Rep. Henry A. Waxman Ranking Minority Member
Committee on Government Reform U.S. House of Representatives
December 9, 2004
Fact Sheet
Halliburton's Iraq Contracts Now Worth over $10 Billion
The value of Halliburton's Iraq contracts has crossed the $10 billion
threshold. Halliburton has now received $8.3 billion in Iraq work under
its LOGCAP troop support contract and $2.5 billion under its no-bid
Restore Iraqi Oil (RIO) contract, a total of $10.8 billion.
The mounting value of the contracts has been accompanied by a growing
list of concerns about Halliburton's performance. Over the last year,
government auditors have issued at least nine reports criticizing
Halliburton's Iraq work, and there are multiple criminal investigations
into overcharging and kickbacks involving Halliburton's contracts. Former
Halliburton employees have testified before Congress about egregious
instances of over billing. Despite these concerns, the Bush Administration
continues to reject the recommendations of its auditors that 15% of
Halliburton's LOGCAP reimbursements be withheld until the company can
provide better substantiation for its charges.
Value of the Contracts
Halliburton has several major contracts in Iraq. The largest, called
the Logistics Civil Augmentation Program (LOGCAP), is a cost-plus contract
to provide support services to the troops. As of December 2, 2004, the
value of Halliburton's Iraq task orders under LOGCAP was $8.26 billion.
(1)
The second largest Halliburton contract is the cost-plus RIO contract
to restore and operate Iraq's oil infrastructure, which Halliburton was
awarded on a no-bid basis in March 2003. The value of the work Halliburton
performed under this contract is $2.51 billion. (2)
The combined value of these two contracts is $10.77 billion. This is
significantly more than any other contractor has been awarded in Iraq. For
example, the maximum value of Bechtel's Iraq infrastructure contracts is
$2.8 billion. Halliburton will reap profits of between $133 million and
$424 million on its two contracts. (3)
The actual value of Halliburton's Iraq contracts is likely higher than
$10.77 billion. In January 2004, Halliburton received a follow-on oil
contract for southern Iraq worth up to $1.2 billion. The Administration
has not disclosed the value of the work given to Halliburton under this
contract.
Investigations and Audits
At the same time that the value of Halliburton's contracts is
increasing, auditors are finding extensive problems with Halliburton's
billings, and criminal investigations of Halliburton and its employees
continue.
Auditors from the Defense Contract Audit Agency (DCAA), the Government
Accountability Office (GAO), and the Coalition Provisional Authority
Inspector General (CPA IG) have repeatedly and consistently criticized
multiple aspects of Halliburton's activities in Iraq. In nine different
reports, these government auditors have found widespread, systemic
problems with almost every aspect of Halliburton's work in Iraq, from cost
estimation and billing systems to cost control and subcontract management.
Key findings from these audits include the following:
a.. In December 2003, a DCAA draft audit reported that Halliburton
overcharged the Defense Department by $61 million to import gasoline into
Iraq from Kuwait through September 30, 2003. (4)
b.. On December 31, 2003, a DCAA "Flash Report" audit found
"significant" and "systemic" deficiencies in the way Halliburton estimates
and validates costs. According to the DCAA audit, Halliburton repeatedly
violated the Federal Acquisition Regulation and submitted a $2.7 billion
proposal that "did not contain current, accurate, and complete data
regarding subcontract costs." (5)
c.. On January 13, 2004, DCAA concluded that Halliburton's deficiencies
"bring into question [Halliburton's] ability to consistently produce
well-supported proposals that are acceptable as a basis for negotiation of
fair and reasonable prices," and it urged the Corps of Engineers to
"contact us to ascertain the status of [Halliburton's] estimating system
prior to entering into future negotiations." (6)
d.. In a May 13, 2004, audit, DCAA reported "several deficiencies" in
Halliburton's billing system that resulted in billings to the government
that "are not prepared in accordance with applicable laws and regulations
and contract terms." DCAA also found "system deficiencies resulting in
material invoicing misstatements that are not prevented, detected and/ or
corrected in a timely manner." The report emphasized Halliburton's
inadequate controls over subcontract billings. The auditors "identified
inadequate or nonexistent policies and procedures for notifying the
government of potential significant subcontract problems that impact
delivery, quality, and price" and determined that Halliburton "does not
monitor the ongoing physical progress of subcontracts or the related costs
and billings." (7)
