Targeting no-bid deals
Critics are taking a hard look at several rich US contracts to rebuild war-damaged Iraq.
When Susan Collins was just a staffer in the United States Senate, she used to worry about fat government contracts being awarded in secret. Now Collins is a US Senator - and she can finally do something about it.
Senator Collins is drawing a bead on contracts in Iraq, where the US has begun pouring in billions of dollars to repair war damage and rebuild the country. There are charges in the press that no-bid contracts are squandering taxpayer funds.
"A tremendous amount of money will be spent on contracts to rebuild Iraq," says the soft-spoken Maine senator, a leading GOP moderate. She wants Washington to avoid even the appearance of cronyism or war profiteering in these deals. "We have an obligation to make sure that money is not being wasted," Collins says.
Yet some key Iraq contracts already were bid secretly, or on a sole-source basis, to companies with strong ties to the Bush administration. These included a $1.39 billion contract to a subsidiary of Halliburton, an energy giant formerly chaired by Vice President Dick Cheney.
Another $680 million contract for Iraq's power grid, water system, and airport facilities went to Bechtel Group Inc., after a secret bidding process. Together, the six companies invited to bid on the Bechtel contract contributed $3.6 million to federal election campaigns, two-thirds to Republicans, according to the Center for Responsive Politics.
Democrats call it favoritism, collusion, and even war profiteering.
"These suspect contracts with Halliburton and other companies raise questions about the awarding of contracts to friends of the administration," says Sen. Richard Durbin (D) of Illinois. "Wasn't there someone in the room who said, 'This just doesn't look right.'?"
It's that appearance of wrongdoing that most concerns Collins. In the heat of war, there may be reasons that contracts for fighting oil fires or rebuilding water systems should move quickly - or go to industry giants, she says. Still, anything less than open competition also carries a risk: the integrity of the process, she adds.
Such issues have been a nearly lifelong concern for Collins - one of the rare lawmakers who can do the dog work of a tough investigation herself. As staff director for the government management subcommittee from 1979 to 1987, she led an investigation that found "excessive reliance" on sole-source contracting in Washington. The committee produced a bill that required more competitive bidding, but the law left a loophole: No one needs to account to Congress when they claim one of the seven exceptions in that law, including one for national security.
"The problem is there is no oversight to see that these exceptions are used appropriately," she says. As chairman of the committee she once worked for, Collins wants those loopholes closed. Her "sunshine rule," cosponsored with Sen. Ron Wyden (D) of Oregon, was approved by the Senate as an amendment to President Bush's $87 billion request for Iraq.
She claims another influence in this work: Sen. Harry Truman (D) of Missouri, who was spotted by President Franklin D. Roosevelt as a vice-presidential prospect for his work on war profiteering during World War II. Truman, like Collins, was no grandstander. He said his aim was "heading off scandals before they started." But his conclusions were unambiguous: "The little manufacturer, the little contractor, and the little machine shop have been left entirely out in the cold. The policy seems to be to make the big man bigger and to put the little man completely out of business," Truman said in 1941.
Historian Theodore Wilson wrote in 1975 that the Truman committee is widely viewed as "the most successful congressional investigative effort in United States history." It later evolved into the permanent subcommittee on investigation, now a panel of the Senate Government Affairs Committee that Collins chairs. "Our committee has a legacy of being aggressive in protecting the taxpayer from contracting abuses," she says.
Many of the same Truman-like criticisms are surfacing in the congressional debate over the contracts in Iraq. In all, some $79 billion has already been allocated for war expenses in Iraq, and another $87 billion bill is working its way through Congress - a windfall for companies that can make themselves part of it.
"We're overrelying on large umbrella contracts.... Halliburton has a monopoly on the work in oil, and Bechtel has a monopoly on the reconstruction work," says Rep. Henry Waxman (D) of California, the ranking Democrat on the House Government Reform Committee. "There is no incentive to lower costs," he adds.
No contract has riled critics as much as the first and most lucrative: to Kellogg, Brown & Root, a subsidiary of Halliburton. It started as a 2001 contract for logistical support to the US military, wherever it went, and it was competitively bid. But a decision to expand that contract - from supporting troops to oil-well firefighting, repairing oil systems, and now maintaining and operating oil systems - was not.
"Redefining the contract on a no-bid basis, that's where the Pentagon went awry," says P. W. Singer, a fellow at the Brookings Institution. "All the companies have decided that one way for them to achieve a corporate advantage is to hire former government officials or to make political campaign contributions."
Defense Secretary Donald Rumsfeld told Congress, "The Halliburton contract for oil-field restoration is currently in the process of being recompeted," and that "no new funds are planned to be awarded under the old contract."
The impression of favoritism could be tough to blot out. Recently, a new lobby shop touted its ties to the Bush administration as an asset in helping clients get business in Iraq. New Bridge Strategies, with offices in Washington and Houston, describes itself as "a unique company that was created specifically with the aim of assisting clients to evaluate and take advantage of business opportunities in the Middle East following the conclusion of the US-led war in Iraq." Its principals include Joe Allbaugh, campaign manager for Bush presidential race in 2000.
"This kind of thing is tawdry and will reinforce the conviction in some quarters that this is all about making bucks and paying off corporate pals," says Andrew Bacevich, director of the Center for International Relations at Boston University.