But Halliburton can still be a subcontractor, according to the Newsweek story below.
Note that a letter from Rep. Henry Waxman appears to have been instrumental in heating up the situation. (Along with this telling Daily Show Clip, perhaps?)
Halliburton Out of the Running
The construction firm once run by Dick Cheney won’t get a big Iraq contract
By Michael Hirsh for Newsweek.
Halliburton was one of five large U.S. companies that the Bush administration asked in mid-February to bid on the 21-month contract, which involves the reconstruction of Iraq’s critical infrastructure, including roads, bridges and hospitals, after the war. But the administration has come under increasingly strident criticism abroad and at the United Nations for offering postwar contracts only to U.S. companies. Many of the questions have been raised about Halliburton, which Cheney headed from 1995 until 2000. On Monday, the U.S. Army announced it had awarded a contract to extinguish oil fires and restore oil infrastructure in Iraq to Halliburton’s Kellogg, Brown & Root engineering and construction division. Rep. Henry Waxman, a California Democrat, later sent a letter to Lt. Gen. Robert Flowers, commander of the Army Corps of Engineers, questioning why other oil-service companies had not been allowed to bid....Allegations of a too-close-for-comfort relationship with corporate America have long dogged Cheney and other Bush administration officials, as well as insiders. On Thursday, leading hawk Richard Perle stepped down as chairman of the Defense Policy Board, a Pentagon panel of unpaid outside advisers, after congressional Democrats raised questions about his relationship with Global Crossing, a telecom firm that had sought his assistance in winning government approval for a deal with an Asian conglomerate. Cheney’s spokeswoman, Cathie Martin, said Friday she “hadn’t even heard” that Halliburton would not be awarded the reconstruction contract and added, “The vice president has nothing to do with these contracts.”
Here is the full text of the article in case the link goes bad:
http://www.msnbc.com/news/892259.asp?0cv=KB10&cp1=1
Vice President Dick Cheney arrives at the White House earlier this month
Halliburton Out of the Running
The construction firm once run by Dick Cheney won’t get a big Iraq contract
By Michael Hirsh
NEWSWEEK WEB EXCLUSIVE
March 28 — After taking some political heat, Halliburton is stepping out of the kitchen. The giant energy and construction firm once managed by Vice President Dick Cheney is no longer in the running for a $600 million rebuilding contract in postwar Iraq, NEWSWEEK has learned.
TIMOTHY BEANS, THE chief acquisition officer for the U.S. Agency for International Development, said in an interview that Halliburton is not one of the two finalists to be prime contractor for the reconstruction of Iraq, though the Houston-based firm could take part as a subcontractor. The contract is to be awarded next week.
Halliburton was one of five large U.S. companies that the Bush administration asked in mid-February to bid on the 21-month contract, which involves the reconstruction of Iraq’s critical infrastructure, including roads, bridges and hospitals, after the war. But the administration has come under increasingly strident criticism abroad and at the United Nations for offering postwar contracts only to U.S. companies. Many of the questions have been raised about Halliburton, which Cheney headed from 1995 until 2000. On Monday, the U.S. Army announced it had awarded a contract to extinguish oil fires and restore oil infrastructure in Iraq to Halliburton’s Kellogg, Brown & Root engineering and construction division. Rep. Henry Waxman, a California Democrat, later sent a letter to Lt. Gen. Robert Flowers, commander of the Army Corps of Engineers, questioning why other oil-service companies had not been allowed to bid.
Controversial Bush Aide Perle Resigns
Allegations of a too-close-for-comfort relationship with corporate America have long dogged Cheney and other Bush administration officials, as well as insiders. On Thursday, leading hawk Richard Perle stepped down as chairman of the Defense Policy Board, a Pentagon panel of unpaid outside advisers, after congressional Democrats raised questions about his relationship with Global Crossing, a telecom firm that had sought his assistance in winning government approval for a deal with an Asian conglomerate. Cheney’s spokeswoman, Cathie Martin, said Friday she “hadn’t even heard” that Halliburton would not be awarded the reconstruction contract and added, “The vice president has nothing to do with these contracts.”
