The Despicable Profiteering by the Cabal

While taxpayers want to keep costs down,
cost-plus contractors want to run costs up.


"I can unequivocally state that the abuse related to contracts awarded to KBR [Halliburton] represents the most blatant and improper contract abuse I have witnessed during the course of my professional career."

Testimony of Bunnatine Greenhouse, the highest ranking civilian in the U.S. Army Corps of Engineers.

         
  1. The United States has spent $505 billion in overall defense acquisitions and contracts thus far in this war for profit:

    • Fully 50% of the contracts have been awarded without competitive bidding

    • Only 41% of those remaining contracts were subject to full and open competition

    • In 9% of the contracts, the means of procurement is not even known now in 2006.

  2. Halliburton's two biggest contracts with the military in Iraq are the Logistics Civil Augmentation Program (LOGCAP) for troop support and the Restore Iraqi Oil (RIO) contract to rebuild the oilfields.

  3. For LOGCAP, Halliburton receives a base fee of 1% of its costs and an additional award fee of up to 2%. This guarantees a profit range of $83 million to $248 million.

  4. The $2.5 billion RIO contract to restore Iraqi oil production was awarded without competitive bidding and against Pentagon procurement requirements. The decision was apparently made by top Pentagon officials and political appointees, and against the recommendations of procurement professionals. E-mail messages uncovered by Judicial Watch suggest that Defense Secretary Paul Wolfowitz was personally involved, and that decisions were .coordinated with the Vice President's office. For RIO, Halliburton's base fee is 2% of its costs and its additional award fee is up to 5%. This guarantees a profit range of $50 million to $176 million.

  5. The Halliburton $8.3 billion LOGCAP contract was supposed to supply American troops and support personnel with food, fuel, housing and logistical support. Yet performance has been plagued by cost overruns and shoddy results.

    • Inserting Halliburton as middleman for the operation of dining halls increased costs by more than 40%.

    • With the motivation of a .cost-plus. contract, Halliburton kept its own personnel at the deluxe Kuwait Hilton Hotel, where the excess costs ran in the range of $300,000 per month.

    • Examination of seven LOGCAP task orders with a combined value of $4.33 billion identified unsupported costs totaling $1.82 billion. Nearly half of every dollar spent (42 cents) could not be justified. And yet the Pentagon paid the costs anyway.

  6. Halliburton quickly became the leading firm pocketing sole source contracts in Iraq. Halliburton received over $16 billion from the Pentagon for work in Iraq between the March 2003 invasion and July 2006.

  7. Halliburton.s two biggest contracts with the military in Iraq are the Logistics Civil Augmentation Program (LOGCAP) for troop support and the Restore Iraqi Oil (RIO) contract to rebuild the oilfields.

  8. Both RIO and LOGCAP are cost-plus contracts, under which the company purchases all goods and services to complete the job, and is then reimbursed by the government for all costs plus a percentage of costs as a fee. Such contracts contain a built-in incentive to waste money: the higher the cost runs, the higher the profit will be.


    Over 3,000 US soldiers killed, 22,057 wounded, and at least 750,000 Iraqis killed.