In a letter on June 1, 2004, Congressman Henry A. Waxman raised new questions for the Secretary of Defense regarding the decision to award the Kellogg Brown and Root division of Halliburton a sole source contract worth up to $7 billion dollars for the rebuilding of Iraq's oil infrastructure. His letter comes amid the revelation of a memo that stated that "action" on the contract was "coordinated" with the office of Vice President, Dick Cheney. Congressman Waxman notes that the rationale for excluding other contractors from being involved in the bidding for the contract was that Halliburton had already completed the planning for the work under a task order issued from an existing contract with the army and that further competition would have "been a wasteful duplication of effort". The letter states that Congressman Waxman has been briefed by the General Accounting Office (GAO) regarding the legality of issuing the task order for the planning and they have responded that the action was outside the scope of the contract and was therefore a violation of federal contracting regulations. Furthermore, the letter alleges that the office of the Secretary of Defense overruled the Army's shared opinion that contract was outside the scope of the contract and directed the Army to issue the task order to Halliburton. His letter requests unredacted copies of all communication with the White House and the names of officials involved regarding the issuance of the task order and contract. The letter notes that when seven senior members of the Defense Department were questioned under oath that they swore that they did not discuss nor did they have any knowledge of their offices discussing the contract with the Vice President or his office. In a earlier letter to the Secretary of Defense dated May 18, 2004, Congressman Waxman is joined by Senators Byron L. Dorgan and Ron Wyden along with Congressman John D. Dingall in which they raise further allegations of fraud, waste and abuse that they claim are well documented by the Defense Contract Audit Agency and the Office of Inspector General for Department of Defense. They further claim that the oversight of contracts was even contracted out thereby creating situations where companies were overseeing companies in which they were involved together in joint ventures elsewhere. According to their letter: These contractors are being asked to carry out essential governmental oversight functions, including defining and prioritizing project requirements and actually overseeing the work of construction contractors. It is not appropriate for contractors to exercise these functions - particularly in view of significant conflicts of interest among these companies.
A report by the elected officials entitled Contractors Overseeing Contractors: Conflicts of Interest Undermine Accoutability in Iraq, recounts the case studies of two contracts that were awarded to oversee two other contracts worth approximately $3 billion dollars. In the report's conclusion: In government contracting, two safeguards are commonly used to protect the taxpayer from waste, fraud, and abuse: (1) fixed-price contracts are employed to avoid giving contractors an incentive to run up costs, and (2) competition is promoted to allow market forces to discipline prices. In the reconstruction contracts in Iraq, neither of these two safeguards is present. The major reconstruction contracts are cost-plus contracts that preclude price competition for specific reconstruction projects. The absence of these safeguards increases the burden placed on oversight officials to hold contractors accountable and to protect taxpayer interests. In Iraq, CPA has given the responsibility for this essential contract oversight to private contractors. This report has found that these private contractors have
conflicts of interest. The conflicts include ongoing business relationships with the contractors they have been hired to oversee, as well as conflicts with their own reconstruction contracts. Without the discipline of price competition and rigorous and impartial oversight, the Iraq reconstruction contracts will be vulnerable to waste, fraud, and abuse.A four part series produced in co-operation with Center for Investigative Reporting by Karen Lowe for the radio program Marketplace reveals several allegations of rampant abuse of taxpayer dollars in Iraq including bribes and black marketeering. According to the Marketplace website for the Spoils of War series: The spoils of war add up to more than capturing expansive palaces and luxury cars. As Marketplace reporters have discovered, not all of the $22 billion being spent to rebuild Iraq is going where it should. Who's watching the money as it streams through Baghdad? Just about no one, and bribes and black marketeering are rampant, witnesses say. A leading anti-corruption group claims that at least 20% of U.S. money spent in Iraq is being lost to corruption. From Halliburton subsidiaries charging double for gas, Iraqi officials and Arabic translators unrestrained from pocketing millions of dollars, or even members of the interim governing Council accusing each other of taking tens of millions in bribes.
_DATE: 02.06.2004, 11:56 Hora Printer Friendly  Email to a Friend 
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