FBI now investigating no-bid Halliburton contracts

[natty dread]

It's about time, but as was the case with Agent Colleen Rowley, sometimes it just takes a courageous employee who is fed up and willing to blow the whistle for the truth to come out:

F.B.I. Investigating Halliburton Contracts
By THE ASSOCIATED PRESS

Published: October 28, 2004

Filed at 10:13 p.m. ET

WASHINGTON (AP) -- The FBI has begun investigating whether the Pentagon improperly awarded no-bid contracts to Halliburton Co., seeking an interview with a top Army contracting officer and collecting documents from several government offices.

The line of inquiry expands an earlier FBI investigation into whether Halliburton overcharged taxpayers for fuel in Iraq, and it elevates to a criminal matter the election-year question of whether the Bush administration showed favoritism to Vice President Dick Cheney's former company.

FBI agents this week sought permission to interview Bunnatine Greenhouse, the Army Corps of Engineers' chief contracting officer who went public last weekend with allegations that her agency unfairly awarded KBR, a Halliburton subsidiary, no-bid contracts worth billions of dollars for work in Iraq, according to documents obtained by The Associated Press.

Asked about the documents, Greenhouse's lawyers said Thursday their client will cooperate but that she wants whistle-blower protection from Pentagon retaliation.

``I think it (the FBI interview request) underscores the seriousness of the misconduct, and it also demonstrates how courageous Ms. Greenhouse was for stepping forward,'' said Stephen Kohn, one of her attorneys.

``The initiation of an FBI investigation into criminal misconduct will help restore public confidence,'' Kohn said. ``The Army must aggressively protect Ms. Greenhouse from the retaliation she will encounter as a result of blowing the whistle on this misconduct.''

FBI agents also recently began collecting documents from Army offices in Texas and elsewhere to examine how and why Halliburton, a Houston-based oil services conglomerate, got the no-bid work.

``The Corps is absolutely cooperating with the FBI, and it has been an ongoing effort,'' said Army Corps spokeswoman Carol Sanders. ``Our role is to cooperate. It's a public contract and public funds. We've been providing them information for quite a while.''

The FBI declined to comment Thursday.

Wendy Hall, a Halliburton spokeswoman, said the company is cooperating with various investigations, but she dismissed the latest revelation as election politics. She noted Congress' auditing arm, the Government Accountability Office, found the company's no-bid work in Iraq was legal.

``The old allegations have once again been recycled, this time one week before the election,'' Hall said. ``The GAO said earlier this year that the contract was properly awarded because Halliburton was the only contractor that could do the work.

``We look forward to the end of the election, because no matter who is elected president, Halliburton is proud to serve the troops just as we have for the past 60 years for both Democrat and Republican administrations,'' she said.

Cheney spokesman Kevin Kellems, asked if investigators had contacted the vice president or his office about the contracts, said they had not.

Democrats have tried to make Halliburton an election-year issue, and vice presidential candidate John Edwards quickly seized upon the latest development. In a CBS interview, Edwards said there was a ``long pattern of favoritism'' between the Bush administration and its well-connected friends.

Sen. Frank Lautenberg, a Democrat on the Senate Governmental Affairs Committee who has been investigating Halliburton's contracts, said his office was told the FBI recently sought documents from various government offices. The requests focused on how and why Halliburton got the Iraq contracts.

``This multibillion dollar no-bid contract to Halliburton was suspicious from day one, and now our worst suspicions are confirmed,'' Lautenberg said. ``The FBI doesn't get involved unless there are possible criminal violations.''

In a formal whistle-blower complaint filed last week, Greenhouse alleged the award of contracts without competition to KBR puts at risk ``the integrity of the federal contracting program as it relates to a major defense contractor.'' The contracts were to restore Iraq's oil industry.

Among the evidence cited in the complaint was an internal 2003 Pentagon e-mail that says the Iraq contract ``has been coordinated'' with Cheney's White House office.

The vice president, who continues to receive deferred compensation from when he was Halliburton's chief executive in the late 1990s, has steadfastly maintained he has played no role in the selection of his former company for federal business.

The Army last week referred Greenhouse's allegations to the Defense Department's inspector general. Documents show FBI agents from Quad Cities, Ill., asked Tuesday to interview Greenhouse. Her lawyers declined to discuss the contacts.

