Halliburton's Iraq, Afghanistan Contracts at $600 Million and Growing
Friday, May 30, 2003

WASHINGTON  Vice President Dick Cheney's (search) former company already has garnered more than $600 million in military work related to the wars in Afghanistan and Iraq, and potentially could earn billions more without having to compete with other companies.

As the Army's sole provider of troop support services, Halliburton's Kellogg Brown & Root subsidiary has received work orders totaling $529.4 million related to the two wars under a 10-year contract that has no spending ceiling.

Rather than put the Iraq work up for bidding, the government has used the 2001 Halliburton contract to place the various work orders in Iraq, prompting criticism from some Democrats that Cheney's former company is receiving favored treatment.

"The amount Halliburton could receive in the future is virtually limitless," said Rep. Henry Waxman, D-Calif., who disclosed the troop support work orders Thursday. "It is simply remarkable that a single company could earn so much money from the war in Iraq."

Halliburton (search), a Houston-based oilfield-services and construction company, disputes those characterizations, noting it had to compete to win the original contract and that each of its work orders is covered by strict guidelines and costs controls.

"U.S. government contracts are awarded, not by politicians, but by government civil servants, under strict guidelines," company spokeswoman Wendy Hall said. "Government civil servants are well aware of and consistently abide by the requirements of the process. Privatizing this work allows the military to concentrate on its mission. "

"Any allegation that this contract is set up to encourage unwarranted spending is unfounded and untrue," she said. "The vice president has nothing to do with the awarding of contracts, the bidding process or task orders."

Cheney headed Halliburton from 1995 until George W. Bush picked him as his running mate in July 2000.

The Army Corps of Engineers (search), using a separate no-bid contract, has awarded Kellogg Brown & Root $71.3 million in work orders to repair and operate oil wells in Iraq. That contract has a two-year duration of a spending ceiling of $7 billion.

Kellogg Brown & Root competed with two other companies in 2001 to win the logistics contract that makes it the Army's only private supplier of troop support services such as housing, amenities and food over the next decade.

The initial logistics contract award carried no value. The Army negotiates each task order with the company and then verifies the costs as they are billed.

There is no ceiling on spending, because the contract is designed to provide rapid troop support wherever and whenever U.S. forces move into action overseas.

Under similar contracts, the Army paid Kellogg Brown & Root $1.2 billion from 1992 through 1999 to support U.S. troops, mainly in the Balkans. An extension of that contract from 1999 through 2004 is projected to cost $1.8 billion.

Since March 2002, the Army has issued 24 task orders totaling $425.5 million under the contract for work related to Operation Iraqi Freedom, according to Army records provided Waxman. Eleven more work orders totaling $103.9 million have been issued under the same contract for work related to the war in Afghanistan.

Dan Carlson, spokesman for the Army Field Support Command, said the Army has paid $42 million to Kellogg Brown & Root through April for work under the contract related to Iraq and Afghanistan.

Carlson said the more than $500 million in work orders under the logistics contract represents the Army's best estimate of the final costs of the projects. He said the company must justify its spending to Army contract officials before it can be paid.

"Costs are verified as they are billed," he said. "We may spend more or we may spend less."

Much of a $60 million obligation to Brown & Root to provide logistical supply line services and locations in Turkey was never spent because the Turkish government refused to allow U.S. troops to launch an invasion of Iraq from Turkey, Carlson said.

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