e.. On June 25, 2004, the CPA IG found that, as a result of poor
oversight, Halliburton charged U. S. taxpayers for unauthorized and
unnecessary expenses at the Kuwait Hilton Hotel. According to the IG, the
overcharges would have amounted to $3.6 million per year. (8)
f.. A July 26, 2004, CPA IG audit report found that Halliburton "did not
effectively manage government property" and that the company's property
records "were not sufficiently accurate or available to properly account
for CPA property items." The IG "projected that property valued at more
than $18.6 million was not accurately accounted for or was missing." (9)
g.. In July 2004, GAO found ineffective planning, inadequate cost
control, and insufficient training of contract management officials under
LOGCAP in Iraq. GAO reported that, when Halliburton acted as a middleman
for the operation of dining halls, costs were over 40% higher. (10)
h.. In an August 16, 2004, memorandum, DCAA "identified significant
unsupported costs" submitted by KBR, a Halliburton subsidiary, and found
"numerous, systemic issues . . . with KBR's estimates." According to DCAA,
"while contingency issues may have had an impact during the earlier stages
of the procurements, clearly, the contractor should have adequate
supporting data by now." When DCAA examined seven LOGCAP task orders with
a combined proposed value of $4.33 billion, auditors identified
unsupported costs totaling $1.82 billion. (11)
i.. On November 23, 2004, the Special Inspector General for Iraq
Reconstruction (formerly the CPA IG) examined a $569 million LOGCAP task
order and found that Halliburton "did not provide . . . sufficiently
detailed cost data to evaluate overall project costs or to determine
whether specific costs for services performed were reasonable." The IG
concluded that the Army "did not receive sufficient or reliable cost
information to effectively manage" the task order. (12) Multiple criminal
investigations of Halliburton's Iraq contracts are also ongoing. The
Justice Department is investigating Halliburton's admission that two of
its employees received up to $6.3 million in kickbacks to steer LOGCAP
subcontracts to a Kuwaiti contractor. (13) The Defense Department
Inspector General, the FBI, and the Justice Department are investigating
allegations of fraud and overcharging for gasoline under the RIO contract.
(14)
Disclosures by Former Employees and Independent Experts
The concerns expressed by government auditors have been corroborated
by the testimony of former Halliburton employees. Over the past year, six
former employees came forward publicly to provide Congress with
information about egregious overcharges by Halliburton. Others have
contacted congressional staff privately to echo these concerns. For
example:
a.. Marie deYoung, a Halliburton logistics specialist, testified about
subcontracts under which Halliburton paid $45 per case of soda and $100
per 15-pound bag of laundry. Ms. deYoung also disclosed that Halliburton
did not comply with the Army's request to move Halliburton employees from
a five-star hotel in Kuwait, where it cost taxpayers approximately $10,000
per day to house the employees, into air-conditioned tent facilities,
which would have cost taxpayers under $600 per day. (15)
b.. Henry Bunting, a Halliburton procurement officer, described how he
and other buyers were instructed to split large purchase orders into
multiple purchase orders below $2,500 in order to avoid the requirement to
solicit multiple bids. Supervisors routinely told the employees
responsible for purchasing: "Don't worry about price. It's cost-plus."
(16)
c.. David Wilson, a convoy commander for Halliburton, and James Warren,
a Halliburton truck driver, testified that brand new $85,000 Halliburton
trucks were abandoned or "torched" if they got a flat tire or experienced
minor mechanical problems. Mr. Warren brought these and other concerns to
the personal attention of Randy Harl, the president and CEO of KBR. He was
fired a few weeks later. (17)
d.. Mike West, a Halliburton labor foreman, described how he and other
Halliburton employees spent weeks in Iraq with virtually nothing to do,
but were instructed to bill 12-hour days for 7 days a week on their
timesheets. In addition, his superior directed him to buy unnecessary
equipment, telling him: "Don't worry about it. It's a cost-plus-plus
contract." (18)
Similarly, independent experts have criticized Halliburton's inflated
gasoline prices under the RIO contract. Phil Verleger, a California oil
economist and the president of a consulting firm, said of Halliburton's
price: "It's as if they put the gasoline on the Queen Mary and take it
around the globe before they deliver it." (19) Jeffrey Jones, until
recently the Director of the Defense Energy Support Center, stated: "I
can't construct a price that high." (20) Another expert, who asked that
his identity not be disclosed, characterized Halliburton's prices as
"highway robbery."
