Halliburton cheats government.

[Hexxenhammer]

I'm SHOCKED.

I lied.

I'm not.

An ongoing audit of Halliburton's Kellogg, Brown & Root subsidiary found substantial overcharging for fuel and other items, the official said, speaking on condition of anonymity. The problems go beyond overcharging, the official said, declining to elaborate.

http://apnews.excite.com/article/20031211/D7VCE7C81.html

[Landis]

We all know that Haliburton was given exclusive no-bid contracts because they are eminently qualified to carry out the provisions of the contract in a short period of time. After all, they've been cheating the government for years. They know how to do it in record time!!.;)

[tamiO]

Cheney, a former defense secretary, stepped down from Halliburton when he became Bush's running mate in 2000 and has said he played no role in contracts for his former company.

Whew! I am glad he cleared that up. It sure does look fishy.

Seriously, if Haliburton is not being given preferential treatment, it sure a stupid move on their parts to give such ammunition to the opposing political parties.

They are either all weasels or they are really stupid. Dick Cheney does not strike me as a stupid person.

Maybe they don't care what we think and they will be sitting on a secluded beach on some tropical isle counting their profits for years to come - no matter what we think.

How many people in the White House have worked for Haliburton?

[Segnosaur]

Originally posted by tamiO


Whew! I am glad he cleared that up. It sure does look fishy.

Seriously, if Haliburton is not being given preferential treatment, it sure a stupid move on their parts to give such ammunition to the opposing political parties.

They are either all weasels or they are really stupid. Dick Cheney does not strike me as a stupid person.


I have no doubt that Haliburton is charging a lot for gas in Iraq, and they are a very profitable company. But, lets try to look at a few factors:

- They charge a lot for gas, but it is a war zone. Do you think the kid making minimum wage at your local gas station would accept such low pay if he were going to be shot at regularly? (The original article did touch on this point.)

- Haliburton is earning high profits, but how much of their profits are due to its Iraq operations? I remember seeing an article once that its percentage profits for its Iraq operations were much lower than its overall percentage profits. (This implies that its Iraq contracts aren't the gold mind people suggest, and that other areas of the company are much more profitable.) Unfortunatley, I never bothered to keep a link to the article.

[tamiO]

Originally posted by Segnosaur


Do you think the kid making minimum wage at your local gas station would accept such low pay if he were going to be shot at regularly?

You mean the one that got shipped of to Iraq a few months back and can't afford his plane ticket home for his upcoming leave? He did!
;) :D

[tamiO]

Originally posted by Segnosaur

Haliburton is earning high profits, but how much of their profits are due to its Iraq operations?

Their pay-off for this will come years down the road. Their role now is considered an investment in a future where American Oil Companies will be "in position" to serve Asia's growing needs for oil. :)

[Cain]

Perhaps apologetics from the other side are in order. David Brooks from the _NYTIMES_ Op-ed page (Nov 11, 2003) argued that the activists and Democratic nominees agitating over no-bid contracts know practically nothing about how they're awarded (a different topic, but still related).

Defense contractors habitually defraud the federal government. The top ten (at least) have been found guilty of such.

Over the past few months, the Democratic presidential candidates have been peddling a story. The story is that the Bush administration is circumventing the competitive bidding process to funnel sweetheart Iraq reconstruction contracts to major campaign contributors, especially Dick Cheney's old firm, Halliburton.

The riff was laid down by Dennis Kucinich, but now all the candidates are playing along. Howard Dean says the Halliburton contracts show that the Bush administration "has sold this country down the river." John Kerry says the administration has broken faith with the American people with its no-bid contracts with Halliburton. In the parade of Democratic bogeymen, the word "Halliburton" elicits almost as many hisses as the chart-topping "Ashcroft."

The problem with the story is that it's almost entirely untrue. As Daniel Drezner recently established in Slate, there is no statistically significant correlation between the companies that made big campaign contributions and the companies that have won reconstruction contracts.

The most persuasive rebuttals have come from people who actually know something about the government procurement process. For example, Steven Kelman was an administrator in the Office of Federal Procurement Policy under Bill Clinton and now is a professor of public management at Harvard.

