Iraq: Delays Hand Halliburton $1bn

Publisher Name: 
Observer (London)

Halliburton, the engineering group formerly run by US vice-president Dick
Cheney, has been given $1 billion worth of reconstruction work in Iraq by
the US government without having to compete for it, thanks to repeated
delays in opening up a key contract to competition.

The Houston-based company was controversially awarded a contract to repair
Iraq's damaged oil infrastructure without competition in February.

The cost-plus contract means the amount spent by the US Army Corps of
Engineers (USACE), which is running the work, is open-ended, rather than
being fixed at the outset, because the scope of the damage was unknown.
The USACE described the contract as a 'bridge to competition', but
original plans to award the work competitively in August have repeatedly
slipped. So far, $1.7bn has been made available to Halliburton for the

Figures obtained from the USACE by Democrat Congressman Henry Waxman
indicate that on 21 August, around the time the contract should have been
opened to competition, the amount made available to KBR, the Halliburton
subsidiary involved, was $704m. Since then the total has risen by

Waxman said: 'Since August, when the follow-on contracts were supposed to
be awarded, the administration has obligated more than $1bn to Halliburton
under the oil infrastructure contract. These inexplicable delays may be
good for Halliburton; they are costing taxpayers a bundle.'

The figures have emerged as the UK Government and contractors reacted with
dismay to news this week that competitive tendering had again been pushed
back to between 15 December and 17 January. Previously it was delayed to
mid-October, late October, then year-end.

One leading UK contractor, which made strong representations in Whitehall
this week, said: 'We are very disappointed that it has been put back
again,' adding that the longer the delay, the more KBR benefited.

Brian Wilson, the Prime Minister's special representative on
reconstruction, wrote to Blair in advance of President Bush's recent
visit, urging him to press for a level playing field in Iraq.

Wilson said: 'These are very important contracts for the future of the
Iraqi oil industry. We think keeping a level playing field is very
important, and the further delay is regrettable.'

USACE says that the August date was not a deadline for contract award, but
for tenders to be submitted. However, in a letter dated 2 May to Waxman, a
US army general states the 'best estimate for the award of the contract
based on this schedule is approximately the end of August'. According to
contract rules, Halliburton can make a margin of up to 7 per cent on the

AMP Section Name:War & Disaster Profiteering