NEW YORK: Anti-war protesters in San Francisco recently barricaded the gates of Bechtel, the engineering group that oversaw the construction of the Channel tunnel. The protesters set aside the usual rallying cry: the war in Iraq was not all about oil, they noted, it was also about building roads and schools, and getting power and water services back in operation in a country ravaged by years of underinvestment as well as war.
Contracts worth billions of dollars for the reconstruction of Iraq are already being handed out by the US government, offering huge profits to a few, favoured firms, many with high level contacts in the Bush administration and a history of donations to the Republican party. The contracts are being awarded exclusively to US firms and, instead of the usual tendering process, are by invitation only. Bechtel is one of six construction firms chosen to bid.
The army said this week that the biggest of the contracts dished out so far, fighting oil well fires, could be worth $7 billion. It has been awarded to Kellogg, Brown & Root, a division of Halliburton, the company once run by vice president Dick Cheney. In response to questioning from Capitol Hill, the army said the contract was awarded under an existing deal with KBR signed in December 2001.
Washington, as well as San Francisco, has taken note. “This administration is beyond Nixon when it comes to secrecy,” said Bill Allison, a spokesman for the DC-based Independent Centre for Public Integrity. “There’s definitely the potential for the appearance of conflict of interest. They have thrown out the normal procedures and the administration is very close to corporate America. When Halliburton in particular is involved then it raises questions.”
Separate from the Halliburton deal, a tranche of eight contracts is being awarded by the US agency for international development (USAID). The organization has earmarked $2.4 billion for reconstruction and humanitarian aid but will continue to fund projects beyond the initial work. It is still unclear who will take the lead role in reconstruction.
But what is clear are the huge amounts at stake in what is being billed as the biggest reconstruction effort since the second world war. The cost of reconstruction has been put as high as $100 billion and could last many years. It is assumed that those in at the first will have significant advantage in bidding for future deals, including the exploitation of Iraq’s oil industry.
The first two awards have been relatively minor. Washington-based International Resources Group won the first in February, a $7 million contract to provide personnel support for reconstruction. Stevedoring, a Seattle firm, won a $4.8 million contract to manage the Iraqi port of Umm Qasr.
According to the Centre for Responsive Politics, the invited bidders together contributed almost $3.6 million during the current election cycle, mostly to the Republicans. The amounts, though individually not large, are part of the process of ensuring a seat at the table, said Charles Tiefer, professor of law at Baltimore University and an expert in government contracting.
He said the administration faced a “credibility gap” by awarding the contracts behind closed doors.
The connections between the companies invited and the administration run deep. Ray Hunt, a director of Halliburton, is on the president’s Intelligence Advisory Board. Lawrence Eagleburger, secretary of state under the first president Bush, is also a Halliburton director.
Kenneth Oscar, the vice president of Fluor, another of the six bidders, is a former army secretary and oversaw the Pentagon’s $35 billion procurement budget. Its board also includes Bobby Inman, a former CIA deputy director. Labour secretary Elaine Chao worked on the board of another of the six, Parsons, before joining the government.
Bechtel employed the former defence secretary Caspar Weinberger, and the former secretary of state George Shultz is on the board. Jack Sheehan, a senior vice president with Bechtel, is on the defence policy board, a Pentagon advisory group, one of many apparent conflicts among its 30-strong membership.
Democrats Henry Waxman and John Dingell have written to the general audit office (GAO), the investigative arm of Congress, asking that the process for handing out contracts be examined. Mr Waxman has separately asked that the contract to the Halliburton subsidiary KBR be put under the microscope.
In a letter to David Walker, comptroller general of the GAO, they asked: “We are interested in how certain companies were invited to bid on these contracts, how the contract winners were selected, why so little information has been provided to the public and Congress about the contracts, and what role various agencies played in making the determination to proceed with these contracts.”
The agency’s handling of the process was decried by Chris Patten, the European commissioner for external relations, as “exceptionally maladroit”. It was only under pressure from Britain that the US administration agreed to open up subcontracting to overseas companies.
But it is inevitably the Halliburton contract that has come under the most scrutiny. Mr Cheney ran the Dallas-based company between 1995 and 2000 before stepping down to run for office. When he left, he received a $33 million thank you, much of which was at the discretion of the board. He is still receiving $180,000 a year in deferred income from the business.
The company is also no stranger to other controversy. Last year it was forced to pay $2 million to settle fraud claims involving work at a military base, and was found in 1997 by the GAO to be billing the army for questionable expenses. The company has been criticised by its own shareholders for dealing with Iran and is still under investigation by the US financial watchdog, the securities and exchange commission, for a possible accounting scandal while Mr Cheney was still at the helm.
Wendy Hall, a spokeswoman for Halliburton, defended the company’s role in Iraq, citing KBR’s long history in the field, going back to building ships for the US navy in the second world war. More recently it built the detention centre for suspect terrorists in Guantanamo Bay, Cuba. The company did equally well under the Clinton administration.
“The vice president has absolutely nothing to do with the awarding of defence contracts, the bidding process or the current work orders,” she said.
Construction and government officials point out that there are few companies with the experience or capabilities to carry out the kind of work needed in Iraq. They argue that suggesting any inside influence is being brought to bear is the stuff of lazy innuendo.
Jonathan Marshall, a spokesman for Bechtel, said it was absurd to suggest that there was any horse-trading behind the scenes. “The USAID process seems to have been handled by career civil servants and it’s not reasonable to suggest they are influenced by political pressure nor that we have attempted to bring any political al pressure to bare,” he said. “We have a proud record in engineering and construction and have handled very large contracts, many in the Middle East, where we have been for 60 years. It’s almost inconceivable that we wouldn’t be on the list.”
USAID argues that it expedited the usual method of tendering for contracts because of the need to get reconstruction under way as quickly as possible as well as for security reasons.
But for critics, the process has been one more example of an unhealthy tendency toward secrecy and the impression of government being run like a private members’ club, from the formation of energy policy to new rules giving Mr Cheney more power over what information is eventually declassified for public consumption.—Dawn/The Guardian News Service.