Last week, Kelman wrote an op-ed article in The Washington Post on the alleged links between contributions and reconstruction contracts. "One would be hard-pressed to discover anyone with a working knowledge of how federal contracts are awarded — whether a career civil servant working on procurement or an independent academic expert — who doesn't regard these allegations as being somewhere between highly improbable and utterly absurd," he observed.

The fact is that unlike the Congressional pork barrel machine, the federal procurement system is a highly structured process, which is largely insulated from crass political pressures. The idea that a Bush political appointee can parachute down and persuade a large group of civil servants to risk their careers by steering business to a big donor is the stuff of fantasy novels, not reality.

The real story is that the Halliburton subsidiary, Kellogg, Brown & Root, won an open competition to provide the service support for overseas troops. This contract is called the Logcap, and is awarded every few years. KBR won the competition in 1992. It lost to DynCorp in 1997, and won it again in 2001.

Under the deal, KBR builds bases, supplies water, operates laundries and performs thousands of other tasks. Though the G.A.O. has found that KBR sometimes overcharges, in general the company has an outstanding reputation among the panoply of auditing agencies that monitor these contracts.

But some circumstances are not covered under Logcap. During the Clinton administration, the Pentagon issued a temporary no-bid contract to KBR to continue its work in the Balkans. In the months leading up to the Iraq war, Defense officials realized they needed plans in case Saddam Hussein once again set his oil wells ablaze. KBR did the study under Logcap. Then in February, with the war looming, Pentagon planners issued an additional bridge contract to KBR to put out any fires that were set. KBR had the experience. Its personnel were in place. It would have been crazy to open up a three-to-five-month bidding process at that time.

continues...

[tamiO]

Originally posted by Cain
Perhaps apologetics from the other side are in order. David Brooks from the _NYTIMES_ Op-ed page (Nov 11, 2003) argued that the activists and Democratic nominees agitating over no-bid contracts know practically nothing about how they're awarded (a different topic, but still related).

Defense contractors habitually defraud the federal government. The top ten (at least) have been found guilty of such.

Over the past few months, the Democratic presidential candidates have been peddling a story. The story is that the Bush administration is circumventing the competitive bidding process to funnel sweetheart Iraq reconstruction contracts to major campaign contributors, especially Dick Cheney's old firm, Halliburton.



All I am saying is that Dick Cheney spent a looong time thinking about world politics, economic positioning and strategies, from a very young age. I think he also included personal financial gain in the planning; why wouldn't he? He attracted the interest of some very influential people years and years ago and it is all culminating in he and his friends becoming very rich people.
There is a reason for that smug look on his face. :)

I am not saying he planned on invading Iraq 20 years ago, but I do believe he had it in mind that it would be very good timing for the United States to have global position in that region around the time the masses in China started to demand more oil. If we can be economically superior to the Chinese in that regard, we will have them in check, somewhat. We will also benefit as a country economically. All of us, I suppose.

We are talking big bucks with the silver lining of a better future for our country; more money for everyone. I am sure that that level of greed and power can allow a person to do a lot of unconscionable things.

Of course, I am just speculating. It's just one of my theories. I don't know the man, nor do I know the details of the world events concerning this show.

[fishbob]

From the linked article:Halliburton has denied any price gouging. The company has said it needs to charge a high price because the fuel must be delivered in a combat zone.

Several KBR workers have been killed or wounded in attacks by Iraqi insurgents. Contracting with the US Government is expensive. Everything costs more when purchased under a government contract. The standard government contracts contain dozens to hundreds of the contract clauses from the Federal Acquisition Regulations (FARS). There are all kinds of expensive little cost-bombs in the FARS, like requirements to print reports double-sided on recycled paper (nice sentiment, costs extra). I seem to recall that Halliburton has a cost-plus contract, which would then include (probably sky-high) hazardous duty life insurance premiums.

There is a saying among companies that routinely bid for government contracts: "The government thinks we are all a bunch of lying, cheating bastards; so don't disappoint them."

I don't know if Halliburton is gouging the Feds for gasoline, but I would be surprised if they could get away with it, because every expense has to be documented and submitted with invoices on these cost plus contracts.

[peptoabysmal]

The Pentagon said Thursday a routine review turned up the potential overcharge by subsidiary Kellogg, Brown and Root, which was awarded a no-bid contract in March to rebuild Iraq's oil industry.

