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A Suspect Stays on the Job

March 16, 2004

What homeowner, suspecting he had been gulled by a contractor, would then turn around and rehire that contractor? On a larger, more troubling scale, the Bush administration is playing out that questionable scenario with a mammoth defense contractor: Halliburton. The firm and the administration, if they expect to retain their credibility and employment, need to clean up a mess involving billions in tax dollars.

After Defense Department auditors warned on Dec. 31 that Halliburton was supplying inaccurate cost data, the Army Corps of Engineers awarded the firm $1.2 billion in new contracts in mid-January, bringing its total to $5.8 billion. The Pentagon and the Justice Department currently are investigating charges that Halliburton overbilled the U.S. by $61 million for fuel. The firm has admitted that one or two employees took kickbacks in overcharging the U.S. $6.3 million.

Initially, the administration argued that problems had cropped up because the United States needed to hand out contracts swiftly to the few contracting giants to keep the military campaign in Iraq on course, then to get the Iraqi reconstruction moving. This has been dirty, dangerous work. But after almost a year, it tests credulity as to why the U.S. has no better system to award and scrutinize giant Iraq pacts.

Rather than seeking competition on individual projects, the administration, for example, has lumped them together and largely handed them out as exclusive deals to Halliburton and Bechtel; 2,000 projects have been conglomerated and are covered by 17 umbrella pacts lacking cost controls. In seven of these cases, this is not military but rather reconstruction work, in which the administration lets private contractors oversee other private contractors. The possibilities for cozy dealing and conflicts of interest are dizzying.

It doesn't help that the watchdogs are few and far between. The newly established Pentagon Program Management Office has just 120 employees in Iraq. They not only must wrestle with the mega-contractors but also try to follow billions funneled to hundreds of subcontractors in Iraq.

The administration, meanwhile, feeds suspicions by authorizing Halliburton to withhold data on costs and prices of its work from U.S. auditors, says Rep. Henry A. Waxman (D-Los Angeles).

It's incomprehensible that administration officials would tolerate, say, a French firm in similar circumstances. The White House also surely must be sensitive to public sensibilities about a firm once headed by Vice President Dick Cheney, who helped set in motion the outsourcing to private firms of pacts like the ones that Halliburton profits from now. With defense contractors pouring money into political races -- and with GOP candidates the big beneficiaries -- the whiff may be sufficient to fuel a taxpayer urge to track where billions of federal dollars go.

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