Failure To Withhold Funds
Reflecting the growing problems with Halliburton's Iraq contracts,
government auditors have recommended that the Army begin to withhold
partial payment to Halliburton under LOGCAP as required by the Federal
Acquisition Regulation. On August 16, 2004, DCAA strongly encouraged the
Army to begin withholding 15% of Halliburton's reimbursements, stating,
"It is clear to us KBR will not provide an adequate proposal until there
is a consequence." (21) On November 23, the Special Inspector General for
Iraq Reconstruction supported this recommendation with respect to the $569
million LOGCAP task order it attempted to audit. (22)
Instead of following the advice of these independent auditors, the
Army has refused to withhold payments for the last eight months. To the
contrary, the Army has given Halliburton multiple extensions to provide
the adequate cost estimates and supporting data needed to finalize the
terms of the contract.
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Notes
(1) U. S. Army Field Support Command, Media Spreadsheet for AFSC
LOGCAP (Dec. 2, 2004).
(2) U. S. Army Corps of Engineers, Frequently Asked Questions:
Engineer Support to Operation Iraqi Freedom (Oct. 7, 2004).
(3) Under Halliburton's cost-plus contracts, the government reimburses
the company for its actual costs and then pays an additional fee. For
LOGCAP, Halliburton receives a base fee of 1% of its costs and an
additional award fee of up to 2%. This yields a profit range of $83
million to $248 million. For RIO, Halliburton's base fee is 2% of its
costs and its additional award fee is up to 5%. This yields a profit range
of $50 million to $176 million.
(4) Department of Defense, DOD News Briefing (Dec. 11, 2003). The
minority staff of the House Government Reform Committee later determined
that the total overpayment to Halliburton through April 1, 2004, was $167
million. See Minority Staff, Committee on Government Reform, Halliburton's
Gasoline Overcharges (July 21, 2004).
(5) Defense Contract Audit Agency, Audit Report No. 3311-2004K24020001
(Dec. 31, 2003).
(6) Defense Contract Audit Agency, Status of Brown & Root Services
(BRS) Estimating System Internal Controls (Jan. 13, 2004).
(7) Defense Contract Audit Agency, Audit Report No. 3311-2002K11010001
(May 13, 2004).
(8) Coalition Provisional Authority Inspector General, Federal
Deployment Center Forward Operations at the Kuwait Hilton (June 25, 2004).
(9) Coalition Provisional Authority Inspector General, Audit of the
Accountability and Control of Material Assets of the Coalition Provisional
Authority in Baghdad (July 26, 2004).
(10) Government Accountability Office, DOD's Extensive Use of
Logistics Support Contracts Requires Strengthened Oversight (July 2004).
(11) Memorandum from Defense Contract Audit Agency to U. S. Army Field
Support Command (Aug. 16, 2004).
(12) Memorandum from Special Inspector General for Iraq
Reconstruction, Task Order 0044 of the Logistics Civilian Augmentation
Program III Contract (Nov. 23, 2004).
(13) House Committee on Government Reform, Hearings on Unprecedented
Challenges: Contracting and the Rebuilding of Iraq (June 15, 2004).
(14) Letter from John R. Crane, Assistant Inspector General,
Department of Defense, to Rep. Henry A. Waxman (June 30, 2004); FBI
Investigating Contracts with Halliburton, New York Times (Oct. 29, 2004).
(15) House Committee on Government Reform, Hearings on Contracting and
the Rebuilding of Iraq: Part IV, 108th Cong. (July 22, 2004).
(16) Senate Democratic Policy Committee, Hearings on Iraq Contracting
Abuses (Feb. 13, 2004).
(17) House Committee on Government Reform, supra note 15.
(18) Statement of Mike West (June 6, 2004).
(19) The High Price of Gasoline for Iraq, NBC News (Nov. 5, 2003).
(20) Army Eyes Halliburton Import Role in Iraq, Associated Press (Nov.
5, 2003).
(21) Defense Contract Audit Agency memorandum, supra note 11.
(22) Special Inspector General for Iraq Reconstruction memorandum,
supra note 12.
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http://www.truthout.org/docs_04/121004A.shtml
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| User: "Michael Johnathan McDonald" |
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| Title: Re: Halliburton Iraq Contracts Now Worth Over $10 Billion |
11 Dec 2004 02:43:40 PM |
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Doc wrote:
Rep. Henry A. Waxman Ranking Minority Member
Committee on Government Reform U.S. House of Representatives
December 9, 2004
Fact Sheet
Halliburton's Iraq Contracts Now Worth over $10 Billion
The value of Halliburton's Iraq contracts has crossed the $10
billion
threshold.
Is that all, Dr, Chump? Geeezz.... I thought it would by much more.