But there is no allegation that Halliburton unduly profited from the overpriced gas.

The audit questions if Halliburton paid above-market rates to a Kuwaiti subcontractor when it paid $2.27 per gallon for the gas. Another supplier bought gas at $1.18 per gallon from Turkey.

Halliburton says the higher cost was due to having to negotiate a short-term contract, at a time when there weren't enough trucks in Kuwait to deliver the fuel. It says trucks had to be brought in and shipping in a war zone pushed up the transportation and security costs as well.

In a statement, Halliburton insisted those costs are "pass through costs" and said the company "only recovers a few cents on the dollar."

Congressional critics, who accuse the company of price gouging, don't believe the claims.
http://www.cnn.com/2003/WORLD/meast/12/11/sprj.irq.halliburton/

Hmmm.. if they are comparing prices to ship fuel from Kuwait with what it costs to ship in fuel from Turkey, it's a case of apples vs. oranges.

[corplinx]

Haliburton has been a heavy hitter defense contractor for over 30 years. Former executive branch members working on the boards of defense contractors is nothing new either. Look at Rummy, he was on more than a few.

My guess is Haliburton is coming under the most scrutiny for a few reasons.
A. its attached to "big oil", a much villified bogeyman
B. its attached to Cheney, as high up the chain as you can go

If I hear Haliburton mentioned one more time at a democrat debate, I'm going to mail said candidate a broken record.

Anyone still wondering why were leasing planes from Boeing instead of buying them? Talk about getting bent over by a contractor, its SOP for these companies. Unfortunately, the boeing case doesn't have:
A. a ready-to-believe crowd biting for ammo to use against their opponents
B. no attachments to any politician up for relection

I think we need to audit dealings with all of these contractors. After all, its our tax dollars being spent when they pay Haliburton too much for a gallon of fuel or when they overspend millions on aircraft.

[reprise]

Isn't the plan that every cent the US government is currently paying to Haliburton for goods and services in Iraq is to be repaid out of previously frozen Iraqi funds and out of oil revenues (meaning that it would ultimately be Iraq, rather than the US, which is being "gouged" on prices)?

[The Don]

My understanding was this was not the case. There was a debate in the United States Congress and a number wished for Iraq to pay for the military operation and restructuring costs. GWB insisted that the U.S. taxpayer footed the bill

http://news.bbc.co.uk/1/hi/world/americas/3239097.stm

[Segnosaur]

Ok, here's a little more information on the Haliburton contracts:
http://story.news.yahoo.com/news?tmpl=story&cid=514&e=1&u=/ap/20031212/ap_on_go_ca_st_pe/halliburton_probe_27

But the company apparently didn't profit from the discrepancy, according to officials who briefed reporters Thursday on condition of anonymity. The problem, the officials said, was that Halliburton may have paid a Kuwaiti subcontractor too much for the gasoline in the first place.


A Halliburton statement released Thursday said the Kuwaiti company was the only one that met the Army Corps of Engineers' specifications. "Halliburton only makes a few cents on the dollar when fuel is delivered from Kuwait to Iraq," the statement read.


Anyone know what the 'specifications' from the Army Corps of Engineers was for? (gasoline grade, 'purity', etc.)

[Luke T.]

Originally posted by Segnosaur
Ok, here's a little more information on the Haliburton contracts:
http://story.news.yahoo.com/news?tmpl=story&cid=514&e=1&u=/ap/20031212/ap_on_go_ca_st_pe/halliburton_probe_27


Anyone know what the 'specifications' from the Army Corps of Engineers was for? (gasoline grade, 'purity', etc.)

Ahhhhhhh....MILSPEC. A pain in the neck sometimes. Everything in the military has to meet MILitary SPECifications. This usually means it has to be rugged. Able to sustain combat for long periods of time. A lot of money is spent thinking about, debating, formulating, writing formulas and scenarios, writing convoluted specifications with charts and graphs and tables. Then a contract is opened up, and companies bid on how low they can go to make the necessary item at those specifications. This whole process is why we have 5000 dollar toilet seats.

There is a reform movement underway, but that is a whole other slow process.

