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Bad Whiff From a Big Deal

September 06, 2003

Vice President Dick Cheney has long insisted that the private sector can handle some chores better and more cheaply than the military can. His habitual advancing of this cause, however, demands renewed, outside scrutiny. The need for this has grown especially acute since the appearance of conflict of interest involving Cheney and Halliburton, his former firm, and its Kellogg Brown & Root subsidiary, has escalated in the $1-billion-a-week U.S. campaign in Iraq.

New documents show that Halliburton has been awarded deals in Iraq worth more than $1.7 billion and could make hundreds of millions more under an effectively open-ended contract with the U.S. Army Corps of Engineers.

It was almost inevitable that these questions would arise. When the Cold War ended and military cuts began, Cheney, as Defense secretary in 1991, pressed the Pentagon to contract out as many services as it could. Despite concerns then about the appearance of conflicts, Halliburton's subsidiary was hired to draw up a 10-year, renewable contract -- a plan dubbed the Logistics Civil Augmentation Program -- for a giant contractor to provide the military with everything from facilities and base camps to billeting and food preparation. Halliburton in 1991 bid for and won this pact, which its subsidiary had drawn up. Halliburton was awarded the contract again in 2001.

Under the program -- and the prevailing logic that combat situations demand utter expediency, even as taxpayer dollars get spent -- Halliburton has received money to work on U.S. base camp operations in Kuwait and to build Iraqi prisoner-of-war facilities. But here's where the program causes new concern: Halliburton subcontracts most of its work, and its pact is so open-ended that it's difficult for the military to control the services delivered or costs. Just imagine dealing with a general contractor and subs on a home remodel without clearly defined spending caps and the program's flaws become apparent.

Because civilian subcontractors in Iraq are working in a war zone, insurance has been expensive and difficult to obtain, with premiums shooting up and the costs being rolled into an escalating tab. Also, if civilian employees or their companies decide a situation is too risky, they can't -- unlike troops -- be compelled to work.

No matter how fast the Pentagon wants to move, it doesn't make sense to allow one company to dominate this process. A better idea would have been to carve up the giant contracts so there was more competition. Others suited for this work include Fluor of Aliso Viejo, DynCorp and San Francisco's Bechtel Group, which has received a $350-million hike in its Iraq contracts.

The General Accounting Office is looking at military contracts and should pay special attention to this program and its ilk. The administration should welcome independent scrutiny to lift any suspicions hanging over Cheney and his one-time employer.

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