Hope they employ many Americans - ya know need those jobs boy ;)
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| User: "Doc" |
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| Title: Re: Halliburton Iraq Contracts Now Worth Over $10 Billion |
13 Dec 2004 09:43:33 PM |
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"Michael Johnathan McDonald" <abookoflife@yahoo.com> wrote in message
news:1102797820.751009.204230@f14g2000cwb.googlegroups.com...
Doc wrote:
Rep. Henry A. Waxman Ranking Minority Member
Committee on Government Reform U.S. House of Representatives
December 9, 2004
Fact Sheet
Halliburton's Iraq Contracts Now Worth over $10 Billion
The value of Halliburton's Iraq contracts has crossed the $10
billion
threshold.
Is that all, Dr, Chump? Geeezz.... I thought it would by much more.
Hope they employ many Americans - ya know need those jobs boy ;)
Should be more than enough to know they're crooked as hell. And it doesn't
matter to me who has invested in that mass of greed and corruption nearly
as much as it concerns me to know Cheney was the CEO from 95 to 2000.
Why should you turn to corporations to create domestic jobs when they're
well known for outsourcing US work to numerous foreign countries, thereby
helping add more unemployment here?
Ya know, we need those jobs HERE boy. ;D
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| User: "Marvin The Paranoid Android" |
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| Title: Re: Halliburton Iraq Contracts Now Worth Over $10 Billion |
11 Dec 2004 03:59:12 PM |
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Michael Johnathan McDonald wrote:
Doc wrote:
Rep. Henry A. Waxman Ranking Minority Member
Committee on Government Reform U.S. House of Representatives
December 9, 2004
Fact Sheet
Halliburton's Iraq Contracts Now Worth over $10 Billion
The value of Halliburton's Iraq contracts has crossed the $10
billion
threshold.
Is that all, Dr, Chump? Geeezz.... I thought it would by much more.
Hope they employ many Americans - ya know need those jobs boy ;)
If Haliburton offered you a job in Iraq today, would you take it? Assume
you are not in school or currently employed. Would you?
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| User: "Michael Johnathan McDonald" |
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| Title: Re: Halliburton Iraq Contracts Now Worth Over $10 Billion |
13 Dec 2004 12:38:56 PM |
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At my school they large pictures of black men working on oil felids
around the world in the engineering building. That is until you see a
picture of one of the men wiping a part of their face off with one of
their fingers to expose white skin; 0. Get all oil-muddy? No!
Although they do pay well - I bet they have benefits for the whole
family - if you are into that. I like sand allot, but there needs to
be water and waves close by ;)
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| User: "TonyZ2001" |
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| Title: Re: Halliburton Iraq Contracts Now Worth Over $10 Billion |
12 Dec 2004 09:06:06 AM |
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Bill Clinton should be very happy, he owns a lot of Halliburton stock.
Tony
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| User: "Michael Johnathan McDonald" |
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| Title: Re: Halliburton Iraq Contracts Now Worth Over $10 Billion |
13 Dec 2004 12:40:52 PM |
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That's good to know. I know Barbara Streisand was fan big and a big
stalk holder in the 1990s. ;)
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| User: "Cuan" |
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| Title: Re: Halliburton Iraq Contracts Now Worth Over $10 Billion |
13 Dec 2004 05:26:27 AM |
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On Sat, 11 Dec 2004 16:59:12 -0500, Marvin The Paranoid Android
<marvin@heartofgold.com> wrote:
Michael Johnathan McDonald wrote:
Doc wrote:
Rep. Henry A. Waxman Ranking Minority Member
Committee on Government Reform U.S. House of Representatives
December 9, 2004
Fact Sheet
Halliburton's Iraq Contracts Now Worth over $10 Billion
The value of Halliburton's Iraq contracts has crossed the $10
billion
threshold.
Is that all, Dr, Chump? Geeezz.... I thought it would by much more.
Hope they employ many Americans - ya know need those jobs boy ;)
If Haliburton offered you a job in Iraq today, would you take it? Assume
you are not in school or currently employed. Would you?
at least he's already a freemason "from birth" - he'll probably get a
seat on the board.
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| User: "Tadapope" |
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| Title: Re: Halliburton Iraq Contracts Now Worth Over $10 Billion |
12 Dec 2004 03:49:42 PM |
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They are trying to out do Bill Gates!
Tangents are infinite in all of nature in
all universes constantly and at random.
* D OUOSVAVV M *
Oh Joy!
Tom
The Psychedelic Pope
Patron Saint of the Internet
http://www.apple2.org.za/gswv/me/
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