See here (http://www.dsp.dla.mil/reform/reform.htm) if you really care...

[Luke T.]

I looked at the MILSPEC for a type of transistor once because I was contemplating sneaking out to Radio Shack and buying one out of my own pocket at a much lower price than the navy supply system version of the same transistor. That MILSPEC made my head swim. I am sure civilian contractors who make things for the military must have huge staffs of people whose only job is to figure this stuff out. They get to be experts at it.

If you are going to break into the field of "defense contractors," you will have to acquire the same talent.

And don't even get me started on HAZMAT and safety regulations. MSDS. Hoo boy. I don't know if it is still the case, but even water had a Material Safety Data Sheet requirement once. So does talcum powder. It's wild.

By the way. What in blazes is the deal with the forum these days? Slow. Hard to post. ARGGGGGHH!

[Scott]

Today's Washington Post (http://www.washingtonpost.com/wp-dyn/articles/A60025-2003Dec12.html) says Haliburton didn't profit from what may be an overcharge.

Just think, gas in Iraq costs as much as it does/did in California, and less than it does in England, Germany, France, Russia...

Clinton's contract guy (http://www.ksg.harvard.edu/news/opeds/2003/kelman_cronyism_iraq_wp_11003.htm) says there's nothing wrong with Haliburton contract...

Did you whine when Clinton used them in much the same way?

The LOGCAP contract was first awarded in 1992 to Haliburton, three years before Cheney took their helm. In 1997 Haliburton lost the LOGCAP to my former employer, Dyncorp. But the under Clinton, the defense department gave a seperate sole source contract to Haliburton to work in the Balkins. That contract lasted until 1999 when Clinton held an open bid for the contract, which Haliburton won.

LOGCAP expired in 2001 and was rebid, Haliburton won.

Dyncorp and Haliburton both win big contracts under Clinton, when only one of them should have, and you say nothing. When the contract is properly let under the Bush administration you whine.

IF Bush had gave some contracts to Dyncorp, would your panties still be in a wad over nothing?

[Frank Newgent]

Originally posted by Scott
Today's Washington Post (http://www.washingtonpost.com/wp-dyn/articles/A60025-2003Dec12.html) says Haliburton didn't profit from what may be an overcharge.


Hey, not so fast... (http://story.news.yahoo.com/news?tmpl=story&cid=514&e=1&u=/ap/20031213/ap_on_go_pr_wh/halliburton_probe_40)

Under the contract, Halliburton gets a guaranteed profit calculated as part of the company's costs. In other words, the higher the costs, the more money Halliburton gets.

Halliburton is guaranteed a profit equal to at least two percent of its costs. Depending on performance, Halliburton can earn a profit of up to 7 percent of costs.

If the subcontractor did overcharge by $61 million, Halliburton would be guaranteed $1.2 million in profit from that amount. If Halliburton earned the entire 7 percent, its profit on the overcharge would be about $4.3 million.

The rest of the article probably belongs on a different thread.

The Army Corps of Engineers currently is reviewing bids for the $2 billion in contracts that will replace Halliburton's no-bid award. At least 69 companies — including Halliburton — were sent solicitations, according to a Corps Web site.

Those companies included ones based in Canada, India, Great Britain, Jordan, Kuwait, Oman and Saudi Arabia. Bids from Canadian and Indian companies would be barred under the Bush administration's restrictions.
Neither market nor human values at work here.

[fishbob]

In my experience, contracting with the Corps of Engineers is the most expensive, least efficient way of doing a project. COE projects typically cost 100% to 200% more than similar private sector projects. So the price of gas in Iraq is not likely to go down when the replacement contract takes over.

[Frank Newgent]

Why not fill 'er up at a Baghdad gas station? It's only 15 cents a gallon. (http://www.msnbc.com/news/989803.asp)

[hammegk]

Except there is no gasoline available for Bagdad citizenry -- at any price -- if the lines of Iraqi autos waiting to gas up are any indication.

[Frank Newgent]

Originally posted by hammegk
Except there is no gasoline available for Bagdad citizenry -- at any price -- if the lines of Iraqi autos waiting to gas up are any indication.
Please don't let your poodle walk on the keyboard.

[hammegk]

Originally posted by Frank Newgent

Please don't let your poodle walk on the keyboard.

