining and operating oil systems - was not.
"Redefining the contract on a no-bid basis, that's where the Pentagon
(news - web sites) went awry," says P. W. Singer, a fellow at the
Brookings Institution. "All the companies have decided that one way for
them to achieve a corporate advantage is to hire former government
officials or to make political campaign contributions."
Defense Secretary Donald Rumsfeld told Congress, "The Halliburton
contract for oil-field restoration is currently in the process of being
recompeted," and that "no new funds are planned to be awarded under
the old contract."
The impression of favoritism could be tough to blot out. Recently, a
new lobby shop touted its ties to the Bush administration as an asset
in helping clients get business in Iraq. New Bridge Strategies, with
offices in Washington and Houston, describes itself as "a unique
company that was created specifically with the aim of assisting clients
to evaluate and take advantage of business opportunities in the
Middle East following the conclusion of the US-led war in Iraq." Its
principals include Joe Allbaugh, campaign manager for Bush
presidential race in 2000.
"This kind of thing is tawdry and will reinforce the conviction in some
quarters that this is all about making bucks and paying off corporate
pals," says Andrew Bacevich, director of the Center for International
Relations at Boston University.
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