Katrina Style Government: Our Gift to Iraq
Posted by Lorelei Kelly
From the outside, today's Congress looks like a dank Gollum's den of tricksy, swilling, one-armed-bandits wearing golf pants and traipsing to the Lear jet courtesy of taxpayer subsidized corporations. But we do still have elected leaders who valiantly insist that our legislature perform its oversight duties. This week, Rep. Henry Waxman (CA) released a memo about corruption run rampant in the post-hurricane Gulf Coast. Like Iraq deja vu, private contractors exploited the system to make millions and ripped off the taxpayers while the folks who needed the help were left wanting.
Here's a fun irony: Conservatives who ignore all free-market principles when it comes to product delivery. Its called a "cost plus" contracting system and it works exactly like it sounds. Be ready to go when crisis erupts then charge for the cost and add a profit that is a percentage of the cost... Wheeeee! a recipe for unending, no-questions- asked profit! In Iraq, because monopoly contracts were awarded before specific projects were identified, there was no actual price competition for more than 2,000 projects. That must be how Halliburton, despite $263 million in unaccounted for reconstruction funds for the project "Restore Iraqi Oil" -- still managed to pay out $100 million in profits and bonuses or that it racked up $1.2 billion in unaccounted costs for the logistics support to the war and still served up contaminated water to our troops! Back in 03, we did hear a few yelps about no bid contracting for Halliburton and the fact that VP Cheney was prior CEO of that very same company. We were told that Cheney was not involved in the decision. Yet the DoD political appointee who secured the billions for Halliburton did so after consulting with a "principles committee" that included the now indicted Cheney Chief of Staff Scooter Libby. The wikipedia description of "cost-plus" sounds like today's conservative leadership philosophy in a nutshell:
easy to calculate
minimal information requirements
easy to administer
tends to ignore the role of consumers
tends to ignore the role of competitors
Being in the minority, Waxman and his Democratic colleagues on the Government Reform committee have some success in convening oversight hearings on these issues (much thanks to Christopher Shays, Republican maverick from Connecticut).
The larger theme here, however, is a battle of ideologies about what government is for. 30 years of conservative contempt has gutted our public services across the board (except for the military, which has been forced to take up much of the slack). You don't have to be a government-weenie to appreciate the need for smart, trained and permanent staff to be on hand to serve the public both overseas and in New Orleans--and to ask hard questions. One of the most shocking parts of the Iraq financing fiasco is that the role of accountability itself was outsourced. Congressional appropriators (the people who control the money) shifted funds from the US Government to hire yet more contractors to do the Iraq reconstruction oversight--the very companies who were partners on millions of dollars worth of deals with Halliburton. Yeah, right.
And we're supposed to be excited about $100 gasoline rebate?
Apparently the administration think there's not enough fraud in Iraq. Wall St. Journal:
The Senate last week approved ... $1.5 billion in added Iraq reconstruction money.... The administration’s main vehicle for rebuilding Iraq has, in the past, been designated "Relief and Reconstruction" funds, which by law are overseen by a special inspector general, Stuart Bowen. The new money going toward similar reconstruction goals will be classified as coming from “Foreign Operations” accounts. The State Department is responsible for spending both pools of money.
...Because the new money technically comes from a different source, Mr. Bowen, who has 55 auditors on the ground in Iraq, will be barred from overseeing how the new money is spent. Instead, the funds will be overseen by the State Department’s inspector general office, which has a much smaller staff in Iraq and warned in testimony to Congress in the fall that it lacked the resources to continue oversight activities in Iraq.
Republican Appropriations Committee aides say legislators shifted the Iraq money to the foreign operations accounts at the request of the White House...
Posted by: Cal | May 11, 2006 at 03:59 AM
Serious question: Besides Halliburton, what companies are qualified or prepared for 'rebuilding Iraq'?
This question is always lurking in a discussion about Halliburton, but I have no idea! Are there 100 other companies that could have done a better job?
Posted by: Miss K | May 11, 2006 at 09:24 PM
Bechtel is the only other US company that could compete on the same scale as HAL/KBR.
There are probably 4 or 5 US companies like Parsons, F-D, etc could compete on an individual contract basis.
To the author - Can I ask what your experience is relative to contracting with an undefined scope of work?
It seems to me rather naive to blame any/all of the issues on the means of procurement. Unfortunately, it obscures the real problems relative to any/all issues relative to HAL/KBR, such as over billing and or services provided.
Posted by: Johnny Upton | May 11, 2006 at 11:58 PM
Whatever sense does it make to contract with an undefined scope of work?
That's OK for a victory. If we had won everything in iraq in 6 weeks, and controlled the oil, and multinational oil companies had come in immediately to spend the money needed to triple iraqi oil production, and within a year iraq was selling $60 billion/year and paying back our expenses for liberating them -- if that had worked then nobody would noodge about just what we paid contractors for when the scope was undefined to begin with.
But when it didn't work out, isn't it only natural to scapegoat the contractors? We blame them for $100/gallon fuel and contaminated water and all the other little things that didn't go perfectly. We begrudge them their giant profits -- which we wouldn't have minded at all if it had been a victory and the iraqis were paying them.
It looks to me like this reflected an undue lack of planning on the government's part. The planning didn't happen so we couldn't say just what we intended to contract out. So we agreed to pay for great big undefined projects.
I can't really blame them for making out like bandits. It's like we were telling them, "We have to get rid of this money and if you don't take it we'll just throw it away."
The very fact that there was no other company that could do the job was a great big red flag labeled POOR PLANNING.
Posted by: J Thomas | May 12, 2006 at 04:15 PM
1) Bechtel could have done the work
2) Time was of the essence. Is it preferable to have the CoE perform surveys to determine a scope of work post invasion, then place the project out for bid for 30 days and then begin the repairs to hospitals, de-Sal plants, etc?
Posted by: Johnny Upton | May 15, 2006 at 11:25 PM
Johnny Upton, you have brought up an important point.
Time was of the essence.
Instead of the CoE doing surveys to determine scope of work, it appears that Halliburton subsidiaries did surveys for roughly one year to determine scope of work. And then by the time they were ready to do the work the security situation had devolved to the point they couldn't.
Perhaps some alternative would have been better.
Posted by: J Thomas | May 16, 2006 at 07:47 PM
JT - I don’t think you statement is totally correct, civilian contractors completed a number of projects within the first year. HAL/KBR was also responsible for a number of support functions as well.
You are fairly limited in regards to contracting options in emergency situations. I don’t think the administration (State & DoD) had a working plan at any time, thus the rebuilding effort was not as successful as it should have been. Successful execution of Cost+ work is driven by the decision makers on the ground.
FWIW - Parsons got the boot for managing hospital reconstruction.
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