?

Please take a flying f*ck at a rolling donut.

[subgenius]

Halliburton has a multibillion-dollar contract to feed and house U.S. troops in Iraq. But there are problems. A food subcontractor that runs 10 percent of the dining facilities in Iraq claims it hasn’t been paid by Halliburton for months and is threatening to stop serving hot meals.

The company, Event Source, serves 100,000 meals a day in Iraq under a contract with a Halliburton subsidiary. vent Source claims Halliburton owes it $87 million, including payment for President Bush's Thanksgiving dinner with the troops.

“When you get stuck out there for $87 million,” explains Event Source Chief Executive Officer Phil Morrell, “it’s a question of economics.”

In an interview with NBC News, Morrell says he’s already laid off employees in the United States and soon will have to feed sandwiches to the troops, instead of hot meals, because his company is running low on money.
http://msnbc.msn.com/id/4480796/

[Bottle or the Gun]

Originally posted by Luke T.
I looked at the MILSPEC for a type of transistor once because I was contemplating sneaking out to Radio Shack and buying one out of my own pocket at a much lower price than the navy supply system version of the same transistor. That MILSPEC made my head swim. I am sure civilian contractors who make things for the military must have huge staffs of people whose only job is to figure this stuff out. They get to be experts at it.

I work for a company that sells MILSPEC laptops. The reason for the cost can be found in how rugged they have to be. You want a laptop that can handle 2 years in Iraq, you buy a certain model. You want pretty for the office, you buy a different kind. I actually have a report from the army of laptop failure rates for the first deployment in the Iraq war which supports my statement.

When I was in the service a friend once complained about the $950 coffee pot on a plane. While it looked like the standard 25-cup aluminum pot, it wasn't. It had to have seals and ruggedness to withstand jolting, decompression, etc. You don't want a gallon of boiling coffee to explode at your back during an in-flight emergency.

You have to have MilSpec and the extra cost it entails. MilSpec also ensures longevity, hardiness and addresses liability. There are still desks and chairs and other equipment, prerfectly functional, that goes through all sorts of treatment, that were new in WWII and Korea. They are still in use today. Try getting something as reliable from the local furniture or hardware store.

A bolt that costs a nickle and can be found at a hardware store looks the same as the $300 bolt on an airplane but it isn't. One is good for holding the wheel of your BBQ on, one is good for keeping a panel on the skin of an aircraft going Mach 3.

[fishbob]

From Subs article:Morrell says he believes Halliburton and its other food service contractors did overcharge, billing the government not for meals actually served, but for meals a facility could have served.
If Halliburton is required to provide a field kitchen and enough cooks to serve 1000 meals, and only meals 300 are served, the cost for the kitchen does not change much. There are the same number of cooks, same number of ovens, same dining hall. The only differences are how much the grocery bill is and how busy the cooks are. On a cost type contract, the charges to the government will change very little. Charging for the meals that could have been served is exactly how cost plus type contracts are structured.

On a cost plus contract, the government will not pay a prime contractor, if the prime pays a subcontractor for unacceptable work.

This sounds more like a contract dispute between the Event Source people and Halliburton.

[TillEulenspiegel]

Corplinx: "Anyone still wondering why were leasing planes from Boeing "

Boeing got their -insert appendage here- caught in a meat grinder for industrial espionage. The pentagon suspended the lease contracts for tankers in Dec. Article here:
http://www.washingtonpost.com/wp-dyn/articles/A59057-2004Feb20.html

MIL-SPEC?? NOOOOO!
Horrible constraints. Someone said something about semiconductors. There is a unbelievable set of standards for quality control , in other words all equipment build from thousands of components , all those constituent parts are subject to MIL-SPEC QC models which are generally 1% meaning 1 bad part out of 100. An integrated circuit you can buy at Radio Shack for < $1 is an altogether different animal in the military, the substrate ( base layer) is sapphire, the operating temperature window is huge, the mechanical constraints ( static, vibration, impact shock Et.Al.) are very brutal. This for a circuit that be destroyed by the static of a human finger.This is why there are ridiculous cost associated with many military weapons systems and yes even toilet seats. Gasoline, however is a different subject altogether.


Edit to add quote.