Text 1680, 151 rader
Skriven 2006-07-12 01:21:00 av ROSS SAUER (1:123/140)
Ärende: Halliburton
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Go Cheney Yourself isn't going to be too happy about this... 

Army to End Expansive, Exclusive Halliburton Deal
Logistics Contract to Be Open for Bidding

By Griff Witte
Washington Post Staff Writer
Wednesday, July 12, 2006; A01

The Army is discontinuing a controversial multibillion-dollar deal with 
oil services giant Halliburton Co. to provide logistical support to U.S. 
troops worldwide, a decision that could cut deeply into the firm's 
dominance of government contracting in Iraq.

The choice comes after several years of attacks from critics who saw the 
contract as a symbol of politically connected corporations profiteering 
on the war.

Under the deal, Halliburton had exclusive rights to provide the military 
with a wide range of work that included keeping soldiers around the 
world fed, sheltered and in communication with friends and family back 
home. Government audits turned up more than $1 billion in questionable 
costs. Whistle-blowers told how the company charged $45 per case of 
soda, double-billed on meals and allowed troops to bathe in contaminated 
water.

Halliburton officials have denied the allegations strenuously. Army 
officials yesterday defended the company's performance but also 
acknowledged that reliance on a single contractor left the government 
vulnerable. The Pentagon's new plan will split the work among three 
companies, to be chosen this fall, with a fourth firm hired to help 
monitor the performance of the other three. Halliburton will be eligible 
to bid on the work.

The decision on Halliburton comes as the U.S. contribution to Iraq's 
reconstruction begins to wane, reducing opportunities for U.S. companies 
after nearly four years of massive payouts to the private sector.

Of the more than $18 billion Congress allocated for reconstruction in 
late 2003, more than two-thirds has been spent and more than 90 percent 
has been contractually obligated, according to the inspector general's 
office overseeing reconstruction work. The rest of the money, which is 
collectively known as the Iraq Relief and Reconstruction Fund, needs to 
be obligated by the end of September.

Army spokesman Dave Foster said in a written response to questions that 
funding for 11 contracts covering various aspects of reconstruction -- 
including transportation, communications, water distribution and the 
electric grid -- will expire this fall. While the contractors will be 
allowed to finish any work previously requested, no new work can be 
ordered after September.

Among those contracts is another Halliburton deal, for up to $1.2 
billion to restore oil services in southern Iraq. As with the others, it 
will not be extended.

"The Iraq reconstruction is winding down . . . so there is no need for 
new contracts to replace the existing," Foster said.

Instead, the Iraqi government will have to find its own contractors to 
do the work, which includes tackling a large number of projects left 
undone by the United States.

"This is the year of transition for Iraqi reconstruction. The U.S.-
funded projects are being completed and transferred to Iraqi management 
and control," said James Mitchell, spokesman for the inspector general's 
office.

That office has repeatedly warned of a "reconstruction gap" between what 
the United States promised in rebuilding the country after the spring 
2003 invasion and what it has delivered. For instance, a contract aimed 
at building 142 new health centers across Iraq instead produced 20 
before the program ran out of money.

The heavy involvement of U.S. contractors in Iraq has been one of the 
defining features of the American presence there, with private companies 
called on for duties as varied as guarding supply convoys and analyzing 
intelligence.

No contractor has received more money as a result of the invasion of 
Iraq than Halliburton, whose former chief executive is Vice President 
Cheney.

The logistics work is performed through a subsidiary, Kellogg Brown & 
Root Services Inc. Last year, the Army paid the company more than $7 
billion under the contract, according to a search of government 
contracting data by Eagle Eye Inc., a private consulting firm. The 
number this year is expected to be between $4 billion and $5 billion, 
according to Randy King, a program manager with the Army.

The company maintains that its billing disputes with Defense Department 
auditors have been resolved and that its work has received rave reviews 
from the military. "By all accounts, KBR's logistical achievements in 
support of the troops in Iraq, Kuwait and Afghanistan have been nothing 
short of amazing," said company spokeswoman Melissa Norcross in a 
statement.

King, the Army official, agreed yesterday. "Halliburton has done an 
outstanding job, under the circumstances," he said. He added that 
Pentagon leaders ultimately decided they did not want to have "all our 
eggs in one basket" because multiple contractors will give them better 
prices, more accountability and greater protection if one contractor 
fails to perform.

Halliburton initially won the contract in December 2001. At the time, 
the deal was relatively modest in size, but stubborn insurgencies in 
both Iraq and Afghanistan have stretched U.S. troops and kept 
Halliburton busy trying to meet their needs.

Known formally as the Logistics Civil Augmentation Program, or LOGCAP, 
the contract "has expanded beyond what anyone could have imagined," said 
Dov S. Zakheim, the Pentagon's comptroller from 2001 until 2004 and now 
a vice president at consulting firm Booz Allen Hamilton Inc. "The KBR 
people themselves would point out that the challenges they had coming 
out of Iraq, over and above everything else they had to do, were taxing 
their systems. You're really asking too much of one firm to be able to 
manage all of this."

The original contract included one base year with nine option years. The 
Army says it will not pick up the next option year and instead plans to 
put out a new request for proposal by the end of the month. It expects 
to announce winners in November.

The bidding on the new contract is likely to attract some high-profile 
suitors, including weapons makers Lockheed Martin Corp. and Northrop 
Grumman Corp.

"These are huge contracts. They are among the biggest government 
services contracts that have ever been created," said Loren Thompson, 
chief operating officer of the Lexington Institute, a defense research 
organization in Arlington. "Most of the big, integrated defense 
contractors recognize that new sales of military hardware are going to 
be hard to come by in the years ahead. There's a general migration to 
services. And no contract on the horizon is bigger in services than 
LOGCAP. It's just too big to ignore."

Rep. Henry A. Waxman (D-Calif.), a frequent Halliburton critic, said he 
would like to see even more companies included as winners in order to 
increase competition as work arises. But he welcomed the move away from 
the exclusive contract with Halliburton as a good first step. "When you 
have a single contractor, that company has the government over a 
barrel," Waxman said. "One needs multiple contractors in order to have 
real price competition. Real competition saves the taxpayer money."

© 2006 The Washington Post Company

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