Greenhouse alleged in her complaint that after her superiors signed off on the Iraq business in February 2003, a month before the war began, and returned it for her necessary approval, she specifically asked why the work was being extended for several years.

Beside her signature, Greenhouse wrote: ``I caution that extending this sole-source effort beyond a one-year period could convey an invalid perception that there is not strong intent for a limited competition,'' the complaint said.

The oil restoration work was given to KBR without competitive bidding through 10 separate work assignments called ``task orders.'' The orders were issued under an existing contract between Halliburton and the U.S. military that was awarded competitively in December 2001.

While the Corps was authorized to spend up to $7 billion for the oil restoration work, the actual cost so far has been $2.5 billion. Halliburton is still working on the oil facilities, but it is now operating under a new, competitively awarded contract.

[Schmear]

Halliburton was the only contractor that could do the work.

I've heard this said of Haliburton many times. What if it's actually true? Is Haliburton the best staffed and best equipped company to do this kind of overseas job? (Disclaimer: just wondering; I know absolutely nothing about that industry.)

[natty dread]

That is the point of the bidding process, to find out which company is the best equipped to do the job at hand for the most reasonable cost.

Also, one of the main issues Greenhouse has brought up is this:

"Greenhouse alleged in her complaint that after her superiors signed off on the Iraq business in February 2003, a month before the war began, and returned it for her necessary approval, she specifically asked why the work was being extended for several years.

Beside her signature, Greenhouse wrote: ``I caution that extending this sole-source effort beyond a one-year period could convey an invalid perception that there is not strong intent for a limited competition,'' the complaint said."



In a true emergency, perhaps a limited no-bid contact would be necessary and allowable, but to extend that contract for 5 years as was done in the case of Iraq, is improper and reeks of favoritism of Cheney's old company.

Also at issue is the pentagon awarding a no-bid contract to Halliburton for recent work in Bosnia for $700 million. In this case, the emergency scenario is totally inappropriate and inapplicable as the war in bosnia has been over for several years. Why the no bid contract in bosnia? Hopefully the FBI will find out.

Time will tell, but like in the case of the CIA agent Valerie Plume, outted by someone in the Bush administration as retaliation against her husband, the FBI usually doesn't get involved unless there is evidence of criminal wrongdoing.

[splat]

Actually, Natty, the bidding process was modified, but not eliminated, starting about 10 years ago, specifically for the purpose of implementing energy efficiency within the government. The sole-source criteria stipulated that energy savings monies would be re-allocated to contractors to cover engineering, project management, and overhead and administrative costs on the contracts. The selection process for those contracts became qualifications-based because utilities savings were somewhat less tangible to calculate than hard goods, construction, or straight labor and the contractors had to have fairly exceptional skills. The program worked (somewhat), then privatization contracts were awarded in the same manner to reduce government inefficiency in semi-civilian operations which suffered direct government oversight (and thus governmental waste through bureaucracy).

The Halliburton contract would have been legal, but favoritism in these contracts would be easy to instigate, as many loopholes exist to guarantee selection, i.e., Native American corporations being a prime example, due to Ted Stevens slipping a selection preference for them into the final legislation of the qualifications-based (no) bid process. The most indicting thing I read in what you posted above is the following, which, if proven, would likely guarantee criminal charges against Cheney if it is proven he blatantly lied about his involvement:

Among the evidence cited in the complaint was an internal 2003 Pentagon e-mail that says the Iraq contract ``has been coordinated'' with Cheney's White House office.

The vice president, who continues to receive deferred compensation from when he was Halliburton's chief executive in the late 1990s, has steadfastly maintained he has played no role in the selection of his former company for federal business.

Of course, situations like this are why politicians always keep a scapegoat handy.

edit: clarification

[Rusty Nails]

Splat hit the nail on the head. I'm actually planning to write an LLM thesis on these topics, though I doubt the military will publish it. The big names get all the press, but the little names do billions in business too and are never heard of. The 8(a) native corporations are filled with former military ring-knockers and corporate heads that "team up" with major corporations for sole-source contracting. You wanna know where your taxes are going to be heading until we pay off the deficit? Look no further than the war profiteers doing sole-source contracting for DoD and DoS. Pretty interesting topic. Everybody is leaving military service to work for contractors that pay 5 times more. All that money is still coming from DoD and DoS. And, as much as you can blame Cheney and the shrub, I doubt much will change if the Dems take the White House.

