WASHINGTON, Dec. 28 — The Qarmat Ali water treatment plant in southern Iraq is crucial to keeping the oil flowing from the region's petroleum-rich fields. So when American engineers found the antiquated plant barely operating earlier this year, there was no question that repairing it was important to the rebuilding of Iraq. Setting the price for the repairs was another matter.
In July, the Halliburton Company estimated that the overhaul would cost $75.7 million, according to confidential documents that the company submitted to the Army Corps of Engineers. But in early September, the Bush administration asked Congress for $125 million to do the job — a 40 percent price increase in just six weeks.
The initial price was based on "drive-by estimating," said Richard V. Dowling, a spokesman for the corps, which oversees the contract. The second was a result of a more complete assessment. "The best I can lamely fall back on is to say that estimates change," said Mr. Dowling, who is based in Baghdad. "This is not business as usual."
The rebuilding of Iraq's oil industry has been characterized in the months since by increasing costs and scant public explanation. An examination of what has grown into a multibillion-dollar contract to restore Iraq's oil infrastructure shows no evidence of profiteering by Halliburton, the Houston-based oil services company, but it does demonstrate a struggle between price controls and the uncertainties of war, with price controls frequently losing.
The Pentagon's contract with a Halliburton subsidiary, Kellogg Brown & Root, conceived in secrecy before the war and signed in March, was meant as a stopgap deal to last no more than a few months. But it has been in effect since then and has grown to more than $2 billion.
The scope of the contract includes myriad tasks from importing fuels to repairing pipelines, and the costs have increased through task orders and subcontracts, some of which are carried out with limited documentation or disclosure.
The reconstruction of Iraq has taken on "a Wild West atmosphere," said Gordon Adams, a military procurement expert at George Washington University. "Wartime creates an urgent need, and under an urgent need, contractors will deliver and take a price. There's a premium for getting it done fast."
Earlier this month, Pentagon auditors questioned the $2.64 per gallon that Halliburton was charging to truck fuel from Kuwait to Iraq, and sought to recover $61 million. In response, company officials said they had actually saved the government money and had put the fuel supply subcontract up for competitive bidding. But there was little paperwork to show that any bidding had taken place, according to government officials familiar with the audit.
"Most of it was done on an emergency basis, very quickly, over the phone, and Halliburton has struggled to prove this was competitively bid," said one government official.
Wendy Hall, a spokeswoman for Halliburton, said bids were solicited by telephone in May because the corps needed fuel imported into Iraq within 24 hours. But she said a more formal bidding process was done several days later, and that KBR has provided Pentagon auditors with documentation on the bids.
"KBR followed government-approved procedures in responding to this significant, challenging and dangerous mission," she said.
Minimal Halliburton Profits
The estimated price of another KBR project, the replacement of damaged pipelines over the Tigris River, also grew significantly over the course of a few weeks. In July, KBR estimated that the cost would be $29.8 million for the job, included in a list of 220 tasks to be completed in Iraq. But by fall, the cost had more than doubled, to $70 million.
Both Mr. Dowling, the spokesman for the corps, and Ms. Hall said the price grew because the scope of the project and the method of repair had changed. Ms. Hall said the company had tried to get the lowest price from its subcontractors. In addition, Halliburton and government officials note that the violence in Iraq increases the cost of security and adds to the cost of all reconstruction contracts.
SNIP- reg required
http://www.nytimes.com/2003/12/29/international/middleeast/29CONT.htmlBe interesting to see if other rags around the country pick up this and run with it. I don't expect to see much coverage in our local paper.
Unfortunately, this will mean nothing to the rats. Halliburton is just too good of a buzz word to actually bother with the truth.
Just as long as it's not Gep-ron.
true on DNC - though I wonder what page the slimes printed this "retraction" on.
Will it - in reference to the breaking story title-line on the alleged profiteering - say something like this>??? "the company formerly headed by VP Dick Cheney unfairly accused and cleared of any wrongdoing"??? I don't think so.
These leftists are all the same, lower than whale shit in the marianas trench.
CGVet58
Great News. Thanks for posting this. I just sent it to our local left wing fish wrap.