What remains unclear is whether Halliburton took itself out of the running for the contract, was asked by the Bush administration to do so or whether its bid was simply not deemed competitive. USAID’s Beans would not elaborate on why Halliburton did not make it onto the finalists’ list, but he suggested that Halliburton chose to play a subcontracting role. And Beans said that Andrew Natsios, director of the aid agency—which is handing out most of the postwar contracts—is keen to counter any allegations of favoritism or political influence. “If I got a phone call from anybody putting any political pressure on me, I would report it immediately to Natsios, as I’ve been instructed to do,” said Beans. “He said if anybody calls you, if there’s any pressure whatsoever, you tell me immediately … No one has called me on this. This is going to be done completely openly, transparently and honestly.” USAID officials also emphasize that bidding is reviewed by two “independent” panels composed of engineers and career civil servants.
Wendy Hall, a Halliburton spokeswoman, referred all questions about the contract to USAID. But a U.N. official who follows the issue told NEWSWEEK that the Iraq reconstruction contract probably wasn’t worth the bad publicity for Halliburton, which depends on maintaining a favorable image both in Washington and the Arab world (where it gets much of its oil-related business, and where the war is increasingly unpopular). “This kind of political controversy was not in their corporate interests,” he said. Halliburton may prefer to quietly work as a subcontractor rather than be in the spotlight as prime contractor, the official suggested.
Beans said USAID had originally hoped to announce the reconstruction contract on Wednesday and has delayed the announcement until “realistically, early next week.” He said the contract, part of $2.4 billion allocated for relief and reconstruction in Bush’s supplemental budget request, has been delayed mainly because of last-minute complications raised by lawyers for the two final bidders, whom he would not identify. (Among the other U.S. companies asked to bid were Fluor Corp., Washington Group, Bechtel Group, Louis Berger Group and Parsons Corp.) The snag involves settling questions about liability issues if a contractor accidentally uncovers and releases—by digging or other means—poison gas or other weapons of mass destruction during reconstruction, he said.
IMG: E-mail from the Homefront
The controversy over the awarding of the first postwar contracts only to U.S. companies is part of a larger ongoing issue of whether Iraq’s transformation will be more U.S.-led or multilateral. On Thursday, Bush and his No. 1 ally, British Prime Minister Tony Blair, dickered at Camp David over how central a role the United Nations would play in postwar Iraq. Defense Secretary Donald Rumsfeld, who has taken the lead on postwar as well as wartime issues, is pushing a plan that relies on speed, efficiency and U.S. “unity of command” in contrast to United Nations-led nation-building efforts in places like Bosnia, Kosovo and East Timor. Blair, in part because he is under terrific political pressure at home to take a multilateral approach, has effectively become the spokesman for U.N. interests in Washington.
IMG: Psy-Ops Gallery
USAID officials say the practical demands of rebuilding Iraq quickly, and the legal obligation they are under to favor U.S. firms—Congress wrote such “aid-tying” preferences into the law—have drastically limited their choices. They point especially to the need for speed, which in turn requires security clearances; generally only U.S. companies have such clearances. Also, invoking a legal exception called “impairment of foreign assistance” allowed the administration to circumvent normal bidding procedures, which can take many months. “It’s where people cannot wait,” said Beans. “Remember, these were part of the front-end rush job to get support in. We couldn’t piddle around ... When we were still before the United Nations, we didn’t know how this was going to go. We were in contingency planning. A $600 million procurement is huge. Normally it would take us five to six months to get it done. They said you’ve got two months.” The stakes are bigger than that, actually: the prime contractor is likely to get a lot more than $600 million funneled its way in future extensions of the contract.
Even big British construction firms like Costain and Balfour Beatty have not been asked to bid as prime contractors, even though British troops are fighting alongside American soldiers and have secured the major port of Umm Qasr, which is to be part of the rebuilding project. Earlier this week, USAID awarded a nearly $5 million contract to a Seattle-based company, Stevedoring Services, to run Umm Qasr. British firms had expressed interest in the contract.
Natsios says that in an effort to broaden the participants he has invoked a special provision of the law opening up subcontracts to friendly countries. He and other aid officials note that up to about 50 percent of the work is going to be subcontracted, as is happening in Afghanistan. As of yet, however, no foreign firms have been awarded even a subcontracting role in Iraq, USAID officials said. Last week, British cabinet minister Clare Short traveled to Washington and complained to Natsios and other administration officials about the contracting process.
Beans said the war’s slower-than-expected progress has at least one silver lining for him. “I’ve been under incredible pressure to get these things done,” he said. “The fact that they’ve been slowed down a little bit has given me a little extra time.”