Fraud? Waste? Abuse?

[Jumper Bones]

Splat hit the nail on the head. I'm actually planning to write an LLM thesis on these topics, though I doubt the military will publish it. The big names get all the press, but the little names do billions in business too and are never heard of. The 8(a) native corporations are filled with former military ring-knockers and corporate heads that "team up" with major corporations for sole-source contracting. You wanna know where your taxes are going to be heading until we pay off the deficit? Look no further than the war profiteers doing sole-source contracting for DoD and DoS. Pretty interesting topic. Everybody is leaving military service to work for contractors that pay 5 times more. All that money is still coming from DoD and DoS. And, as much as you can blame Cheney and the shrub, I doubt much will change if the Dems take the White House.

Fraud? Waste? Abuse?

yup, and what's even better is, the existence of these contractors and the services they provide is reason for management (ie, DoD) to look at their active-duty workforce and say "we don't need you, we've got those guys who'll do it". For which it ends up costing them about 6,000 times more because of the way costs get hidden from the actual bid in the contract...

Rusty I'd love to see this when you're done with it, send it my way. Do you doubt it'll get published, because it diverts from party line?

[Huck Finn]

Fraud? Waste? Abuse?

I can see you've worked for Uncle Sam.

[splat]

"Overhead and administrative costs" - billing for the time of anyone remotely associated with the contract. Plus, "government-approved markups on time and materials" are a negotiated item, something which leaves unbelieveable room for corruption. But then it's only corrupt because these mega-corps are taking the food out of babies mouths to bank outrageous fortune. A re-allocation of the country's wealth is taking place right under everyone's noses.

[Huck Finn]

It seems to me that poor management, waste, and bloat are more serrious issues in the federal government then blatent criminal misconduct. While there are those cases where parties are knowingly breaking laws to line their pockets, I would say there are far more tax dollars flushed down the crapper on above the board projects. It is staggering the way government agencies waste money. Poor planning and the lack of capable personel make even the simplest of projects drag on way longer then they should, all the while consuming rediculous sums of money. When things go south, it's time to bring in more or different contractors to fix it. Those contractors are then paid a bazillion dollars an hour, to and are also mismanaged, while Joe civil servant sits in the corner picking his butt all day.

Grrr... Now you got me all fired up.

[Benny Profane]

ummm....[benny scratches himself, strokes long white cartoon beard, still in alcoholic haze from Sox thing]......uh....isn't this kinda interesting timing for this, um, announcement, considering the ELECTION IS LIKE NEXT TUESDAY!
Doesn't the Cheney/Bush family organization have the FBI IN IT'S BACK POCKET?! hack hack, sorry for the shouting, ...... my head hurts.

[13]

I'd just like to remind y'all that (at this time) the government doesn't need to be efficient and profitable, but they are held highly accountable for their actions and decisions, and rightly so.

This begets the highly bureaucratic and process-oriented nature of government work.

Independent of my dislike for Cheney, this no-bid contract stuff is bullshit. Even if Halliburton is the only one with the necessary equipment and labor force, other companies with an incentive (profit) to purchase similar equipment and labor force should be allowed to bid as well. Corporations are excellent at figuring out ways to minimize costs in the face of competition.

This no-bid contract smells like a legal loophole to allow a new type of monopoly and Halliburton is one of the beneficiaries.

[SteepnDeep]

In a true emergency, perhaps a limited no-bid contact would be necessary and allowable, but to extend that contract for 5 years as was done in the case of Iraq, is improper and reeks of favoritism of Cheney's old company.

Let's face it! "Who you know", is always more beneficial/lucrative than "what you know". This is not a new revelation. The same crap played out in your grandfather's day and before that. Damn, almost every city worker in Chicago was hired this away. How many of your friends or family were hired on strictly merit alone? You can't discredit Haliburton for playing the system. This is the way it works. For most people, you either play this game or get fucked. What we should not accept, is any fraud, scams, or misuse of the public trust or funds before/after the contract has been signed. If Haliburton engages in these activities, they need to be held accountable and penalized severely.

[VTskibum]

These projects don't get re-competed b/c DoD management usually find it to hard to start from scratch and so they continue the relationships with the people already doing the work.

There are some positives to it, consistency and ability to plan out a long term solution based on the past, but the problem is managing the costs associated with doing so.