Reconstruction Corruption Watch Part II

Yesterday, I reported on the current controversy surrounding Halliburton's poor performance and cover-up on its water treatment contract in Iraq. Now add oil to the mix.

In the Washington Post Wednesday, Griff Witte writes of overcharges and obfuscation by Halliburton subsidiary--you guessed it--Kellog Brown and Root on a $1.2 billion contract to restore oil services in southern Iraq.

The competitive contract awarded in 2004 followed a $2.4 billion no-bid deal in 2003. Prior to settling on the newer contract, the Defense Contract Audit Agency requested that the Army Corps of Engineers speak with its auditors about "significant deficiencies in KBR's ability to estimate its costs"--the DCAA had challenged $200 million in fuel delivery charges on the first contract--but the Corps failed to do so.

Rep. Henry Waxman released a statement saying, "Halliburton has pulled off the impossible: it has actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract. This new round of overcharges and dismal performance would have been avoided if the Bush Administration had listened to its own auditors."

KBR's profit in the newer contract is determined as a percentage of its costs. In challenging $45 million of the $365 million in reviewed costs, Pentagon auditors cited instances such as KBR's "paying a supplier more than it was due"; cutting cost estimates in half when "pressed on its true expenses"; and billing "for work performed by the Iraqi oil ministry."

As questions about costs and performance were raised, "federal officials in Iraq reported KBR was being ‘obstructive' towards officials trying to investigate what had gone wrong." One contracting officer described "…numerous attempts to work with KBR to bring their cost reporting procedures into minimal acceptable standards." And the New York Times reports of an officer writing to the company, "you have universally failed to provide adequate cost information as required."

William Nash, a retired Army General and senior fellow at the Council on Foreign Relations, summarizes, "This a continuing example of the mismanagement of the Iraq reconstruction from the highest levels down to the contractors on the ground."

It is also an example of why only an independent, bipartisan commission will get to the bottom of the waste, mismanagement and corruption related to the Iraqi war effort.

Comments (3)

1. OK--You want an "independent, bipartisan commission."

   1. Who has the power to appoint such a commission? Do you trust the person or persons who could be charged with this job? 2. Whom do you envision sitting on such a commission? People who have an understanding of how the defense contracting business has worked in the past AND who might really, truly, sincerely be willing to say that it must be changed? Can you name three such people? 3. What if you successfully complete steps 1 and 2, what if this commission concluded that "waste, fraud and corruption" have been and remain the essence of defense contracting and that the entire system has to be gutted and rebuilt? Do you believe that Congress, the Pentagon and Industry would not prevail in putting such a conclusion in the same spot where Jimmy Hoffa's remains now rest? Money and power will talk, the commission's report will take a walk. When it comes to defense contracting, Pork is the only white meat.

   Posted by donescobar at 03/31/2006 @ 1:59pm

2. Realistically, such a commission would never root out all evil. But it may be successful in killing off this particular beast.

   The fact that we are engaged in a war begun in an atmosphere of lying and hysteria, which is not achieiving its stated goals but which is a cash cow for the company the Vice President ran until he was elected ... this is a scandal of truly Olympic scale. If a kangaroo court can put an end to it, I'm all in favor.

   Posted by MyParadigm at 04/01/2006 @ 12:48pm

3. Don't hold your breath.

   Posted by redwingblack at 04/02/2006 @ 8:17pm